Amid deep cuts across HHS, Trump’s budget maintains focus on healthcare fraud enforcement

Donald Trump
Given the $70 million proposed increase to federal fraud enforcement programs, Trump is likely to continue efforts with proven ROI.

President Donald Trump’s budget looks to eliminate a global health program, consolidate a national healthcare quality research organization and defund the National Institutes of Health to the tune of nearly $6 billion. One area his administration isn’t touching: healthcare fraud enforcement.

In fact, the Health Care Fraud and Abuse Control program (HCFAC)—which gained significant traction during Barack Obama’s presidency—would receive an additional $70 million in discretionary funding in fiscal year 2018, giving the the program $751 million in discretionary funding. The budget noted that between 2014 and 2016, the HCFAC program returned $5 for every $1 spent on fraud enforcement.

Healthcare fraud attorneys told FierceHealthcare that the additional funding, especially amid more than $15 billion in cuts to other agencies within the Department of Health and Human Services, is a clear signal that healthcare fraud enforcement will remain a priority under the Trump administration.

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“It’s certainly indicative of support for those programs, where other programs have received no bump in funding or proposed decreases in funding,” said Harold Malkin, chair of the investigations and regulatory compliance team at Lane Powell in Seattle. “So, it at least helps to identify clearly that this is a priority.”

The funding increase continues a trend dating back to 2009, in which the federal government has directed significant funding toward the HCFAC program. Over the past five years, HCFAC discretionary funding has more than doubled, from nearly $310 million in 2012 to $681 million in 2016.

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In the past, most of that money has gone to the Centers for Medicare and Medicaid Services to fund the agency’s Fraud Prevention System, a data analytics initiative that CMS claims has saved the federal government more than $1 billion over the last two years. In 2016, for example, more than $535 million in discretionary funding was provided to CMS. Comparatively, the Office of Inspector General (OIG) and the Department of Justice received $67.2 million and $60.5 million, respectively.

“The funding increase shows that this administration seems poised to follow the lead of past administrations in keeping the spotlight on healthcare fraud enforcement,” said Tony Maida, an attorney at McDermott Will & Emory in New York who previously served as a senior prosecutor at the OIG. 

Whether the proposed funding would go towards analytics or additional law enforcement is unknown, although Maida said there is typically a “greater need for more people to act on whatever the data analysis shows.”

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How that will mesh with Trump’s push for a slimmed down government also remains to be seen, but the proposed funding hints that healthcare fraud enforcement will be largely exempt from personnel cuts. In January, Trump issued a 90-day hiring freeze for all federal agencies, at which point the Office of Management and Budget (OMB) will recommend a “long-term plan to reduce the size of the federal government’s workforce through attrition.”

“I think this is a signal that healthcare fraud personnel—whether it’s law enforcement or prosecutors—are not going to be subject to the kind of pressures, in terms of reductions in their workforce, that you’ll probably see at other agencies,” said Gejaa Gobena, a partner at Hogan Lovells in the District of Columbia who previously served as deputy chief of the fraud section in Justice's criminal division.

And unlike other program cuts that are likely to get pushback from lawmakers, HCFAC funding is generally embraced on both sides of the aisle, particularly when the program continues to see a high return on investment. Regardless of where any additional funding is directed, the healthcare industry can expect to continue seeing large-scale busts, like the $1 billion scheme uncovered last year or the coordinated national bust that nabbed more than 300 people.

“They’re able to trace an individual’s involvement in multiple schemes in a way they weren’t able to do before,” Gobena added.