Deeper Than the Headlines: A Crackdown on Healthcare Fraud: Experts Say it's Here to Stay

“…let me be clear: healthcare fraud is a priority for the Department of Justice,” is how Kenneth Blanco, acting Assistant Attorney General of the DOJ’s Criminal Division, began his speech on May 18, 2017, at the Institute on Health Care Fraud of the American Bar Association.

He said, “Attorney General Sessions feels very strongly about this. I can tell you that he has expressed this to me personally. The investigation and prosecution of health care fraud will continue; the department will be vigorous in its pursuit of those who violate the law in this area.”

As compliance officers, we know that enforcement usually “follows the money” so to speak. We also know that total healthcare spending in the United States is a staggering 18% of the GDP which equates to $3.2 trillion (with a “t”!) each year.

Mr. Blanco shared that healthcare fraud is estimated to be around $100 billion per year. He said that given this context, it should come as no surprise that the DOJ has a keen focus on bringing cases against the fraudsters. The Criminal Division of DOJ employs 56 prosecutors focused solely on prosecuting complex health care fraud causes across the country which include large corporate providers are well as smaller scale medical practices.

Since 2007, there have been Medicare Fraud Strike Forces at work in various “hot spots” across the country. These have included Miami, Tampa, Baton Rouge, New Orleans, Chicago, Detroit, Houston, Brooklyn and Los Angeles. Since inception, the Medicare Fraud Strike Force has charged close to 3,200 defendants who have collectively billed the Medicare program for more than $11 billion.

Mr. Blanco emphasized the techniques being used to identify fraud and spoke of highly advanced data analysis being used to identify aberrant billing levels in order to target suspicious billing patterns and emerging schemes. More specifically, the Medicare Fraud Strike Force is obtaining billing data from CMS in close to real time. They even have an in-house data analytics team and they feel they are able to halt some schemes as they develop. But in addition to the in-house work they are doing, they are pushing out the data they develop to U.S. Attorney’s Offices and investigative agencies across the country, not just their Strike Force cities. This gives other prosecutors the tools and key data they need to fuel their investigations and prosecutions.

Mr. Blanco shared some specific case examples. In the Esformes matter, three individuals were charged in the Miami-area for healthcare fraud and money laundering scheme involving approximately $1 billion in false and fraudulent claims to Medicare and Medicaid that started in 2002. The indictment charges three individuals for their roles in the scheme:

• the owner of a dozen skilled nursing facilities and assisted living centers
• a hospital administrator who allegedly facilitated kickbacks and bribes
• a physician’s assistant who allegedly received kickbacks and bribes in exchange for making medically unnecessary referrals.

He also highlighted the October 2016 global resolution agreement that Tenet Healthcare Corporation entered to resolve the investigation of a corporate bribery and fraud scheme at four Tenet-owned hospitals in Georgia and South Carolina. As part of that scheme, the hospitals paid over $12 million in bribes to a chain of prenatal care clinics in exchange for the referral of Medicaid patients.

False statements and representations were made to expectant mothers, including that Medicaid would only cover the costs associated with their delivery and the care of their newborn baby if the expectant mother delivered at one of the Tenet hospitals or that they were required to deliver their baby at one of the Tenet hospitals, leaving expectant mothers with the false and mistaken belief that they could not select the hospital of their choice. As a result, many expectant mothers traveled long distances from their homes to deliver at the Tenet hospitals, placing their health and safety and that of their newborn babies, at risk.

The current language coming out of the Department of Justice makes it seem as though healthcare fraud, waste and abuse are still going to be very active. Compliance programs are an important and meaningful way to demonstrate real attempts at preventing healthcare fraud and abuse.