Feds' new anti-fraud effort pressures doctors

A joint Justice Dept.-HHS program cracks down on fraud and abuse, while amendments to the False Claims Act expand the law's reach.

By Amy Lynn Sorrel — Posted June 15, 2009

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The government has ramped up its anti-fraud efforts, and physicians can expect more intense scrutiny of their operations, experts said.

Senior officials from the Depts. of Justice and Health and Human Services announced on May 20 a joint fraud prevention and enforcement team with increased resources and a more targeted anti-fraud approach. The same day, President Obama signed into law amendments expanding the government's reach under the federal False Claims Act.

"The primary message is that health care fraud is cited by both sides of the aisle as a significant factor in the continued escalation in health care costs, so we are going to continue to see a focus on trying to reduce and appropriately penalize those that engage in fraud," said Gary W. Eiland, a health regulatory expert and partner at King & Spalding in Houston.

Obama's proposed fiscal 2010 budget also calls for infusing an additional $311 million -- a 50% increase over 2009 funding -- to strengthen Medicare and Medicaid fraud-fighting programs. The Dept. of Justice estimated the monetary boost, on top of its combined efforts with HHS, could save the government $2.7 billion over five years.

Although a good first step, the efforts may not be enough to recover the estimated $20 billion in health care-related fraud and waste that occurs each year, said Patrick Burns, a spokesman for the consumer watchdog organization Taxpayers Against Fraud. "We've recognized we have to change the way we do business ... but the real problem has always been Congress not appropriating enough money to the civil division," he said.

The joint task force -- dubbed the Health Care Fraud Prevention and Enforcement Action Team, or HEAT -- builds on existing Justice Dept.-HHS cooperative efforts in South Florida and Los Angeles established in 2007. The teams also worked with local law enforcement agents, prosecutors and Medicaid officials to target suspected civil and criminal activity in particular geographic areas.

The Justice Dept. plans to expand what it calls its strike forces to Detroit, Houston and other areas yet to be named. Other initiatives include expanding:

  • Technology training for federal investigators.
  • Analysis of Centers for Medicare & Medicaid Services data.
  • Training and resources for health care entities on detecting and preventing fraud and billing mistakes.
  • Oversight of Medicare Advantage and prescription drug plans.

"Today we raise the stakes on health care fraud," U.S. Attorney General Eric H. Holder Jr. said in a statement. The Justice Dept. also plans to work with health care entities to "encourage their voluntary efforts to root out waste and abuse and to institute effective compliance programs."

The government's strategy focuses largely on sharing and comparing billing and quality data, explained Lawrence W. Vernaglia, co-chair of Foley & Lardner LLP's Health Care Payments, Fraud & Abuse and Compliance Work Group.

"The government has figured out that data-mining is a really efficient way of finding problems," he said. "What might be new now is the use of data-mining to identify quality issues, which can potentially rise to false claims cases."

False Claims Act broadened

Physicians also face greater risk of investigation and potential liability under recently enacted changes to the federal False Claims Act. The revisions eliminated certain judicially imposed constraints on the government from a pair of U.S. Supreme Court rulings in 2004 and 2008, experts said.

While the law was intended to beef up oversight of the financial industry, it has significant ramifications for health care, Vernaglia warned.

For one, the law opens the door for the government to argue that knowingly and improperly retaining an overpayment constitutes a false claim, he said. "The government is saying once you have an overpayment, you have to give it back. And once you don't, you have a reverse false claim. So the burden is now on doctors to figure it out, and the risk is on them if they don't."

A good physician compliance program should address billing and quality issues, and track overpayments, Vernaglia recommended.

Another modification clarifies that those who do not bill the government directly but go through an entity that contracts with the U.S. can be held liable for fraudulently obtained funds, Eiland noted. That means claims submitted through a Medicare private insurer or a state Medicaid program likely fall within the scope of the act and may face more intense scrutiny.

Besides claims submissions, other activities by physicians could be subject to investigation if they impacted the government's decision to pay for a particular service, Eiland added. "If a Medicare carrier sent a query to a physician asking for more detail or for patients' medical records, [doctors] need to make certain they are providing the facts and only the facts because [such statements] could be viewed as having the ability to influence a payment."

On the flip side, the law gives whistle-blowers, who are often physicians, enhanced tools. "There is a broader diversity of claims that can be swept into a whistle-blower action," Eiland said.

The TAF's Burns noted the law gives the Dept. of Justice greater subpoena powers, enabling federal agents to speed up investigations and get better information to decide if they have a valid case.

Eiland added that the most recent federal stimulus package included stronger protections for whistle-blowers against potential discrimination for reporting fraud. Other legislation under consideration could broaden the False Claims Act further.

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The prominence of health care fraud

Recoveries from health care fraud continue to yield the lion's share of total federal false claims recoveries. Whistle-blowers have played a large role in rooting out all types of fraud.

2006 2007 2008
Total recoveries $3.1 billion $2.0 billion $1.3 billion
Health care recoveries $2.2 billion $1.5 billion $1.1 billion
Whistle-blower cases $1.3 billion $1.5 billion $1.0 billion

Source: U.S. Dept. of Justice

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