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Seven predictions for the future of healthcare fraud enforcement


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.