822% Healthcare Fraud. Office of Medicaid Fraud and Abuse Control

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1 Office of Medicaid Fraud and Abuse Control Michael E. Brooks, Executive Director Office of Medicaid Fraud and Abuse Control Office of the Attorney General Healthcare Fraud The problem is so large that at its current growth rate, many experts in the industry, including CMS and the NHCAA, have projected healthcare fraud, waste, and abuse to rise as high as $330 billion by George Lazenby From Prosecutions for healthcare fraud increased in the US by 822% 1

2 Fraud Prevention and Prosecution is Essential and Successful Over $260 million in civil recoveries since January 2008 Intervention in federal lawsuits to obtain restitution for Kentucky s Medicaid Program Every $1 the Federal Government Invests in Medicaid Fraud Prevention and Prosecution Resulted in a Savings of approximately $1.55 Every $1 the Commonwealth of Kentucky Invested in MFCU in 2011 Resulted in a Return of approximately $8.25 Medicaid Title XIX of the Social Security Act State run program, jointly funded by federal and state funds, to provide medical care to economically disadvantaged Federal share determined annually by comparing state s average per capita income to the national average income Ranges from 50 to 83 percent Medicaid Fraud & Abuse Control Unit Federal law requires each state to have a MFCU or to provide a waiver to the Secretary of HHS 49 states and the District of Columbia have MFCUs Kentucky MFCU began in

3 Medicaid Fraud & Abuse Control Unit 44 MFCUs are in the Office of the Attorney General 6 are in other state agencies such as the State Police MFCU Jurisdiction Investigate and prosecute healthcare provider fraud in the Medicaid program. - Fraud in the administration of the program - Recipient fraud investigated and prosecuted by KY HFS OIG / Commonwealth and County Attys. MFCU Jurisdiction Identify overpayments made by the program to Medicaid providers and attempt to collect overpayments or refer for collection Work with KY HFS. Can bring civil actions against providers. 3

4 MFCU Jurisdiction Review and investigate complaints of resident abuse or neglect in healthcare facilities receiving Medicaid funding May investigate abuse or neglect of Medicaid patient in non-medicaid facility. MFCU Jurisdiction May review complaints of misappropriation of resident s private funds in facilities By facility personnel only. May not investigate misappropriation of funds by family members or others. Extended MFCU Jurisdiction Ticket to Work and Work Incentive Improvement Act (1999), P.L Authorized MFCUs to: - investigate and prosecute fraud involving other federally funded healthcare programs where there is a Medicaid nexus (e.g., Medicare) 4

5 Extended MFCU Jurisdiction Investigate and prosecute resident abuse and neglect in facilities not receiving Medicaid funding While both additional authorities are optional, OIG must approve cases involving other federally funded programs Kentucky MFCU Jurisdiction I. Provider Fraud -Prosecuted under KRS 194A.505 Prohibited Activities -Prosecuted under KRS Fraudulent Acts -MFCU has original jurisdiction to prosecute -21 indictments and 21 convictions in 2011 II. Patient Abuse and Neglect -Medicaid patients and/or Medicaid facilities -Prosecuted under KRS (2)-(4) -Commonwealth Attorneys have original jurisdiction to prosecute -17 indictments and 18 convictions in 2011 III. Civil Cases -AWP Litigation -Global Settlements Federal Regulations 42 C.F.R Statewide prosecutorial authority options: Direct MFCU prosecutors Local prosecutors Federal prosecutions 5

6 Federal Regulations 42 C.F.R MFCU must be independent of the Medicaid agency No Medicaid agency official has authority to review Unit activities No state Medicaid agency funds go to MFCU or vice versa Federal Regulations 42 C.F.R Staffed by Investigators, Auditors, & Prosecutors One or more attorneys with experience in the investigation and prosecution of civil or criminal fraud Senior investigator with substantial experience in commercial or financial investigations One or more experienced auditors capable of reviewing financial records Must work Medicaid matters exclusively. KY MFCU Director Assistant Director / Litigation Manager Investigative Manager Investigative Supervisor 5 attorneys 9 investigators 3 auditors Nurse / Certified Medical Coder Nurse 2 administrative assistants 6

7 MFCU Interactions with the Medicaid Program (42 CFR ) The Medicaid program must: (1) Refer all cases of suspected fraud to the MFCU (2) Promptly comply with a request to: a. be given access to and be provided free copies of agency records kept by the agency b. be provided computerized data (without charge and in the form requested by the MFCU) MFCU Interactions with the Medicaid Program (42 CFR ) c. Be given access to any information kept by providers which is accessible by the agency (3) Initiate any available administrative or judicial action to recover improper payments to a provider upon referral from the MFCU Payment Suspension Regulations Affordable Care Act (ACA) prohibits payment by the Medicaid program of federal financial participation (percent of state Medicaid funding that comes from federal government) when the state fails to suspend payments to a provider when an investigation is pending of a credible allegation of fraud. Credible allegation of fraud is defined as one that has been verified by the state and has some reliability from any source. Allows for continuation of payments if there is a certification that suspension of payment would hinder a law enforcement investigation. 7

8 Sources of fraud referrals include: Fraud hotline complaints Claims data mining Referrals from other state agencies Provider audits Civil false claims cases Law enforcement investigation Provider Exclusions (42 USC 1320a-7 and 42 CFR 1001 et. Seq.) Mandatory: Criminal conviction related to health care delivery... or... Conviction related to the neglect or abuse of a patient in connection with the delivery of health care services Minimum 5 years Provider Exclusions (42 USC 1320a-7 and 42 CFR 1001 et. Seq.) Permissive: Derivative or nonderivative results from actions by a court, licensing board or agency. 8

9 Civil Litigation AWP Litigation Filed lawsuits against 47 pharmaceutical companies in Allegation that they were causing false prices to be reported to Medicaid so that providers would receive higher reimbursement Companies would in turn get a larger market share AWP Trials Sandoz (June 2009) $16,000,000 jury verdict (state & federal) $11,164,000 fines under CP (state) AstraZeneca (September 2009) $14,720,000 jury verdict (state & federal) $5,391,000 fines under CP (state) GSK (November 2009) $662,000 jury verdict (state & federal) $5,828,500 fines under CP (state) Settled post trial for $3.75 million Watson (November 2011) Jury verdict for the defense 9

10 AWP Settlements Date Defendant Medicaid Recovery (State & Federal) 05/2009 Boehringer $4,500,000 08/2012 Teva $9,999,999 01/2011 Schering/Warrick $6,750,000 03/2011 Alpharma $10,200,000 05/2011 Mylan $6,500,000 03/2012 Merck $6,000,000 Total AWP Medicaid recoveries including jury verdicts, fines and settlements: $111,319,999 (Federal & State) Global Recoveries Teams from the National Association of Medicaid Fraud Control Units (NAMFCU) negotiate on behalf of the states Kentucky MFCU reviews the agreement and decides whether to sign on Kentucky members have served on global teams Global Recoveries CY 2011 Defendant Medicaid Recovery State & Federal GSK (Kytril, Avandamet, Bactroban) $8,463, Forest Laboratories, Inc. (Lexapro, Celexa, Levothroid) $3,173, Eisai Inc. and $132, Elan Corp. (off-label promotion of Zonegran) $1,306, Ortho-McNeil Pharmaceutical, Inc. (Topamax) $1,967, Total Global Recoveries CY 2011 $17,498,

11 Examples of Provider Cases Doctor who fails to provide services Ambulance company that bills for transportation not provided Doctor who is an over-prescriber Pharmacist who is billing for name-brand drugs, but dispensing generic drugs Home health agency is billing for licensed physical therapists, but is actually furnishing unlicensed individuals who clean the patient s home Managed Care A mechanism for the delivery and payment for health care services A capitated system through which contracted, medically necessary services are provided to members The addition of extra layers in a healthcare system When the government contracts to pass the risk of loss for Medicaid services from Medicaid to a private entity Kentucky turns to Managed Care to Balance Medicaid The Murray Ledger & Times (7/8/11): Faced with a growing financial burden, Kentucky is turning to managed care organizations to run Medicaid, the $6 billion government program that provides health care to more than 800,000 poor, elderly and disabled residents. Gov. Steve Beshear said Thursday that the change could save $375 million in the state's General Fund over the next three years and potentially $1.3 billion overall. The governor said the shift from a purely government-run program will not only save money but provide improved medical care to the state's Medicaid recipients. 11

12 Before managed care Fee-for-Service was primarily the way health claims were paid The patient would go to the doctor The doctor would bill Medicaid Medicaid would pay the doctor Managed Care The Overview SSA contracts with a Profit making entity, a Managed Care Organization (MCO) Contract covers specific services MCO agrees to be financially responsible for those services for the Beneficiaries SSA pays the MCO a capitated fee (set amount per person/per month) 12

13 After managed care The patient goes to the doctor The doctor submits proof of the service to the MCO The MCO has already received money from Medicaid The MCO pays the doctor, and keeps either a cut or any left-over money it received from Medicaid MCO Ohio Firm To Pay $26 Million To Settle Allegations Of Medicaid Fraud. The Columbus (OH) Dispatch: (2/2/11) "A Daytonbased managed health care company agreed today to pay $26 million to settle allegations that it defrauded Ohio's Medicaid program. The firm, CareSource, which provides managed care benefits to Medicaid recipients in Ohio and other states, was accused of failing to provide required screenings, assessments, and case management for special-needs children and adults and submitting false data to make it appear as they had which allowed them to be reimbursed for services." 13

14 Florida-Based Wellcare Health Plans Agrees to Pay $137.5 Million to Resolve False Claims Act Allegations WASHINGTON (4/3/2012) WellCare Health Plans Inc. will pay $137.5 million to the federal government and nine states to resolve four lawsuits alleging violations of the False Claims Act, the Justice Department announced today. WellCare, based in Tampa, Fla., provides managed health care services for approximately 2.6 million Medicare and Medicaid beneficiaries nationwide. The lawsuits alleged a number of schemes to submit false claims to Medicare and various Medicaid programs, including allegations that WellCare: falsely inflated the amount it claimed to be spending on medical care in order to avoid returning money to Medicaid and other programs in various states; knowingly retained overpayments it had received from Florida Medicaid for infant care; and falsified data that misrepresented the medical conditions of patients and the treatments they received. engaged in certain marketing abuses, including: cherrypicking of healthy patients in order to avoid future costs; manipulated grades of service or other performance metrics regarding its call center; and operated a sham special investigations unit. Kentucky Managed Care 960,776 Medicaid enrollees 92% or 884,663 in Managed Care Long-term care and waivers exempted KY MCOs: Coventry Cares of Kentucky 208,218 Kentucky Spirit Health Plan 212,520 WellCare of Kentucky 121,187 PassPort Health Plan 170,000 14

15 Fighting Fraud Under Managed Care MCOs are required to have a Program Integrity Unit (PIU) PIUs identify and refer fraud or abuse to DMS (state agency); can also conduct preliminary investigations PIUs coordinate and cooperate with MFCU and USAO MCOs attend quarterly meetings with DMS and MFCU Kentucky Managed Care Passport Health Plan/AmeriHealth Mercy Health Plan AMHP is the third party administrator for Passport AMHP falsely reported its HEDIS score for Cervical Cancer Screening to achieve certain goals Resulted in a bonus payment of $677,000 AMHP agreed to pay $2,032,758 in damages Settlement also required AMHP to put procedures and personnel in place to ensure that all reports sent to DMS, including HEDIS scores, are fully and completely accurate in the future Kentucky Managed Care Issues in Fraud Investigations and Prosecutions What is incentive for MCO to find fraud within a MCO? Who gets the money? The development of best practices by MFCUs because MCOs are different in every state. Who is covered. What is covered. Changes in coverage. 15

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