Fighting Medicaid Fraud is Focus of Congressional Testimony

With the health care reform debate focused on containing costs, the U.S. House Judiciary Subcommittee on Crime, Terrorism, and Homeland Security held a March 4 hearing to discuss the government’s efforts to combat Medicare and Medicaid fraud. State Medicaid Fraud Control Units (MFCUs) have seen a rapid increase in both the number of fraudulent schemes targeting Medicaid dollars and the degree of sophistication with which they are perpetrated.

MFCUs are the law enforcement agencies primarily responsible for monitoring each state’s Medicaid program. Of the 50 MFCUs that comprise the National Association of Medicaid Fraud Control Units (NAMFCU), 43 are located in the state Office of the Attorney General and seven are located in other state agencies. They have uncovered some of the largest and most sophisticated frauds ever committed against the program.

Assistant Attorney General Mark Collins, director of the Nebraska MFCU and president of NAMFCU, testified before the Subcommittee.

“The Units have seen wave after wave of fraud sweeping through nursing homes and hospitals, clinics and pharmacies, podiatrists, labs, home health care providers and durable medical equipment vendors and, more recently, pharmaceutical companies,” Collins said.

For example:

  • Following a two-week trial, a physician in the District of Columbia was found guilty of one count of health care fraud and 16 counts of false statements in a health care matter for billing Medicaid over $700,000 for procedures and office visits that never occurred.
  • In Alaska’s largest Medicaid fraud case, the owner of a home health care agency pled guilty to a felony count of defrauding the Alaska Medicaid program of over $1.3 million. There were several different schemes involved, including billing for services never rendered and billing for Medicaid recipients who did not qualify for the personal care attendant program. The owner was sentenced to three years in jail with 28 months suspended, 10 years of suspended probation and was ordered to pay $800,000 in restitution.

In addition to fulfilling their primary investigative and prosecutorial functions, the MFCUs work to identify and implement systemic reform initiatives in the administration of the Medicaid program.

“One important feature of the MFCU program is to cultivate close and effective working relationships between state and federal agencies to combat fraud and abuse in the Medicaid programs of the various states,” Collins said. “These cooperative efforts have grown out of the relationship between MFCUs and HHS-OIG [U.S. Department of Health and Human Services – Office of Inspector General], which has oversight over the MFCU program. Medicaid fraud is a crime under both state and federal statutes and may be prosecuted in both state and federal courts.”

The testimony went on to state that cooperative efforts between state and federal authorities are very effective in protecting the Medicaid and Medicare programs from health care providers or vendors who defraud both programs and whose misconduct occurs in multiple states. The multi-state/federal or global cases, in which the Units have participated, have resulted in the recovery of over $5 billion to the Medicaid program.

NAMFCU also encourages states to look beyond their individual state perspective and to participate in global cases. A recent exampleof a state-federal global settlement was with Pfizer, Inc. In September 2009, Pfizer agreed to settle civil and criminal allegations that the company and its subsidiaries paid kickbacks and engaged in off-labeling marketing campaigns that improperly promoted numerous drugs that Pfizer manufactures. This is the largest settlement in history in a health care fraud matter. Pfizer paid the states and the federal government a total of $1 billion in civil damages and penalties to compensate Medicaid, Medicare and various federal healthcare programs for harm suffered as a result of its conduct. All state recoveries are allocated based upon a state’s actual damages. In appropriate circumstances, penalties as well as damages will be sought.

“MFCUs aggressively identify and prosecute, both civilly and criminally, those who seek financial gain at the expense of the Medicaid program,” Collins testified. “By doing so, MFCUs deter health care fraud, identify program savings, and remove incompetent practitioners from the health care system.”

A copy of the written testimony is available here.

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Mark Collins, NAMFCU President