With music thumping in the background of a West Hollywood club, Dustin Warren looked at the person sitting across from him and explained--with almost a hint of shock--how to make $60,000 a month billing Tricare for genetic tests. Unbeknownst to him, a hidden CBS News camera was capturing his sales pitch.
“We were banging them for 12 to 16 grand and we dialed it back to 8,000 because we're like, we're going to get [expletive]. This isn't going to be good for anybody,” Warren told the undercover reporters.
Warren was right. They (and for now we don’t know exactly who “they” are) got… caught, to put it less profanely. CBS exposed a scheme that specifically targeted Tricare because it reimburses the most for genetic tests that screen for cancer. So a Dallas laboratory offered military members $50 Walmart gift cards in exchange for their Tricare information and a DNA sample, and cashed in on the profits.
It’s not good when fraud schemes like this go undetected, but it’s infinitely worse when the guys taking the money are self-regulating their payments more effectively than the program's fraud prevention system. If Warren hadn’t “dialed it back” on his own, Tricare could have lost twice as much.
It’s the second time this kind of issue has been exposed within the Tricare system. You probably remember last year’s scheme in which Tricare paid as much as $545 million for compounded pharmaceutical claims in just one month. By the time Tricare finally cut off the supply with new screening procedures, the program had spent $1.75 billion on pain creams and forced the government to reallocate military funding to cover the deficit.
Similar to the latest genetic testing scheme, pharmacies targeted Tricare because it would practically write providers a blank check for pain creams that, in many cases, had virtually no medical value. Despite the fact that other private insurers stopped reimbursing for the compounded drugs after seeing unusual spikes in reimbursement, Tricare continued paying the exorbitant claims, unfazed.
Tricare has a long history of inadequate fraud prevention. A 1999 report by the Government Accountability Office found that out of 50 million claims processed between 1996 and 1998, Tricare contractors referred just 100 to the Department of Defense based on fraud suspicions. In fact, contractors were not even contractually obligated to identify fraud and abuse concerns.
Since then, DoD has improved its fraud and abuse oversight, establishing the Defense Health Agency in 2013, which included a program integrity division. According to a report released in April, the agency managed 564 active investigations and opened 433 new cases in 2015. Fraud judgements and settlements exceeded $61 million.
Tricare contractors also implemented prepayment reviews to identify questionable or fraudulent billing practices, preventing more than $33 million inappropriate claims last year. However, contractors varied widely in avoided costs associated with prepayment reviews. Humana Military Healthcare Services (South region) reported nearly $26 million in costs avoided, while Health Net Federal Services (North region) and United Healthcare Military & Veterans (West region) reported a combined $5.8 million.
The anecdotal evidence still suggest there’s still plenty of holes attracting high-priced fraud schemes. Last year, the GAO offered up one potential issue when it criticized Tricare’s system for eliminating overpayments. Although the program reported a 0.3 percent improper payment rate--miniscule compared to Medicare’s rate of 10.1 percent--auditors found that unlike the Centers for Medicare & Medicaid Services, Tricare does not examine medical record documentation, but merely reviews the accuracy of each contractor’s claims processing procedures. In fact, auditors noted that the “basic process for reviewing claims has not changed in 20 years.”
The impact of schemes perpetrated against Tricare is threefold: It depletes taxpayer money, but it also raids the country’s defense budget and creates the potential for undue harm to veterans and military members. Unfortunately, until Tricare modernizes its claims review process and implements a better process for preempting fraudulent schemes, it’ll never shake that irresistible target on its back. - Evan (@HealthPayer)