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Risk Fraud & Compliance

Fed government expects $3 billion in investigative recoveries for FY 2020

Melissa D. Berry  Lead Compliance Attorney Editor / Regulatory Intelligence / Thomson Reuters

· 5 minute read

Melissa D. Berry  Lead Compliance Attorney Editor / Regulatory Intelligence / Thomson Reuters

· 5 minute read

HHS's OIG oversight saved taxpayers approximately $4 billion in 2020

Healthcare fraud related to the COVID-19 pandemic skyrocketed in the last six-months, according to the Office of the Inspector General (OIG) for the Department of Health & Human Services (HHS). But despite fraudsters attempt at exploiting the public health emergency, endangering people and stealing public funds, the OIG mitigated these scams to the tune of hundreds of millions of dollars.

In its recent Semiannual Report to Congress, the OIG stated that it expected investigative recoveries for FY 2020 to be around $3.14 billion.

What does that translate to in real-world crime prevention? In FY 2020, there were 624 criminal actions and 791 civil actions, and 2,148 individuals and entities were ultimately excluded from participating in federal healthcare programs.

In the current six-month reporting period, the OIG issued 97 audit reports and 27 evaluation reports. The audit work identified more than $337 million in expected recoveries and more than $446 million in questioned costs, including costs associated with an alleged violation, not supported by adequate documentation or funds expended for an unnecessary or unreasonable purpose.

The OIG also reported that its investigative work in the reporting period from April 1 to September 30, 2020, led to $1.62 billion in expected investigative recoveries and 181 criminal actions. The agency also took civil actions against 421 individuals and entities, as well as excluding 1,245 individuals and entities in this reporting period. That is a lot of thwarted fraud and a tremendous recovery amount.

Oversight of the pandemic emergency response

Starting in May, the OIG followed a strategic plan on its oversight role during the COVID-19 pandemic response and recovery. The goals of the plan are to:

  • protect the health and safety of people;
  • protect funds by preventing and detecting waste or misspending of pandemic response and recovery funds;
  • protect infrastructure information technology systems, infrastructure, and protected health information; and
  • promote the effectiveness of HHS programs.

The office prioritized investigating suspected fraud that involved patient harm, and alerting HHS, it beneficiaries, and the public to fraud schemes related to the COVID-19 pandemic, including testing and identity theft scams. The OIG also conducted audits across all response and recovery efforts in order to identify best practices as well as prepare for future pandemic responses.

Enforcement efforts against fraud & abuse

In the largest ever national action in the history of the U.S. Department of Justice, 345 individuals in 51 judicial districts were charged in September for submitting more than $6 billion in false and fraudulent claims to federal healthcare programs and private insurers. The allegations included fraudulent claims of:

  • $4.5 billion related to prescribing or ordering unnecessary medical items or services using aggressive marketing tactics and “so-called telehealth services”;
  • $845 million for substance abuse treatment facilities or “sober homes”; and
  • $806 million for other healthcare fraud and illegal opioid distribution schemes across the country.

In another significant action, Universal Health Services, Inc. (UHS) agreed to pay $117 million to settle False Claims Act allegations relating to charges the company had billed for medically unnecessary in-patient behavioral health services and failed to provide adequate and appropriate services.

According to the allegations, between January 2006 and December 2018, UHS facilities admitted federal healthcare beneficiaries as patients even though they were not eligible for in-patient or residential treatment. The government also alleged that UHS facilities billed federal healthcare programs for services not provided; billed for improper and excessive lengths of stay; failed to provide adequate staffing, training and/or supervision; and improperly used physical and chemical restraints and seclusion.

Opioid crisis enforcement highlights

Several enforcement cases involving the on-going opioid crisis were also highlighted in this report.

For example, a San Fernando Valley man was sentenced to 108 months in federal prison in May for leading a conspiracy to distribute opioids through sham medical clinics that “hired corrupt doctors who wrote fraudulent prescriptions to black market customers.”

The defendant was charged in August 2017 along with 12 other defendants in a scheme to divert at least 2 million opioid pills for sale on the black market. In addition to hiring doctors to write fraudulent prescriptions, the individual admitted to stealing the identities of other physicians and issuing prescriptions under the stolen identities. As part of the scheme, the defendant sold prescriptions to black market customers and bulk quantities of hydrocodone and oxycodone. During two-month period, the defendant and his co-conspirators sold fraudulent prescriptions for at least 9,450 oxycodone pills and 990 hydrocodone pills.

In a separate action, Indivior Solutions pleaded guilty to a one-count felony information and agreed to pay $600 million in July to resolve criminal and civil liability associated with its marketing of Suboxone, an opioid addiction treatment drug. The company agreed to pay $300 million to resolve allegations that its marketing of Suboxone caused false claims to be submitted to government healthcare programs.

Leveraging data to assist enforcement & prevention

The OIG conducted a claim and medical record review showing that a significant number of children enrolled in Medicaid were involved with incidents of potential child abuse or neglect. It recommended that the Centers for Medicare & Medicaid Services (CMS) issue guidance to inform states that performing data analysis with diagnosis codes indicating possible child abuse or neglect could help identify incidences of abuse and neglect and ensure the states were complying with their mandatory reporting requirements.

The OIG also found that Medicare Advantage Organization (MAO) encounter data continues to lack National Provider Identifiers (NPIs) for providers in high-risk categories, including those who order or refer durable medical equipment, prosthetics, orthotics, and supplies; clinical laboratory services; imaging services; and home health services. Provider identifiers are essential for ensuring program integrity, and the OIG recommended that CMS require NPIs on all encounter records for high-risk services and reject MAO submissions that do not include the information.

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