Imagining how a 2-for-1 deal could combat healthcare fraud

Cees Klumper is responsible for approximately $4 billion a year used to help more than 100 countries throughout the world fight AIDS, tuberculosis and malaria.

More specifically, Klumper is responsible for making sure those countries use the money that is provided to them for fighting AIDS, tuberculosis and malaria, and not, you know, something else.

In other words, Klumper doesn't have the luxury of hemming and hawing over stolen funds. As the chief risk officer of the Global Fund to Fight AIDS, Tuberculosis and Malaria, he has adopted a unique, uncompromising approach to fraud.

It's the 2-for-1 methodology. Essentially, as Klumper explains in a recent interview with NPR, he approaches government officials who have engaged in fraud and gives them a simple ultimatum: Pay back the stolen funds in full, or the Global Fund will take away twice as much in your next round of grants.

As it turns out, even something as virtuous as AIDS and malaria research is rife with bad actors. In 2011, the Associated Press reported that as much as two-thirds of grants in certain countries were lost to corruption thanks to forged documentation and improper book-keeping. Global Fund investigators found that 67 percent of anti-AIDS funding in Mauritania was misspent, along with 36 percent of the grants intended to fight tuberculosis and malaria in Mali.

Klumper described one scheme to NPR in which officials from Burkina Faso purchased mosquito bed nets from an unapproved vendor at a significantly cheaper price, and then billed the Global Fund for the full amount, approximately $10 million. In some instances, malaria drugs have ended up on the black market, according to the AP.

"Whenever you provide funding to people and ask them to do things, there will always be some people looking for the opportunity to take some of that money for themselves," Klumper told NPR.

Klumper was hired by the Global Fund in 2012 to address fraud within the program. At the time, he was particularly interested in recovering the theft of funds that had plagued the organization in recent years. He quickly realized that when the Global Fund tried to recoup misspent grant money, the government and other non-governmental organizations (NGOs) frequently deferred blame, pointing fingers at a previous regime. Or representatives would stall, telling Global Fund officials that they would have to do their own investigation before paying back any money.

The negotiations and the unaccountability wore on Klumper, so he pitched the 2-for-1 idea to one of his colleagues. By 2014, it was approved by the organization's board.

The method essentially disregards the usual excuses that previous government officials were to blame, and the current regime shouldn't have to pay for the misconduct of long-gone individuals. Klumper says the stern approach has worked, and in many cases its spurned national governments to recoup money from the original fraudsters.

Klumper said he's only had to use the full force of the 2-for-1 penalty four times, reducing funding to Bangladesh, Guatemala, Nigeria and Sri Lanka by $14.8 million. But he tells NPR he wants to take the approach one step further and "name and shame" countries that are forced into this deal.

"Just deducting the amount from the future grants may not be enough, we need to publicize it," he said.

Reading the interview with Klumper, I couldn't help but imagine how that approach might work in healthcare. What if the government was this emphatic about recouping fraudulent Medicare and Medicaid claims?

Take the recent $390 million settlement with Novartis, for instance. The government alleged that Novartis paid kickbacks to pharmacies that boosted prescription sales of a transplant drug called Myfortic and an iron chelation drug called Exjade. Prosecutors originally sought $3.4 billion in damages and fines after calculating that Medicare and Medicaid reimbursed Novartis as much as $500 million for more than 160,000 fraudulent claims.

Using Klumper's methodology, the feds should have asked for the $500 million back, no questions asked. Don't think that's fair? We'll just knock $1 billion off of next year's reimbursement.

It's fun to imagine, but perhaps it's not that realistic in a massive, high-stakes industry like healthcare. It's probably more suitable for a smaller operation--the kind that manages $4 billion and 130 different governments in countries across the globe. - Evan (@HealthPayer)

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