Interagency fight against Medicare fraud shows promise

By Charles S. Clark

April 24, 2012

Teamwork between the Health and Human Services and Justice departments targeting criminal fraud in the Medicare program is producing encouraging results in prosecutions and funds recovered, agency officials told a Senate panel Tuesday. But HHS’ Centers for Medicare and Medicaid Services is seen as slow to implement some key tools made available under the 2010 health care form law.

The focus of the Senate Finance Committee hearing was indictments in Miami made public in September 2011 after a federal strike force busted a $300 million scheme of fraudulent home health care providers in eight cities. The scheme’s ringleaders, members of a firm called ABC Home Health Care, were charged with recruiting indigent people and paying them $1,500 a month to use their identification to file false claims for home health services that were never delivered. The invoices were executed by paying kickbacks to corrupt physicians to fill out forms for such treatments as insulin injections and physical therapy.

ABC’s records were “clinically incoherent,” as HHS Inspector General Daniel Levinson observed, noting computer data analysis revealed dozens of daily treatments were suspiciously the same for all patients.

Committee chairman Sen. Max Baucus, D-Mont., said the result was a “success story” where CMS, the HHS IG and Justice “were able to work as a team” to crack the largest case of Medicare fraud in U.S. history, having been given an “unparalleled set of tools from Affordable Care Act.”

Though the fight against Medicare fraud recovered $4.1 billion in fiscal 2011-- a return of $7 for every $1 invested in the effort, the IG said -- several Republican senators expressed doubts that CMS had done enough.

Sen. Orrin Hatch, R-Utah, graded CMS’ follow-through on implementing its new tools, assigning it an “incomplete” and noting, “though CMS has made some strides in its fight against fraud, [its report card] is not one to be proud of.” His list of unfulfilled tasks included not implementing a temporary moratorium on enrolling new Medicare providers and suppliers; not establishing a surety bond on home health agencies, which are considered high risks for fraud; not placing limits on billing amounts; and not denying billing privileges to providers not in good standing for past work.

Kathleen King, director of health care for the Government Accountability Office, said, “although CMS has taken some important steps to identify and prevent fraud . . . more remains to be done to prevent making erroneous Medicare payments due to fraud. In particular, we have found that CMS could do more to strengthen provider enrollment screening to avoid enrolling those intent on committing fraud, improve pre- and post-payment claims review to identify and respond to patterns of suspicious billing activity more effectively, and identify and address vulnerabilities to reduce the ease with which fraudulent entities can obtain improper payments.”

Dr. Peter Budetti, deputy administrator and director of the Center for Program Integrity at CMS, said the Miami case was “a good example of how we work together,” adding CMS provided data and played an important role in the entire prosecution, including serving as witnesses at the trial. He described his agency’s new software tools, which he called “the twin pillars,” a Fraud Prevention System that employs analytic technology to head off bad payments, and an Automated Provider Screening tool to root out bad actors who submit Medicare invoices. The prevention system has saved some $35 million in just the first year, he said.

Defending HHS’ speed in implementation, Budetti said his team fully intends to put the tools in place but said, “it is difficult to determine which tool to use in which circumstances.” He said slapping a moratorium on providers would affect legitimate ones as well fraudsters. He agreed with Baucus’ assertion that the anti-fraud effort should be executed with metrics or benchmarks to gauge progress, promising to deliver such metrics in the program’s annual report this summer.

Wifredo Ferrer, U.S. attorney for the Southern District of Florida, called the ABC Home Health Care case “a perfect example of the tools needed, from data analysis to old-fashioned police work,” and said the interdepartmental team meets monthly and shares leads immediately. He praised the Affordable Care Act for its expanded definition of health care fraud, greater subpoena power and tougher sentences for deterrence. “You have to prosecute up and down the health care chain to give an incentive to cooperate,” he said. But Ferrer added,“we can’t prosecute our way of this,” that prevention is key.

Sen. Tom Coburn, R-Okla., stressed the importance of delivering fraud-committing physicians to prison, “to send an important signal to publicize for other doctors to change their behavior.”

Levinson noted the anti-fraud team members increasingly face dangers of pursuing criminals who are armed, and stressed that modern fraud schemes have grown more sophisticated. “The people who’re doing the paperwork right know exactly what they’re doing to steal taxpayers money,” he said. The traditional Medicare fraud committed using empty storefronts selling durable medical equipment multiple times is today viewed as “lazy man’s fraud,” he said.

Baucus said, “We’re starting to make a little progress, [but] more needs to be done.” He promised another hearing in a year.

By Charles S. Clark

April 24, 2012