Cracking Down on Fraud

DEPARTMENT OF HEALTH & HUMAN SERVICES
Centers for Medicare & Medicaid Services
Room 352-G
200 Independence Avenue, SW
Washington, DC 20201
Office of Media Affairs
THE WHITE HOUSE
Office of the Press Secretary
FOR IMMEDIATE RELEASE
December 13, 2011

Campaign to Cut Waste: Vice President Biden Announces U.S. Will Halt Production of Excess Dollar Coins and Department of Justice Recovered a Record $5.6 Billion in Fraud in 2011

Department of Health and Human Services Takes New Steps to Prevent Medicare Fraud

As part of the Obama Administration’s Campaign to Cut Waste, Vice President Biden today announced the U.S. Mint would suspend the production of Presidential dollar coins for circulation. Today, nearly 1.4 billion surplus dollar coins are sitting in Federal Reserve vaults due to lack of demand for the coins. By halting this unnecessary production, the Administration will save taxpayers at least $50 million per year in production and storage costs. The Vice President made today’s announcement at a Cabinet meeting focused on the President’s commitment to cut waste and eliminate misspent dollars across the Federal government.

The Vice President also announced significant progress in cracking down on fraud, including that the Department of Justice recovered more than $5.6 billion in fraud government-wide in 2011, a 167 percent increase in recovery from 2008 and a new record, and that the Department of Health and Human Services will prevent Medicare fraud by telling prescription drug plans to withhold payment when they see signs of suspicious activity related to OxyContin, Percocet, and other narcotics and painkillers.
Vice President Biden said, “Today’s announcements, from putting an end to the wasteful production of Presidential dollar coins to recovering over $5 billion in fraud, demonstrate the Administration’s continued commitment to cutting waste and protecting taxpayers.”
Halting Production of Excess Dollar Coins
The Vice President and Secretary Geithner announced the Administration’s plan to stop the wasteful production of $1 coins for circulation. In 2005, Congress enacted the Presidential $1 Coin Act, which mandated that the United States Mint issue new Presidential $1 Coins with the likeness of every deceased President. But more than 40 percent of the $1 coins that the United States Mint has issued have been returned to the Federal Reserve, because nobody wants to use them.
As a result, nearly 1.4 billion excess dollar coins are already sitting unused in Federal Reserve Bank vaults – enough to meet demand for more than a decade. But until today, the Mint was on pace to produce an additional 1.6 billion dollar coins through 2016.
To put a stop to this waste the Administration will halt the production of Presidential $1 Coins for circulation. The Administration will still be required, by law, to continue to produce a relatively small number of the coins to be sold to collectors, at no cost to taxpayers. Instead of producing 70-80 million coins per President, the United States Mint will now only produce as many as collectors want. Regular circulating demand for $1 coins will be met through the Federal Reserve Banks' existing inventory, which will be drawn down over time. Overall, this step will save at least $50 million annually over the next several years.
“At the Treasury Department, we’re continuing to work hard in support of President Obama and Vice President Biden’s efforts to cut waste and streamline government,” said Treasury Secretary Tim Geithner. “Putting a stop to the minting of surplus $1 coins represents a significant opportunity to reduce costs and improve efficiency. In these tough times, Americans are making every dollar count, and they deserve the same from their government. We simply shouldn’t be wasting taxpayer money on money that taxpayers aren’t using.”

Cracking Down on Fraud
At the meeting, the Vice President and the Deputy Attorney General announced the Department of Justice (DOJ) recovered over $5.6 billion in total fraud in 2011, an increase of over 167% since 2008. This includes almost $3.4 billion in civil fraud, and over $2.2 billion in criminal fraud. For example, a company called American Grocers was buying expired (and, therefore, deeply discounted) food, altering the dates on the food, and selling the food at a steep markup to the government to serve to American troops serving in Iraq. The owner of the company was sentenced to 24 months in prison, and the Department of Justice reached a $15 million settlement with the company.
Of the $5.6 billion recovered by DOJ in 2011, over $2.9 billion was in health care fraud alone. This was driven in part by unprecedented cooperation between the Department of Justice and the Department of Health and Human Services to detect and halt fraud earlier. Specifically, the Obama Administration has greatly expanded the use of Medicare Fraud Strike Forces, specialized teams of agents and prosecutors who focus on catching health care fraud. The teams monitor Medicare data in real time and work together to prosecute fraud much more quickly than before. It now often takes months, not years, to bring a case to resolution. At the start of the Administration, there were two Strike Force teams. Now, there are Strike Force teams in nine different cities. And they have been effective: in 2008, they brought cases involving $384 million in fraudulent claims. This year, they brought cases involving over $1 billion in fraudulent claims. For every dollar spent on this effort, the Administration has recovered seven dollars.
The Department of Justice has also recovered $15 billion in total fraud since 2009. Some of this money has gone back to states, whistleblowers, or into strengthening important programs like Medicare and Medicaid. Other funds have been returned to the Treasury for deficit reduction. Of the $15 billion recovered since 2009, $8.4 billion was in health care fraud alone.
The Department of Justice also announced they doubled fraud recoveries between 2008 and 2011 in twenty-one states, the District of Columbia, and the Virgin Islands. This includes Alaska, Arkansas, Colorado, Florida, Georgia, Kansas, Massachusetts, Maryland, Michigan, Minnesota, Mississippi, Nevada, Ohio, Oklahoma, South Dakota, Tennessee, Virginia, Vermont, Washington, West Virginia, and Wisconsin, as well as the District of Columbia and the Virgin Islands. In fact, 15 of these states quadrupled recoveries and 19 of these tripled recoveries. Click HERE to see the state by state numbers.
This increase in recovering fraud comes as the Administration is decreasing the amount of fraud that occurs in the first place. Government-wide improper payment rates – which include fraudulent payments and other types of errors – were cut by 11 percent this year, keeping $18 billion in taxpayer funds from going to the wrong people or for the wrong purposes.
“All across the country, the Department of Justice continues to move aggressively to protect the American people from fraud. In this past fiscal year, we recovered more money from fraudsters than ever before, over $5.6 billion,” said Deputy Attorney General James Cole. “These efforts not only send the message that those who commit fraud will be held to account, they also result in more dollars in the national treasury and demonstrate a high rate of return on the American taxpayers’ investment in the Justice Department.”
New Steps to Prevent Fraud with OxyContin, Percocet, and Other Prescription Drugs
As a next step in an aggressive campaign to crack down on Medicare fraud, the Department of Health and Human Services (HHS) will direct all Medicare prescription drug plans to use every tool at their disposal to prevent fraud. Patients sometimes “doctor shop,” visiting numerous doctors to get multiple prescriptions for OxyContin, Percocet, and other painkillers and narcotics. In some cases, these medicines are abused by the patients. In others, patients sell the extra drugs.
OxyContin and Percocet abuse, prescription drug fraud, and so-called “doctor shopping” are major problems. The Government Accountability Office recently reported that “170,000 Medicare beneficiaries received prescriptions from five or more” doctors for drugs that are frequently abused, like OxyContin and Percocet.
While not all of these cases are fraudulent, some are. In 2008, for example, one Medicare beneficiary “received prescriptions for a total of 3,655 oxycodone pills [such as OxyContin]…from 58 different prescribers.”
Today, HHS announced they have urged insurance companies to take every step possible to prevent such fraud. Specifically, HHS’ guidance tells prescription drug plans to withhold payment on suspicious claims, including when enrollees use multiple doctors to obtain painkillers and narcotics. Companies that offer prescription drug plans already process each of a patient’s prescriptions. While HHS generally requires prompt payment, today’s guidance clarifies that if a plan sees signs of suspicious activity, it should withhold payment to pharmacies until it verifies the claim is valid.
This guidance to prescription drug plans also explains how plans can use tools like prior authorization, retrospective medical review, and prescribing for less than 30 days (with the cooperation of prescribing practitioners) to root out fraud and ensure appropriate coverage in Medicare.
“Prescription drug misuse has a serious human and financial cost,” said Health and Human Services Secretary Kathleen Sebelius. “The Obama Administration is making unprecedented strides in cracking down on fraud that contributes to this problem while costing taxpayers dollars. With these actions, we are going to continue to stop fraud before it happens and make sure that those who do defraud taxpayers are held accountable.”

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CMS FACT SHEET
FOR IMMEDIATE RELEASE Contact: CMS Media Relations Group
December 13, 20111 (202) 690-6145

The Obama Administration and Expanded Efforts to Fight Fraud

Today, the Obama Administration announced recovery of over $5.6 billion in fraudulent payments in fiscal year 2011, a 167 percent increase from 2008. President Obama’s health care reform law includes new resources and tools to help fight fraud in Medicare and Medicaid, and to protect taxpayer dollars. In addition, the Centers for Medicare & Medicaid Services (CMS) is taking steps to strengthen controls to identify and prevent prescription drug fraud and abuse in the Medicare Part D program.

CMS released a notice to Part D prescription drug plan sponsors that contains information and guidance to immediately take steps to stop prescription drug misuse and fraud. Pain killers like OxyContin are the fifth most filled classes of drugs in Medicare, with spending in 2009 totaling $3.9 billion. Recently, the Government Accountability Office identified evidence of fraud and drug abuse in Medicare for these types of drugs, which pose a threat to public health as well as the federal budget. Among the messages conveyed to the plans:

Investigate and Stop Payment for Suspect Claims
• Medicare’s requirement that pharmacies receive prompt payment for prescription drugs does not prevent sponsors from investigating suspect claims and withholding payment for fraudulent claims.
• When a sponsor suspects fraud with respect to a particular claim, payment need not be made until the claim has been investigated further to determine that it is not fraudulent.

Use Tools to Help Manage Proper Utilization of Drugs
• Prior authorization requirements are a common tool employed by Part D sponsors to ensure appropriate utilization and coverage under the Medicare Part D program.
• Part D sponsors may implement reasonable prior authorization requirements for drugs, such as opioids, that are more susceptible to abuse and diversion.

Limit Prescriptions to 30-Day Doses
• The guidance encourages Plan sponsors to work with doctors to prescribe less than 30 days supplies for drugs that are more susceptible to abuse or diversion.

CMS has also been proactive in identifying other opportunities to strengthen controls to stop fraud and abuse in the Part D program. The agency is implementing additional controls on the use of prescriber identifiers submitted with Part D claims and has proposed to further strengthen the requirement in 2013. CMS has also considered enhanced drug utilization tools and has engaged Part D sponsors to identify other approaches for appropriately identifying and controlling overutilization of pain medications.

These actions are designed to be transparent to the Medicare beneficiary and should not stop anyone from receiving the medications they need to maintain their health.

These efforts build on significant progress already made by the Obama Administration to fight fraud across the health care sector – progress that has been sped up by resources from the Affordable Care Act, the health care law of 2010. This progress has contributed to the 167 percent increase in fraud recoveries since 2008.

Tough New Rules and Sentences for Criminals

The Affordable Care Act increases the federal sentencing guidelines for health care fraud offenses by 20-50% for crimes that involve more than $1 million in losses, establishes penalties for obstructing a fraud investigation and makes it easier for the government to recapture any funds acquired through fraudulent practices. The law also makes it easier for the Department of Justice to investigate potential fraud or wrongdoing at facilities like nursing homes.

New Resources to Fight Fraud

The Affordable Care Act provides an additional $350 million over 10 years to ramp up anti-fraud efforts, including increasing scrutiny of claims before they have been paid, investments in sophisticated data analytics, and more “feet on the street” law enforcement agents and others to fight fraud in the health care system.

These efforts build on our recently awarded predictive modeling contract under which CMS is using the kind of technology used by credit card companies to stop fraud. Since June 30th of this year, CMS has been using this technology to help identify potentially fraudulent Medicare claims and uncover fraudulent providers and suppliers, flagging both for investigation and for referrals to law enforcement. This new tool allows CMS for the first time to spot suspect claims and take action to stop fraudulent payments before they are paid.

Better Coordination across Government

Many of the Affordable Care Act provisions increase coordination between states, CMS, and its law enforcement partners at the Office of the Inspector General and the Department of Justice.
• The law deters fraudulent providers and suppliers from moving from State to State or between Medicare and Medicaid by requiring all states to terminate anyone who has been terminated by Medicare or by another State.
• Under the Affordable Care Act, CMS must work hand-in-hand with the Office of the Inspector General on suspending payments to suspect providers. CMS is also helping to provide the Office of the Inspector General and the Department of Justice improved real-time data access to enable investigators and law enforcement agents to more quickly detect and prosecute fraud schemes.
• In addition, the Senior Medicare Patrol program, led by the Administration on Aging, empowers seniors to identify and fight fraud through increased awareness and understanding of Federal health care programs. Since the program’s inception, the program has educated over 4 million beneficiaries in group or one-on-one counseling sessions and has reached almost 25 million people through community education outreach events.

Sharing Data across Government

Building on the Obama Administration initiatives to improve coordination across the agencies charged with stopping fraud, the Affordable Care Act requires certain claims data from Medicare, Medicaid and the Children’s Health Insurance Program (CHIP), the Veterans Administration, the Department of Defense, the Social Security Disability Insurance program, and the Indian Health Service to be centralized, making it easier for agency and law enforcement officials to identify criminals and prevent fraud on a system-wide basis. The health care law, and new initiatives like the interagency Health Care Fraud Prevention and Enforcement Action Team (HEAT) Task Force between DOJ and HHS, have already improved access to data for law enforcement. DOJ and OIG continue to benefit from improved access to Medicare data to help identify criminals and fight fraud while protecting patient privacy.

Enhanced Penalties to Deter Fraud and Abuse

The Affordable Care Act provides the Department of Health and Human Services’ Office of the Inspector General (OIG) with the authority to impose stronger civil and monetary penalties on those found to have committed fraud. The Secretary also is provided new authority to prevent problematic providers from participating in Medicare, Medicaid or CHIP. Under the new law:
• Providers and suppliers who lie on their application to enroll in Medicare, Medicaid, or CHIP may be excluded from the programs;
• Providers who identify an overpayment from Medicare or Medicaid but do not return it within 60 days may be subject to new fines and penalties; and
• Providers who are terminated from Medicare, a State’s Medicaid program, or both will be terminated from Medicaid programs in other states.

Enhanced Screening and Other Enrollment Requirements

On January 24, 2011, CMS announced some of the Affordable Care Act’s most powerful new fraud prevention tools, including new screening requirements for all Medicare, Medicaid, and CHIP providers and suppliers. These new rules require all providers to go through licensure checks and subject those who pose higher levels of risk to undergo site visits and in some cases, FBI criminal background checks before being allowed to bill the Medicare program.

One of the most powerful new tools is the new authority to suspend Medicare payments to providers or suppliers while investigating a credible allegation of fraud. The new rules also give the Secretary new authority to impose a temporary moratorium on newly enrolling providers or suppliers in certain geographic areas to prevent or combat waste, fraud and abuse. These new tools are also available to states to enhance their program integrity efforts in the Medicaid program and CHIP. Already, revocations, payment suspensions and enrollment denials have taken place as a result of this increased scrutiny.

Targeting High Risk Entities

The Affordable Care Act also imposes more stringent payment and enrollment requirements to target high risk items and entities. On November 17, 2010, CMS published final rules requiring a face-to-face meeting for Medicare home health and Medicare hospice. On July 12, 2011, CMS published a proposal to expand the face-to-face requirement to Medicaid. CMS also issued a final rule on May 5, 2010 to require providers and suppliers who order and refer certain items or services for Medicare beneficiaries to enroll in Medicare and maintain documentation on those orders and referrals.


New Focus on Compliance and Prevention

Under the new law, providers and suppliers must establish compliance programs ensuring they are aware of anti-fraud requirements and good governance practices and have incorporated these into their operations. Nursing homes are also subject to new compliance and ethics plan requirements. Other preventive measures focus on certain categories of providers and suppliers that historically have presented concerns, including Home Health agencies, Durable Medical Equipment, Prosthetics, Orthotics, and Supplies suppliers, and Community Mental Health Centers.

Raising the Bar on DME Suppliers through Expanded Competitive Bidding and Prior Authorization
As part of competitive bidding, CMS is implementing new stricter requirements for DME suppliers, which have historically presented a high risk of fraud. Last month, CMS announced that it is expanding the DME Competitive Bidding program to an additional 91 areas of the country, including 21 areas that are the result of an expansion of DME competitive bidding under the Affordable Care Act. By 2013, the program will cover 100 areas of the country, and over 18 million Medicare fee-for-service beneficiaries living in these areas can save money through this new program, while continuing to have access to quality medical equipment from accredited suppliers they can trust. The program is anticipated to save the Medicare program and beneficiaries approximately $28 billion over the next ten years. This includes more than $17 billion in savings for Medicare, and over $11 billion for beneficiaries as a result of lower coinsurance and premium payments.

In addition, under a demonstration announced in November, Medicare will implement a prior authorization process for all power mobility device claims in 7 high risk states, guaranteeing that beneficiaries receive access to the services they need but preventing payment in cases where medical need is not established. This will make it more difficult to get fraudulent claims through Medicare’s claims payment systems.