An interdepartmental program designed to curb waste, fraud and abuse in federal healthcare programs will collect $1.47 billion as a result of criminal or civil cases brought in the most recent year reviewed, according to a federal report issued this week.
The Department of Justice and the Office of the Inspector General (OIG) at the Department of Health and Human Services (HHS) also announced that they jointly have deposited $8.85 billion into the Medicare trust fund since their joint program began in 1997.
Lawmakers, such as Sens. Chuck Grassley (R-Iowa) and Tom Coburn (R-Okla.), have repeatedly pressed federal agencies to do more to recover funds lost due to fraud and abuse.
The defendants in the fraud and abuse cases outlined in the latest report range from individual schemers to some of the largest healthcare companies in the country.
Among the companies appearing in the OIG-Justice report are the drug maker GlaxoSmithKline, the pharmacy-benefit manager AdvancePCS, the clinic and lab services firm HealthSouth Corp. and the kidney-dialysis provider Gambro Healthcare.
Several individuals, small groups and small companies settled charges in a variety of cases, including several involving the illegal distribution of strictly controlled narcotic medicines and one person charged with selling a date-rape drug over the Internet.
The government won numerous multimillion-dollar financial settlements, including two worth more than $300 million, and individual defendants will serve prison sentences as high as 10 years.
The report reviews actions taken by the agencies in fiscal year 2005.
Budget hawks routinely maintain that addressing waste, fraud and abuse in federal programs is key to lowering the deficit. With massive and rapidly growing entitlement programs such as Medicare, Medicaid and Social Security, the need to take all possible steps to control spending is viewed as even more urgent.
Congress created the Health Care Fraud and Abuse Control Program in a 1996 statute that boosts the two agencies’ budgets using dollars from the Medicare trust fund but directs them to return money attained through settlements, fines, recoveries and other penalties to the trust fund. The program is intended to coordinate the anti-fraud activities of federal, state and local law-enforcement authorities.
The program also is meant to provide guidance to healthcare companies and individuals doing business with federal programs on how to avoid running afoul of anti-fraud laws and regulations.
In FY 2005, the OIG and Justice spent $240.6 million from the Medicare trust fund to deposit $1.55 billion (including monies from cases settled in prior years but excluding funds from cases settled in FY 2005 that will be paid in future years).
In cases involving fraud in other federal healthcare programs, the funds are returned to the respective agencies. The federal government also shares money claimed in cases related to the jointly funded Medicaid program; the federal government’s share totaled $63.64 million in FY 2005.
In addition to the $1.55 billion that went into the Medicare trust fund, other agencies received $23.6 million as a result of the Justice-OIG program’s activities. The OIG got $9.4 million of that amount to cover the costs of its investigating, auditing and monitoring activities.
The Office of Personnel Management, which oversees federal employee and retiree health benefits, received $4 million, the Department of Defense’s Tricare program for military service members and their families received $3.4 million. Other HHS agencies and the Department of Labor divided the remainder.
During the year under review, federal prosecutors secured the convictions of 523 people.
U.S. attorneys launched 935 new criminal investigations into healthcare fraud and have a total of 1,689 pending cases, while Justice began 778 criminal investigations for a total of 1,334 pending cases. Justice also participated in 266 civil cases.
Under federal law, private citizens — including whistleblowers — can file fraud and abuse lawsuits on behalf of federal programs and keep a portion of the financial settlements. In FY 2005, these individuals collected a total of $136.8 million.
Federal authorities had already announced all of the individual cases used as examples in the report but the document compiles the statistics for the fiscal year and offers a glimpse into the variety of schemes — alleged or admitted — employed in attempts to cheat dollars from the gigantic federal healthcare programs.
The HealthSouth settlement might be the best known. The company agreed to pay $327 million to settle charges that it had conducted three separate strategies to overcharge Medicare. Among the accusation levied by prosecutors was that the company tried to pass off to the Medicare program its expenses for a large corporate meeting held at Disney World in Florida.
Gambro agreed to a $310 million settlement over allegedly submitting false claims to Medicare and paying kickbacks to physicians who referred patients to Gambro facilities.
The largest individual prison sentence detailed in the report was 120 months for 17 felony counts. A Las Vegas-based individual, using a company the individual opened in Germany, had been selling the date-rape drug Rohypnol over the Internet. The government also seized the defendant’s $285,000 home.
Another would-be Internet pharmacist was handed down a 51-month prison sentence in what the report describes as “one of the largest Internet pharmacy schemes ever prosecuted.” The California man was convicted of using the web to sell counterfeit versions of prescription drugs, including erectile dysfunction medicines. The defendant’s website also purported to include online consultations with nonexistent physicians.
