Of the many, many different criticisms I have heard regarding our current health care system and the PPACA in particular is that it does not do enough to contain costs. Medicare alone accounts for a staggering amount of overage, and clearly if our health care system is to be improved, so say the critics, then something must be done about Medicare at the very least.
It is a valid argument. The degree of waste and outright fraud that occurs under Medicare is staggering. Which is probably why at the beginning of the year, the Department of Health and Human Services, under Secretary Kathleen Sebelius (who has faced a slew of lawsuits over the healthcare mandate ever since PPACA passed, by the way) has held a series of health care fraud prevention summits. The third such summit was held in Brooklyn, NY this morning and covered a range of efforts to address the problem.
On one front, you’ve got law enforcement agencies at the state and federal levels working hard to crack organized crime rings that are bilking the system for millions upon millions each year. Representatives from those agencies spoke of major cases this year. In one case, the Medicare strike force known as HEAT (Health Care Fraud Prevention and Enforcement Action Team) took down a ring that had fraudulently billed more than $160 million in bogus claims. Another recent case stopped an $80 million ring consisting of more than 90 individuals. All told, in the last fical year alone, explained Sebelius, HEAT opened more than 2,000 civil and criminal fraud investigations, stopped numerous schemes, returned more than $2.5 billion to the Medicare fund and more than $800 million to cash-strapped state funds.
On a second front, you’ve got the judicial element doing what it can to seek tougher penalties for those who do defraud the system in general, but especially Medicare, which falls under federal jurisdiction. Prosecutors are using a wide range of options to raise the stakes for committing health care fraud. For starters, they are pressing charges against medical professionals who knowingly perform unneeded medical services (after all, every health care fraud ring needs at least one complicit doctor), in addition to going after the familiar targets of patient recruiters and patients themselves. Longer sentences are also being sought, with cases this year handing down twenty- or thirty-year stretches for more than a few ringleaders of fraud gangs. Granted, there are violent drug offenders who are getting less harsh sentences, but that’s more reason to punish those bastards more severely, rather than ratchet back the penalties for fraud.
Of special interest is how prosecutors are invoking laws against money laundering and even hate crimes to widen what kinds fo cases they can prosecute, and to deepen the severity of those cases. This last example was used in a case where a professional ring of fraudsters was targeting Asian drivers and getting into intentional car accidents with them. The modus operandi was for the fraudsters to then claim bogus injuries against Medicare, all while claiming the victims caused the accidents. While nobody explicitly said so, one was left to imagine that the hate crime angle was used perhaps because the criminal enterprise was meant, in large part, to play on ugly stereotypes about Asian drivers. But even if not, the use of hate crime law to prosecute those targeting ethnic groups of any kind is an interesting development, and one sure to turn the heat up on fraudsters.
- “If you want to be making scores, then do not let anything into your life that you can’t walk away from in 30 seconds flat if you spot the heat coming around the corner. Remember that?”
But what I found most compelling was the civil side of fraud prevention, where medical providers and health care patients themselves can take an active role in spotting fraud as it happens and blow the whistle on it. Seniors are being actively encouraged to drop a dime on any suspicious Medicare activity they see, and they’ve got plenty of motivation too, since any wrongdoing is only bleeding out a system they are already relying on to deliver medical care. But some of the most hair-curling stories of health care fraud were coming from the corporate front; tales by prosecutors and law enforcement officials of pharmaceutical companies aggressively selling drugs they knew either did not work or were wrong for certain patients, but were pushed anyway to offset their meager legitimate sales. Another story involved a dental clinic that had made a practice of pushing unneeded dental care on Medicare patients less than 10 years old, or on medical clinics that provided kickbacks to local homeless shelters who sent otherwise healthy people for medical procedures they did not need, and were later deposited back on the streets in a post-anasthetic daze.
Cases like this are the worst kind of corruption, as they stem from good business that has somehow morphed into something bad. From the outside, they appear normal, but there is always somebody on the inside who knows better, and this is where the most intriguing element of the fraud-fighting arsenal comes out: the False Claims Act, also known as the “Lincoln Law.” It is a Civil War-era law drawn up to prosecute those who knowingly defrauded the federal government. (During the Civil War, it was meant for contractors who knowingly provided bad shipments of guns, wagons and mules instead of horses to the U.S. Army.) The law protects whistleblowers with a reward of 15% to 30% of any recovered money. In terms of fighting health care, this is potentially huge, especially since the law also hits fraudsters with penalties of triple whatever the fraudsters tried to steal in the first place, as well as a $5,500-$11,000 fine per charge. Just imagine the math for a crime ring processing hundreds of bogus Medicare claims and you can see how it adds up.
Where this really hit home for me was when officials noted how since 1896, whistleblowers have collected some $2.8 billion in rewards. The record case right now involves the GlaxoSmithKline case, in which the whistleblower there received a $96 million payment for doing the right thing. One can only imagine the reward possibilities for the staggering $2.3 billion fine given to Pfizer for marketing drugs to doctors for use well outside of their FDA approvals. Instantly, I imagined a wave of health care fraud bounty hunters canvassing the industry looking for signs of wrong doing, calling it in and waiting for their big pay day to roll around.
- “Alright, who’s been submitting fake mammograms?”
Officials were quick to point out that in most cases, however, whistleblowing rewards are fairly small, as the frauds themselves are for $1 million or less, and that usually the whistleblowers must wait for years to collect while the case is resolved. In corporate cases, the whistleblowers often remain employed at the company they reported on, and as cases wear on, it becomes increasingly obvious who called the cops. Situations like this are the norm, and the money rewarded amounts to a pittance versus the loss of peace of mind most whistleblowers ultimately endure.
I got the feeling that this last point was raised to dissuade people from thinking there was a lucrative career to be had in fraud spotting. But why shouldn’t there be? After all, the money being rewarded is lost one way or the other, and on top of the retrieved funds, these cases are also producing serious convictions that hopefully are sending a message to the criminal community that health care fraud is simply not worth the risk any longer. If that means deputizing a generation of seniors to “see something, say something” and empowering would-be medical bounty hunters to start combing through clinic paperwork to find signs of wrongdoing, how bad would that be, really? Disruptive, sure, and open for abuse, too. But given how much is being ripped off from Medicare at the moment, any idea that works is a good one, no matter how crazy.
Over in the P/C world, you could always tell when times were tough for the industry because it started running fraud awareness campaigns again. The reason, of course, was because their investments were flat, their underwriting was poor, and they figured they could only make money by reducing costs, so out came the “fraud hurts everyone, you know” campaigns. I cannot imagine they ever work that well because most people simply do not make the connection between costing an insurance company money and having to pay for it later through increased premiums. They might make that connection more readily for health care fraud, which is directly tied to their tax dollars. And even if people don’t get the message, it should be obvious to anybody invested in the ongoing health care debate that if the government is suddenly interested in stemming the losses from fraud, then the losses themselves must be pretty enormous, indeed. Wouldn’t it have been nice to have taken care of it before it got to this point?
The Gamut publishes every Monday, Wednesday and Friday, as well as on the front page of each print issue of National Underwriter Life & Health.