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Medicare News

Feds Recover $2.9 Billion from Health Care Fraud; Cracking Down on Pain Drugs

Medicare drug plans to withhold payment when they see suspicious activity related to OxyContin, Percocet, other narcotics, painkillers

Dec. 14, 2011 - The Department of Justice recovered over $5.6 billion in total fraud in 2011, up 167 percent since 2008, and more than half of this - $2.9 billion – was health care fraud, according to an announcement yesterday by Vice President Joe Biden to a Cabinet meeting focused on the Administration’s effort to cut waste and eliminate misspent dollars.

Deputy Attorney General James Cole added that the Department of Health and Human Services (HHS) will further 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.


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Biden said the record setting fraud recovery 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.

Medicare Fraud Strike Force

Specifically, the Obama Administration reports it 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 works 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 21 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 accountable, 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.”

Steps to Prevent Fraud with OxyContin, Percocet, Other Prescription Drugs

As a next step in an aggressive campaign to crack down on Medicare fraud, 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.”

HHS announced yesterday 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.”

To learn more about HHS efforts to fight health care fraud, visit:

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