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Accountable Care May Mean Less Fraud Too


The lead story in Friday’s Boston Globe was about a “massive change” coming to the Commonwealth’s Medicaid program, known as MassHealth.  As many of you know, Medicaid is the federal health insurance program for the impoverished that is jointly funded by the states and the federal government but administered by the states.  So there are 50 Medicaid programs, each run a little differently from each other, based upon local conditions.



What was news on Friday was the federal government’s approval of an overhaul of MassHealth, shifting from the traditional “fee for service” mode of payment, where a doctor submits a bill to MassHealth for a service he/she has rendered, to an “accountable care” model, where doctors and hospitals are given a set amount of money to care for a population of patients with complex medical needs.  (Private health insurance companies and Medicare have already taken steps in this direction.)



This overhaul has two aims in mind:  improvement of patient care and cost accountability, both laudable goals.



But there’s another point here that the article missed that I think should be mentioned:  this accountable care model could decrease fraud and abuse in the health care system.



Why so?



Health insurance programs, particularly the Medicaid and Medicare programs, are run on “honor systems” whereby claims are paid before being fully verified.  There are millions of claims per day to the Medicare and Medicaid systems, and the program would break down if every claim had to be fully verified before being paid.  So the programs pay the claims and chase problems later, the so called “Pay and Chase” model.  Well it turns out that the combination of “fee for service” and these honor systems creates a kind of perfect storm for fraud.  It’s just too easy to do.  Pad a claim here, up-code a claim there; pretty soon it’s real money.  Tens of billions per year by the time you add it all up.



By taking out the fee for service component of some of these reimbursement formulae, we remove a lot of the built-in temptation for fraud.  In other words, when it’s easy for providers to over-prescribe and increase their levels of compensation, it will happen.  By providing incentives to avoid over-prescribing, you slow down the temptation to pad bills and engage in self-enrichment behaviors.



This will be interesting to watch.  Health care is complicated.  Thwarting the pernicious creep of fraud and abuse is complicated, too.  But perhaps this notion of “accountable care” will turn out to have another layer of accountability:  a slowdown in health care fraud and abuse.


OxyContin Marketing: Peddling Opiates for Profit


This fall, whistleblower attorney Bob Thomas has again been teaching as an adjunct professor at BU Law School, offering a course on Health Care Fraud and Abuse.  As the title suggests, the course is about the many ways in which the government health care reimbursement systems such as Medicare and Medicaid are gamed by fraudsters, and what’s being done about it.


One of the more interesting aspects of teaching a course in this area of the law is the dynamic nature of the subject matter.  Each year the syllabus must be updated because of amendments to laws like the False Claims Act or regulations under statutes like the Food Drug and Cosmetic Act (dealing with misbranding and off-label marketing, among other things), and case law interpreting new issues being litigated (such as the Supreme Court’s recent Escobar opinion).   The course also shows students why it’s important to read the news and to pay attention to the many ways the content of the course intersects with real life issues in front of us.


This week was a perfect example.  What would normally have the potential to be a fairly dry topic (“Remedies:  exclusion and debarment, and corporate integrity agreements”) evolved into something directly connected to an evolving news story.


As a case study on corporate officers being excluded from the Medicare and Medicaid programs after pleading guilty under the “responsible corporate officer doctrine,” students were asked to read the 2010 Friedman case from the district court in D.C., in which Judge Huvelle upheld lengthy periods of exclusions for three high ranking officers of Purdue Pharmaceuticals, Inc.  The Purdue settlement in 2007 was a blockbuster at the time:  $634 million in civil damages and criminal fines, criminal pleas by a subsidiary and three corporate officers, tens of millions in personal fines against the officers, and a corporate integrity agreement imposed against the company.  Why?  Because the company irresponsibly (and criminally) marketed its highly addictive painkiller OxyContin as safe and non-addictive, and as a reliable substitute for other non-addictive painkillers.  This behavior is credited by many observers as a key driver of our current opioid epidemic.  The investigation of the company started in 2001 and lasted several years, covering the marketing schemes going all the way back to the 1990’s.


Well right on cue, just as the class was evaluating the many aspects of this “global” (civil, criminal, and administrative) settlement, Purdue Pharmaceuticals was right back in the news.  First, the always provocative but usually spot-on John Oliver took the company to task for ignoring patient safety and for fueling the opioid epidemic.  Then, this morning on the front page of the Boston Globe, another article appeared about Purdue and its marketing of OxyContin, showing how the company manipulated pharmacy benefit managers (“PBMs”) to remove limitations on physicians’ prescription-writing abilities for the drug.  This latter scheme was not part of the government’s 2007 prosecution of the company, but may be the subject of future lawsuits, according to the article.  With a huge public health crisis in the works and a flourishing black market for its addictive painkiller, it seems Purdue just couldn’t say no to schemes to get its product into as many hands as possible.  With sales rep bonuses as high as five times their base salary, the message was clear:  Sell, Sell, Sell.  Lost in that emphasis was the horrible toll this would take on patients, some of whom would injure themselves intentionally to be able to obtain further prescriptions of OxyContin.


For the BU students, it was a perfect example of one of the recurring themes of the course:  Do any of these remedies really slow down fraudsters?  If not, what should we be doing differently?