Seven predictions for the future of healthcare fraud enforcement

Over the course of a year, it's easy to lose sight of the big picture. Usually we're so focused on day-to-day tasks and responsibilities, we don't have the time or patience to think about anything more than what's right in front of us.

The end of the year offers an opportunity to catch our collective breath. If anything, it's a simple and effective demarcation--the end of one year and the beginning of another--that allows for a moment of reflection.

For me, the new year offers a chance to look back at the healthcare fraud stories I've covered over the last 12 months. That's when the bigger picture begins to take shape as enforcement trends and fraud concerns emerge with a year worth of stories lined up next to one another.

Read the fine print: I'm not a licensed fortune teller. If I was, I would have guessed the winning lotto numbers a long time ago. More often than not, predictions are an exercise in futility. But they're also fun, so here are my seven predictions for healthcare fraud in 2016.

Hackers will be the next great avenue for healthcare fraud.

Prior to 2015, the largest healthcare data breach was a 2014 hack that exposed the personal information of 4.5 million at Tennessee-based Community Health Systems. Then the Anthem hack happened, compromising information for 80 million people, including the company's CEO.

It was a bit of a wake-up call. If it can happen to the second-largest insurer in the country, it can happen to anyone. From a fraud perspective, it had longstanding consequences that opened up multiple avenues for schemes using stolen information.  

Since that Anthem hack, other healthcare providers and insurers have reported breaches of their own, including one against Healthfirst that was traced back to a criminal fraud scheme. Considering health information is worth 10-20 times more than credit card information (because it can be used to effectuate much more lucrative schemes) it's easy to see how hackers will play a larger role in the fraud landscape.   

The feds will be forced to confront the Medicare Advantage elephant in the room.

The looming concerns surrounding Medicare Advantage risk scores have been building steam for more than a year, and now it seems close to exploding thanks to a lot of grunt work from the Center for Public Integrity (CPI). In February, the Department of Justice (DOJ) requested information from Humana about Medicare Advantage risk scores. By April, six whistleblower lawsuits had been filed citing inflated risk scores, and even more lawsuits were in the pipeline by August, implicating as many as 30 insurers.

Secret government audits exposed over the summer hinted at millions in potential overpayments. Just last month, CPI released another report that showed the Centers for Medicare & Medicaid Services (CMS) held back on auditing Medicare Advantage plans despite finding overpayments as high as $7 billion in 2008.

Senators on both sides of the aisle are getting restless, and this problem is getting too big and too messy to ignore. I wouldn't be surprised to see one or more of these whistleblower suits make more headway in the coming year, perhaps with some government assistance.

Part D fraud will get worse before it gets better.

It's been said that fraudsters follow the money, and the money is in drugs. Now there's a spotlight shining directly on Medicare Part D when it comes to fraud, waste and abuse. If you don't believe me, just ask Glenn Ferry, ex-special agent in charge for the Department of Health and Human Services Inspector General for the Los Angeles regional office. Ferry, who retired in July, called Part D abuse a "financial tsunami" amid reports that Part D spending on commonly abuse opioids has grown 156 percent in the past nine years.  

It's not as though federal investigators aren't aware of these vulnerabilities. In July's historic Medicare fraud takedown, 44 of the 243 people arrested were linked to Part D schemes, and the Office of Inspector General (OIG) has already included Part D in its 2016 Work Plan. Despite any perceived efficiencies within the program, CMS still does not require plan sponsors to report fraud activity, even after repeated requests to make changes to the program.

Right now, plan sponsors are merely encouraged to report fraud information voluntarily, but there isn't much incentive to do so. Until that changes, fraudsters will keep following the cash.

More healthcare CEOs are going to see prison time.

We've seen some tough sentences this year for healthcare administrators involved in fraud. In June, three administrators at Riverside General Hospital in Texas were sentenced to 115 years in prison collectively for orchestrating a mental health scheme that stole $150 million. The hospital's president and his assistant administrator got the toughest sentences, with 45 years and 40 years respectively.

Less than two months later, the infamous Chicago CEO of the now-defunct Sacred Heart Hospital was sentenced to four and half years for paying kickbacks to physicians, which led to unnecessary emergency department admissions and intubations.

My guess is a lot more CEOs involved in fraud schemes are going to find themselves in a jail cell thanks to the Yates memo released in September. The memo outlined the DOJ's plans to target individuals engaged in corporate crimes, by focusing on individual wrongdoing from the outset. Furthermore, according to changes finalized in the United States Attorney's Manual, corporations will only receive credit for cooperating if they are transparent about individual wrongdoing.

If you're skeptical, just look at the warning shot fired by the DOJ when agents arrested the president of Warner Chilcott PLC, a subsidiary of Allergan, just two months after the Yates memo was released. When pharmaceutical executives aren't being saved by a multi-million dollar settlement, you know the government means business.

Physicians who make a lot of money will continue to face scrutiny.

For the first time, we're seeing how CMS payment data--released publically for the first time in 2014--drives fraud enforcement. Some of the highest paid physicians faced legal backlash this year, including Salomon Melgen, whose currently facing fraud charges for $105 million in allegedly improper Medicare payments, and corruption charges along with his longtime friend Sen. Robert Menendez (D-N.J.). Meanwhile, the second-highest paid physician, a cardiologist from Florida, is facing charges that he unnecessarily billed for cardiac procedures, and has since been banned from the Medicare program.

Fair or not, if you're a physician near the top of that annual list--or CMS' drug and device payment list--you might wake up one morning with a target on your back.

Civil claims and corporate compliance will drive recoveries.

This one is too easy not to include. Based on the government's guidance documents, hiring trends and False Claims Act (FCA) statistics, it's pretty easy to see that corporate compliance is going to be a sticking point, and civil cases will be a new pathway for fraud enforcement.

In June, the OIG announced it would be assembling a new 10-person litigation team to focus solely on civil monetary penalties and exclusion cases, which adds a third leg to the government's "enforcement stool," according to Tony Maida, a partner with McDermott Will & Emory LLP who formally served as a senior official in the Office of Counsel to the Inspector General. In October, an OIG official said the government had resolved 110 civil monetary penalties and program exclusions in 2015, and expected even more cases in the coming year, presumably because of this new team.

Last month, the OIG reported that it's receiving nearly half as much in investigative receivables tied to fraud compared to last year, but civil actions have more than doubled over the past four years. In a recent interview with FierceHealthPayer: Antifraud, former U.S. Attorney for the Eastern District of Tennessee, Bill Killian, said civil fraud claims increased five-fold during the five years he was in office.  

On the compliance front, the DOJ issued corporate compliance guidelines that can help organizations identify and prevent fraud, waste and abuse. Then, in November, the agency doubled down by hiring Hui Chen, who has held senior compliance positions in the banking and pharmaceutical industries, as the new compliance counsel aimed at providing a "reality check" for programs throughout the country.

Cardiology fraud prosecutions will outpace all other specialties.

We're already starting to see the beginnings of what could be a long-running string of settlements tied to unnecessary cardiac procedures. In October, 450 hospitals settled with the DOJ for $250 million over allegations that cardiac devices were implanted in violation of Medicare coverage requirements. The settlement came just days after a New York Times story blamed Medicare's fee-for-service payment system for leading three Indiana surgeons to perform hundreds of unnecessary cardiac procedures while the hospital turned a blind eye and pulled in the profits.

Cardiology procedures are a well-worn scab that the government has just started to pick at, thanks to its renewed focus on medical necessity and a small dose of self-policing. With large settlements rolling in against both systems and physicians, we're seeing that scab start to peel and bleed. And with the government intent on reducing the highest improper payments, cardiology is likely to remain ahead of just about every other specialty when it comes to FCA settlements. - Evan (@HealthPayer)

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