The largest "takedown" to date by the Medicare Strike Force team was announced on June 18, 2015 by U.S. Attorney General Loretta Lynch and the Department of Health and Human Services (HHS) Secretary Sylvia Matthews Burwell. According to Attorney General Lynch, "This action represents the largest criminal health care fraud takedown in the history of the Department of Justice," both in terms of the number of defendants charged and the amount of fraudulent billings. Including the most recent enforcement actions, approximately 900 individuals (involving more than $2.5 billion in fraudulent billings) have been charged in national takedown operations since the Medicare Strike Force was launched in 2007.
The sweeping criminal charges involved 243 individuals for their alleged roles in participating in fraudulent Medicare schemes totaling $712 million in fraudulent billings. The record-breaking takedown, which involved more than 900 law enforcement officials and which spanned over three days, resulted in charges against physicians, patient recruiters, home health care providers, and pharmacy owners, among others. According to the DOJ press release, defendants were charged for fraudulent schemes related to conspiracy to commit healthcare fraud, Anti-Kickback Statute violations, money laundering, and aggravated identity theft.
Individuals were charged and arrested in eight different cities across the U.S., from Miami and Tampa to Los Angeles and New York City. Charges spanned a range of healthcare services including: home, mental and psychotherapy health services; durable medical equipment; physical and occupational therapy, and pharmacy services.
The Centers for Medicare and Medicaid Services (CMS) stated that it additionally, "suspended a number of providers using its suspension authority as provided in the Affordable Care Act."
The Government's efforts at combating fraud and abuse in federal health care programs is only likely to intensify going forward as indicated by comments from Attorney General Lynch, "...In the days ahead, the Department of Justice will continued our focus on preventing wrongdoing and prosecuting those whose criminal activity drives up medical costs and jeopardizes a system that our citizens trust with their lives. We are prepared - and I am personally determined - to continue working with our federal, stated, and local partners to bring about the vital progress that all Americans deserve." Secretary Burwell echoed these sentiments stating that, "This takedown adds to the hundreds of millions we have saved through fraud prevention since the Affordable Care Act was passed. With increased resources that have allowed the Strike Force to expand and new tools, like enhanced screening and enrollment requirements, tough new rules and sentences for criminals, and advanced predictive modeling technology, we have managed to better find and fight fraud as well as stop it before it starts."
The recent actions by the Medicare Strike Force come on the heels of a June 9, 2015 Fraud Alert issued by the Office of Inspector General (OIG) regarding questionable physician compensation arrangements, as well as an announcement that the OIG will be hiring additional attorneys to assist them in their efforts to focus on OIG-initiated litigation involving civil monetary penalty and health-program exclusion cases, including physician compensation arrangements. The Fraud Alert stated that the OIG had recently reached settlements with twelve individual physicians who had entered into suspect medical directorship and other office staff arrangements. The OIG alleged that the compensation paid to the medical directors constituted improper remuneration in violation of the Anti-Kickback Statute in that the compensation took into account the physicians' volume or value of referrals, and did not reflect Fair Market Value for the services to be performed because the physicians did not actually perform the services required under the agreements. The OIG additionally alleged that some of the twelve physicians had entered into certain arrangements by which an affiliated healthcare entity paid the salaries of the physicians' front office staff, thereby relieving the physicians of a financial burden that they otherwise would have incurred and resulting in improper remuneration accruing to the benefit of the physicians.
In issuing the Alert, the OIG warned that, "Although many compensation arrangements are legitimate, a compensation arrangement may violate the anti-kickback statute if even one purpose of the arrangement is to compensate a physician for his or her past or future referrals of Federal health care program business. OIG encourages physicians to carefully consider the terms and conditions or medical directorships and other compensation arrangements before entering into them." Additionally, the OIG emphasized that they considered the individual physicians to be an "integral part of the scheme and subject to liability under the Civil Monetary penalties law," appearing to signal to the physician community that the OIG will hold individual physicians themselves accountable, not just the healthcare enterprises that have contracted with the physicians for these positions. While the Fraud Alert did not necessarily contain anything "new," it highlights the need for the healthcare community, and their legal counsel, to continue to be vigilant in reviewing physician compensation arrangements to ensure that the arrangements are structured in accordance with Fair Market Value compensations for services that are actually rendered and that the compensation does not take into account the volume or value of referrals.
While the OIG Fraud Alert focused on violations of the Anti-Kickback Statute, the Stark Law's prohibitions against physician self-referrals additionally mandates that physician compensation arrangements (medical directorships or otherwise) must be set at Fair Market Value and be commercially reasonable, isolated from the consideration of a physician's value or volume of referrals. Particularly in light of recent False Claims Act qui tam ("whistleblower") actions based on underlying Stark Law violations, all physician compensation arrangements should be reviewed for potential Stark Law violations in addition to potential violations of the Anti-Kickback Statute to in order to ensure that the contracting parties are in compliance.