Medicare Compliance & Reimbursement

Perhaps the top activity for state and federal fraud busters these days is following pharmaceutical money through the complex health-care system.

That's the word from two federal enforcement officials who spoke at a June 3 briefing by the Taxpayers Against Fraud Education Fund.

State Medicaid fraud recoveries are low compared to Medicare recoveries, but Medicaid takes will likely rise as cases against pharmaceutical manufacturers and others in the prescription-drug supply chain come to light, said Jim Sheehan, associate U.S. attorney for the Philadelphia region. States, rather than the federal government, will originate most pharmaceutical cases because they have the developing expertise and economic incentive to do so, he said.

Pharma cases will involve "all kinds of payments back and forth within the industry," including to doctors and health plans, that may be intended to induce prescribing one medicine rather than another, Sheehan said. Other drug cases in the works target companies that use "loopholes" to give bigger rebates to other buyers than Medicaid, violating Medicaid "best price" provisions. Additional cases involve combinations of best-price violations and kickbacks, he said, such as a drug company's saying it can't offer a health plan a price better than Medicaid gets but will give the plan $3 million instead.

Another growth area, quality-of-care investigations, will expand beyond managed care into residential treatment centers and acute care, said Greg Demske of the HHS Office of Inspector General. Now that the Joint Commission on Accreditation of Healthcare Organizations and some states require reporting of certain adverse events, "we'll see people prosecuted for not reporting," or for altering records, Demske said.

Lesson Learned: Expect the feds' emphasis on quality of care enforcement to continue to mount - and to spread into new sectors of the health care industry.