Health Care Fraud v. The FCPA
With all the press and Congressional attention to anti-corruption enforcement, it is important to keep things in perspective. FCPA enforcement is aggressive but pales in comparison to federal government efforts to combat fraud in the Medicare system.
It is estimated that almost 10 percent ($48 billion) of Medicare’s $507 billion budget in 2010 was made for fraudulent or improper payments. The Center for Medicare and Medicaid Services (“CMS”) is on the frontlines of detecting Medicare fraud. Of course, there is room for improvement but CMS has used new technologies to identify suspect payments for further investigation.
Federal prosecutors and law enforcement have the tools, the resources, and the backing of the industry to root out fraudulent and improper payments. All of this has combined to lead to record recoveries last year of nearly $4 billion from Medicare fraud defendants, the highest amount in history. By comparison, FCPA enforcement resulted in approximately $1.6 billion in the same year.
The Health Care Fraud Prevention & Enforcement Action Team (HEAT), a working partnership with government, law enforcement and industry leaders and the public, has been leading the charge. HEATs have been recently expanded and are assigned to regions where fraud activity is high. In many respects, they resemble the organized crime strike forces of the 1960s which were directed at organized crime in specific areas around the country.
The federal efforts are bearing fruit. The number of federal health care fraud prosecutions in the first eight months of 2011 are on pace to rise 85% over last year. The statistics show 903 prosecutions for the first eight months of this year, a 24% increase over the total for all of fiscal year 2010, when 731 people were prosecuted for health fraud through federal agencies across the country. Prosecutions have gone up 71% from five years ago.
A recent GAO report cited a number of improvements which CMS could make to help reduce fraud and improper payments in its contracts. The report cited the fact that greater savings could be realized if CMS improved its internal controls both for managing contracts and conducting payment audits.
Specific actions for CMS, recommended by GAO to refine payment methods and to encourage efficient provision of services include:
- Ensuring the implementation of an effective physician profiling system;
- Managing payments for services, such as imaging;
- Systematically applying payment changes to reflect efficiencies achieved by providers when services are commonly furnished together; and
- Refining the geographic adjustment of physician payments by revising the physician payment localities using an approach uniformly applied to all states and based on current data.
Even though CMS has made great strides to improve its efficiency, there is still room for improvement. With the expected increase in health care costs, the risk of fraud and improper payments will continue to rise.
Remember also that Hank Walther, formerly an FCPA prosecutor, went to lead their health care fraud unit. Evidently, he’s leaving DOJ, but I haven’t heard where yet.