On February 26, the U.S. Departments of Justice (DOJ) and Health and Human Services (HHS) released the Health Care Fraud and Abuse Control Program Annual Report for Fiscal Year 2015 (Report). The Report summarizes the fiscal year (FY) 2015 activities and results of the Health Care Fraud and Abuse Control Program (Program), which operates under the joint direction of both departments.
In its nineteenth year of operation, the government won or negotiated over $1.9 billion in health care fraud judgments and settlements, which, together with the efforts of preceding years, netted approximately $2.4 billion during FY 2015. Of the $2.4 billion, approximately $1.6 billion was returned to the Medicare Trust Funds, approximately $386 million was paid to federal agencies for restitution/compensatory damages, and approximately $414.5 million was paid to relators.
With respect to Program funding, after sequestration, the Program received approximately $380 million more in funding in FY 2015 as compared to FY 2014. For every $1.00 spent, the return on investment, calculated on a three-year basis through FY 2015, was determined to be $6.10 (down from $7.70 in FY 2014).
The Report highlights numerous FY 2015 accomplishments in combatting health care fraud, waste, and abuse by multiple agencies and departments, including:
- HHS Office of Inspector General investigations resulted in 800 criminal actions and 667 civil actions, and excluded a total of 4,112 individuals and entities from participation in federal health care programs.
- DOJ opened 983 new criminal health care fraud investigations and 808 new civil health care fraud investigations.
- The Centers for Medicare & Medicaid Services (CMS) initiated a pilot program to measure probable fraud in the home health benefit and began collecting data on probable fraud to establish an estimate of probable fraud within home health agencies. A review team of analysts, clinicians, policy experts, and fraud investigators will review data and determine whether CMS should refer a matter to law enforcement. After the pilot is complete, CMS will consider expanding the effort to other areas.
Additionally, the Report summarizes the results of numerous successful investigations pursued by HHS and DOJ, including:
- A Chief Financial Officer of a regional medical center was sentenced to approximately two years in jail and payment of $4.4 million in restitution after pleading guilty to certifying to CMS that the medical center met meaningful use requirements after being fully aware that it did not meet the criteria for incentives.
- A physician agreed to pay $425,000 and a regional medical center agreed to pay more than $25 million to settle civil False Claims Act (FCA) allegations that they submitted claims to federal health care programs that violated the Stark Law. The government alleged that the system provided excessive salary and directorship payments to the physician and submitted claims for services at higher levels than supported by documentation.
- An $11.5 million settlement was reached with five ambulance companies to settle civil FCA allegations that they engaged in “swapping” kickback schemes by providing deeply discounted and below-cost ambulance services to hospitals and/or skilled nursing facilities in exchange for exclusive rights to more lucrative Medicare referrals.
- An operator of a sham clinic was convicted and sentenced to 15 years in federal prison for fraudulently prescribing anti-psychotic medications, selling drugs on the black market, and then redistributing them to pharmacies. This was the first case in the nation involving an organized scheme to defraud government health care programs through fraudulent claims for anti-psychotic medications.
- A physician-owned dermatology practice agreed to pay $3.2 million to settle civil FCA allegations that its financial relationships with employed physicians violated the Stark Law. The practice routinely required its physicians to use its in-house pathology lab for pathology services, and billed Medicare for analyses performed by the lab on specimens sent by these physicians.
- The first investigation under the Food and Drug Administration Pharmaceutical Fraud Program concluded in 2015 with a net $25 million recovery. This investigation, which began in 2010, resulted in a large, Philadelphia-based prescription and over-the-counter drug manufacturer pleading guilty to “introducing adulterated infant’s and children’s liquid medications into interstate commerce.”
Since the inception of the Program in 1997, approximately $29.4 billion has been returned by the Program to the Medicare Trust Funds. Approximately 55% of that total amount has been returned between 2009 and 2015.