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Distinct enforcement trends emerge following the largest fraud takedown in history


It's been nearly two weeks since the Department of Health and Human Services (HHS) and the Department of Justice (DOJ) announced the largest healthcare fraud takedown in U.S. history. If you're anything like me, you needed all of that time to digest what happened.

It's not that we haven't seen large fraud busts in the past. Last year's 90-person $260 million takedown was certainly exceptional, as was the 89-person, $233 million bust the year before. But both those cases combined don't even come close to the 243 people indicted for schemes worth $712 million.

The joint announcement by the DOJ and the HHS was orchestrated with the same precision as the bust itself, garnering coverage from just about every major publication in the country. Senior officials took the time to make long, aggressive statements about the fraudsters they pulled in. Sure, it was self-congratulatory, but the message was transparent: This won't be the last time we make this kind of announcement.

"In the days ahead, we will continue 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," Attorney General Loretta Lynch said during the press conference. "The Department of Justice is prepared--and I am personally determined--to continue working with our federal, state and local partners to bring about the vital progress that all Americans deserve."

The raw numbers are certainly impressive, but dig a little deeper into the individual indictments highlighted in this takedown and a few distinct trends emerge.

Investigators are honing in on home health and Part D fraud

It doesn't take more than a cursory scan through some of the cases highlighted in this national takedown to recognize that home health and Part D fraud make up the majority of cases. The fact that the feds are focusing on these two enforcement areas is interesting, mostly because the fraud enforcement approach varies.

Home health fraud has been high on the priority list for some time now, so it's no surprise to see these cases take a prominent position in a large-scale bust. It was clear that the feds were already honing in on this industry, gvien the high priced indictments, pleas and sentencings that rolled in towards the end of 2014. Cases in Louisiana, the District of Columbia and Texas ranged from $50 million to $100 million in stolen Medicare funds.

Part D fraud enforcement, on the other hand has been less prevalent. Although the OIG's fact sheet notes that Part D investigations have netted 339 criminal actions in the last three years, two OIG reports released last week criticized CMS for failing to prevent prescription drug fraud. Over the past two years, ProPublica has routinely unveiled ways in which a lack of Part D oversight allows fraud and abuse to go unchecked.

However, nearly 20 percent of the individuals involved the national takedown were linked to Part D fraud, and Lynch specifically pointed to it as the "first large-scale effort to focus on Medicare Part D fraud." You get the sense that this is only the beginning.

The feds are reorganizing their approach

Lynch referred to the fraud bust as a "truly national effort, involving approximately 900 law enforcement personnel." While that statistic is impressive on its own, the fact that the feds utilized resources outside the Medicare Strike Force and the Health Care Fraud Prevention Enforcement Action Teams (HEAT) offers some insight into how investigators and prosecutors are organizing their approach. According to the press release, districts outside of the Strike Force accounted for 82 of the 243 individuals.

That means fraud enforcement is no longer confined to targeted hotspots (although those high-impact areas still make up the majority of enforcement). Put simply, the DOJ's reach is increasing and becoming more effective as it develops and nurtures partnerships with state attorney's offices and law enforcement personnel.

Plus, as Assistant Attorney General Leslie Caldwell said in her remarks, the DOJ is refining its approach to fraud detection, utilizing real time analysis of billing data to speed up investigations.

Finally, as attorney Mark J. Silberman of Duane Morris LLP pointed out in a recent blog post, fraud takedowns are beginning to resemble drug busts (for good or for ill, in his opinion). Investigators are taking a bottom-up approach, working through low-level sources to find the scheme's mastermind. Now, in the same way the feds might announce a large drug bust, the DOJ has thrown in a coordinated press announcement. It's another flourish, added in an effort to bring national attention to healthcare fraud, minus the bricks of cocaine stacked nearby.

Medical professionals are at risk, but so are clinic owners

A number of media outlets focused their attention on the number of medical professionals (46) wrapped up in the fraud takedown. Although it's in an intriguing storyline, it seems the real threat still comes from nefarious owners and operators rather than providers.

In many of these cases, owners and operators of healthcare companies lure nurses or physicians to take part in the scheme. For example, three owners of two medical supply companies in Louisiana were charged with a $38 million scheme involving talking glucose meters. In Michigan, three owners of hospice and home health companies orchestrated a $58.3 million scheme in which they paid kickbacks to recruiters. And in Miami, eight owners of five pharmacies, managed to fraudulently bill Medicare $21.2 million.

As many of these indictments show, physicians, nurses, therapists and other healthcare workers can become easily entwined in these schemes, but, more often than not, there's an owner and operator sitting at the top, pulling the strings.

Ultimately, these nationwide takedowns could become the status quo for fraud enforcement. It draws attention to healthcare fraud issues that frequently lurk in the background of mainstream coverage, and it allows the DOJ officials to take the national stage, appearing powerful and effective. I wouldn't expect them to take their foot off the gas anytime soon. - Evan (@HealthPayer)