Health Insurance Companies and Health Care Fraud

Handling Whistleblower Cases Nationwide from Newport News, Virginia

The Federal Government and several major health insurers have recently announced a partnership that will take unprecedented steps to eviscerate fraud from the health care industry.  The two sides will share raw data, as well as investigative knowledge and expertise, as they aim to shut off billions of dollars in questionable payments made by the health care system each year.

While insurance companies grudgingly adhere to the requirements of President Barack Obama’s health care overhaul law, industry leaders point out that combating fraud remains atop the list of priorities.

“What’s in it for us is that if you have more data, you are going to be able to recognize aberrant patterns more reliably,” stated Dr. Richard Migliori, an executive vice president of the nation’s largest insurer, UnitedHealth Group. “These perpetrators are moving around from one place to another. You are going to have more eyes on them and they are going to feel surrounded.”

The process is in the early stages of development and lacks a formal budget, but potential methods of fraud detection include sharing information on new fraud schemes as they arise, using claims data to catch false payments, and utilizing computer analysis to spot emerging patterns of fraud. A “trusted third party” would evaluate data from Medicare, Medicaid, and private health plans, and would turn questionable records over to insurers and/or government investigators for a closer look.

Healthcare fraud has run rampant in the past four years, becoming a significant source of government revenue. In 2009, two pharmaceutical giants paid a steep price for fraudulent practice: Ely Lilly & Co. settled for $1.4 billion, while Pfizer, Inc. was struck with a $2.3 billion penalty. Amgen Inc. announced late in 2011 that it had reached a settlement worth $780 million in a case involving illegal marketing practices and state Medicaid investigations. In May 2012, Abbott Laboratories Inc. settled for $1.6 billion over the unlawful promotion of a prescription drugs for uses not approved by the FDA. On July 2, 2012, health care heavyweight GlaxoSmithKline agreed to plead guilty to criminal charges alleging that the company promoted certain drugs for unapproved uses, failed to report drug safety data, and falsely reported drug prices. What resulted was a settlement of $3 billion, the largest in U.S. history. Finally, in mid-July, Johnson & Johnson agreed to pay a $2.2 billion settlement in a case regarding unlawful kickbacks of certain drugs. Overall, the Department of Justice has recovered more than $10 billion since 2009 in cases regarding healthcare fraud.

But while the False Claims Act facilitates massive government recoveries, healthcare fraud that goes undetected has never been more costly. By some estimates, fraud consumes as much as 10 percent of total health care expenditures. Experts believe this rate will rise in the near future, along with total health care expenditures, which could exceed $4.14 trillion by 2016. Fraud is estimated to cost Medicare alone roughly $60 billion a year, and enrollment in both Medicare and Medicaid have surfaced to record highs. According to the FBI, 2,690 health care fraud investigations were pending at the end of 2011, many of which may, or already have, lead to False Claims Act lawsuits.

The latest episode of government-sponsored fraud protection will more than likely have a greater impact than previous efforts. In summer 2011, Medicare unveiled a $77 million computer system designed to expose patterns of fraud at an early stage. By the end of the year, the system had stopped only one suspicious payment from going out, for $7,591.

Of course, the new public-private collaboration sparks debate. Privacy advocates may object to extensive scrutiny of claims records, and doctors conventionally stand against computerized monitoring of their practice patterns. In addition, widespread involvement in the program may create a potential liability. “The government has great intentions but I am concerned when I see so many involved companies,” stated Kirk Ogrosky, a former top Justice Department health care fraud prosecutor who is now with the law firm Arnold & Porter. With so many participants, the threat of conflicting interests arises, and Ogrosky feels it may be best to “listen to people who know what they are doing and let law enforcement work.”

Officials behind the project state that they hope to start producing results by the start of 2013, but access to claims data may take longer to work out due to privacy and legal concerns. Formal working meetings are scheduled to begin in September of this year.

Industry support for the project includes America’s Health Insurance Plans and Blue Cross and Blue Shield, the two major trade groups, as well as individual companies such as UnitedHealth Group and WellPoint, Inc. Law enforcement members include the FBI, the Department of Justice, the Health and Human Services Inspector General’s Office, and state fraud control units.

If you are aware of any type of health care fraud, or other government fraud, feel free to contact us for a free confidential consultation