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Thursday May 28, 2020
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March 2008 - Volume 4 - Issue 9

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Breaches of Security in Federal Health Programs

The following is an excerpt of an article that appears in the March issue of Compliance Today.

On January 22nd, 2007, a portable hard drive was reported missing by an employee of the VA. The hard drive held up to 1.8 million veterans and doctorsí personal health information, including, but not limited to, billing information and codes for Medicare services. While certainly a black eye for the government, making matters worse is the repeated nature of these security breaches occurring on the watch of such organizations as the VA.

Criminals set on defrauding Medicare have taken advantage of these transgressions, establishing various schemes intended to bilk the government. Fortunately, with the advent of real-time analysis of Medicare billing data and stronger collaboration between federal, state and local enforcement agencies, investigators are becoming more adept at capturing those parties who are defrauding Federal health care programs. These efforts have resulted in numerous indictments, which been handed down in South Florida this past year as part of an ongoing investigation of health care fraud in the durable medical equipment and retail pharmacy business.

What is apparent is that the VAís system of monitoring data is porous enough to allow for multiple breaches over the course of eight months. Although the VA has been cited for its poor handling of notifying those who have been victimized and for its perceived lack of leadership, it is hard to apportion the blame entirely on the VA. Considering the limited resources given to them to combat a seemingly unlimited criminal demand for the information they are entrusted to protect, the VA and similar government entities are fighting from a disadvantaged position.

Prior to the January 2007 theft, the Centers for Medicare and Medicaid Services (CMS) had been involved in attempting to strengthen compliance plans for providers and sponsors participating in the Medicare Program. These efforts to safeguard Medicare beneficiaries have resulted in only intermittent success, partly due to regulations that are difficult to enforce. Techniques such as an increase in random compliance inspections and audits have alerted Medicare providers that enforcement is nearby and is being increased.

Yet, this still has not proven to be enough. In January 2007, the Government Accountability Office (GAO) singled out the CMS for their inability to capture unusual charges being billed out to Medicare. Between 2005 and 2006, it has been estimated that up to $700 million in fraudulently induced payments have been made to durable medical equipment companies alone. In fact, recent estimates suggest that one out of every ten dollars spent for Medicare and Medicaid is lost to fraud.

On June 28, 2007, the CMS announced plans to put into operation a two year project involving the enrollment of suppliers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) into Medicare. The effort paid almost immediate dividends on May 9, 2007, when the DOJ announced 38 arrests resulting from a multi-agency strike force investigation which targeted individuals and health care companies that had established fraudulent Medicare billing schemes.

By being able to track billing information as it was being recorded, investigators can catch criminals in the act. It has long been suspected that executives at medical supply companies would close shop at the first sign of government trouble, only to reopen under new identities. Since the inception of the strike force, real-time analysis and the claims data have helped investigators obtain indictments of both individuals and companies that have billed Medicare for over $142 million.

In the past, individuals or companies simply needed access to certain Medicare information to formulate schemes with patients, physicians, medical equipment companies, pharmacies and others to create false claims that induce payment from Federal health programs. After years of individual agency efforts, a sharing of agency resources has commenced in an attempt to capture those who would defraud Federal health programs. The biggest impact can be felt through the introduction of real-time billing analysis, which can alert authorities of fraud as it is happening. This technique has already shown its effectiveness and now there are plans to expand into high problem areas throughout the nation.

Gabriel L. Imperato is the managing partner of the Fort Lauderdale office of the statewide law firm Broad and Cassel and chairs the Firmís White Collar Criminal and Civil Defense Fraud Group. He can be reached by calling (954) 745-5223 or by e-mail at gimperato@broadandcassel.com.
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