Another Whistle Blower

by Douglass, Carl;

  The victims of the drug, Mastcakil—who developed such drug related horrors as Torsades de Pointes Syndrome, Stevens-Johnson Syndrome, and agranulocyosis and suffered the wanton disregard for their safety and well-being by the big pharma companies who knew that something was terribly wrong—received lump sum payments over twenty years stemming from a major class action suit won by the litigants. The average victim of the drug or his or her family—thousands of them—ended up with just under one thousand dollars each. The army of attorneys took home north of seven billion dollars.

  Several credible estimates indicate that around 30 percent of health care is unnecessary … [and] 37 percent of medical cost is waste, abuse, and fraud. Various estimates indicate that between $67 billion and $234 billion are lost each year to waste, abuse, or fraud. That is somewhere between $184 million and $630 million dollar loss per day; broken down, that amounts to $63 billion in physician and clinical spending, $12 billion in dental, $100 billion in facility, and $30 billion in pharmacy claims. Waste—directly or indirectly—results in unnecessary costs to the Medicare and other systems. It comes from duplicates, unbundling, and overuse of services such as unnecessary treatments. Examples include: bundling, unbundling, components billed separately, excessive unit thresholds, billing within global surgery periods, incorrect billing based on medical necessity, keystroke errors, and excessive time increments in psychiatric services billing. Waste is generally not considered to be caused by criminally negligent actions but rather the misuse of resources.

  Despite penny pinching that lowers physician reimbursement to the point that many physicians refuse to treat the elderly, Medicare is far from frugal. A non-Medicare recipient with chronic respiratory illness, for example, usually purchases the equipment at retail prices and pays about $100 a month for oxygen tanks with deliveries for three years—about $3,600. However, Medicare rents the equipment and oxygen for three years at a cost of around $8,280—a cost borne largely by American taxpayers. The cumulative cost for such equipment was $1.8 billion in 2006. During the same year the system put out $21 billion on pumps for disabled and elderly men to obtain erections. Medicare paid $450 for the equipment, which is easily available online for $100. A walking cane can be purchased online for about $11, but Medicare pays $20. $20 million each year in waste comes from the federal Vaccines for Children program by failure to refrigerate the vaccines properly—hundreds of thousands of doses.

  Abuse is more serious and involves upcoding and bill splitting. Abusive patterns develop from the fraction of providers who believe that because they provide superior service, have sicker patients, or are unjustly compensated, they are entitled to additional reimbursement. This entitlement—though it may not occur as regularly as patterns found in waste—has the potential for far greater risk of high-dollar losses. Abusive practices include: cosmetic surgeries billed as necessary nonelective repairs, routine overuse of modifiers that exempt claims from editing, and submission of claims for in-network providers using an out-of-network provider ID to increase reimbursement.

  Outright criminal fraud—intentional deception or misrepresentation—involves schemes such as: durable medical equipment claims for services and supplies not provided; using stolen patient IDs to submit claims for services never provided; submitting claims with reimbursement checks to be sent to PO boxes, commercial mail holding businesses, prisons, etc.; referral rings that send patients to providers who bill for unnecessary services or prescribe unnecessary drug treatments, false claims, and identity theft. The NHCAA [National Healthcare Anti-fraud Association] cites an average of 3 percent to 10 percent of the annual $2.5 trillion of healthcare spending is lost due to fraud alone—upwards of $200 billion.

  The Seattle Stateside Dispatch stated that hundreds of billions of dollars were wasted in fraud, including physicians referring patients to their own facilities. The US Government Accounting Office reported that, in 2003, there were identified 114 unauthorized entities selling bogus insurance to 15,000 employers which—after massive legal processes—left $252 million in unpaid claims as a result of frauds. It 2005, US sales of counterfeit drugs were $39 billion. Estimated bogus drug sales were $75 billion in 2010, and the cost rises annually. Counterfeit versions are often deficient in the important ingredients, and worse, actually dangerous.

  There is a mistaken belief that healthcare fraud is a victim-less crime. On the contrary, that type of fraud is the second largest white-collar crime in the United States. Everyone in the US is affected. Fraud causes insurance premiums and taxes to rise across the board; victims are put through unnecessary or unsafe procedures; and many become victims of identity theft and find that their insurance information has been used to submit false claims.

  Pharmaceutical fraud whistleblowers have exposed a vast amount of pharmaceutical criminal activity. Several hundred pharmaceutical fraud cases covering more than 500 drugs are currently under investigation by the US Department of Justice under the False Claims Act. Settlement of the first sixteen pharmaceutical fraud cases—including kickbacks, Medicaid rebate fraud, and best price violations—brought by whistleblowers has returned over $10 billion to the US. Federal law prohibits the fraud of pharmaceutical kickbacks because it colors the judgment of the physician—that is, the physician will prescribe a prescription drug based not on what is best for the patient, but based upon what prescription drug product most increases the physician’s bottom line. Other examples of kickbacks include: offering pharmaceutical kickbacks to physicians in the form of phony drug studies—the “research” performed has no legitimate value, and is merely a pretext for payments for referrals; phony speaker fees paid for by honoraria—some pharmaceutical companies have used “honorarium” fees or “speaker” fees for physician marketing. They are ostensibly compensation to physicians for agreeing to speak at a true educational event; phony grants—pharmaceutical sales representatives have been allowed by certain companies to give “grants” to physicians, physician groups, and other healthcare providers, ostensibly for an educational program or research program; phony investigator meetings—in some pharmaceutical companies, investigator meetings are ostensibly called for physicians to talk about potential nonindicated uses of drugs. Sales representatives are allowed and instructed to spend lavishly on all physicians, both the speakers and invitees. It has been typical for investigator meetings to last only two hours, yet pharmaceutical companies paid for the physicians’ airfare, hotel, golf, spa treatments, etc. at luxury hotels around the country; advisory board and other meetings—these meetings are typically for the ostensible purpose of getting input/feedback from physicians on drug performance, how they treat disease states, etc. During advisory board meetings, honoraria, lavish entertainment, and expenses for physicians are paid for by the pharmaceutical companies.

  Clinical trial fraud is another source of ill-gotten gains for pharmaceutical companies and unscrupulous providers and of unwarranted cost to insurance companies and consumers. Clinical trials sponsored by pharmaceutical companies often do not produce the same results as those conducted by the government and other public entities acting objectively. For example, in an analysis published in the American Journal of Psychiatry, it was found that in every publicly available trial funded by the companies that compared five new antipsychotic drugs against each other, the results of nine out of ten studies concluded that the best drug was the one manufactured by the pharmaceutical company sponsoring the study.

  GMP [Current Good Manufacturing Practice Guidelines] fraud is a practice that frustrates the scientific process, jeopardizes the integrity of the drug product, and creates fraudulent extra costs along with decreased efficacy and safety of drugs. GMP regulations stem from congressional concern over the danger that impure and otherwise adulterated drugs may escape detection under a system predicated only on seizure of drugs shown to be in fact adulterated. Violations of the GMP regulations have been the basis for qui tam—False Claims Act—lawsuits. The costly and dangerous violations include: off-
label marketing; best price fraud; CME fraud—the use of Continuing Medical Education by pharmaceutical companies as a means to influence and induce physicians improperly to prescribe their products, usually newer and more expensive, but not necessarily better medications—unapproved drugs; long-term care pharmacy fraud—fraudulent practices in which drugs are adulterated or repackaged in violation of the False Claims Act; and PBM [Pharmacy Benefit Managers] fraud—illegal relationships between pharmaceutical companies and PBMs violate the False Claims Act.

  Medicare Part D provides additional opportunities for Medicare patients to have access to a less restricted array of beneficial drugs. Part D qui tam False Claims Act violations for whistleblower exposure have been identified, including: billing for drugs not provided; billing for brand name drugs when generics are dispensed; billing for noncovered drugs as covered; billing multiple payers for the same prescription; splitting prescriptions to receive additional fees; failure to apply “maximum allowable cost” pricing to drugs; submitting claims for drugs that have expired; billing for prescriptions with false physician identifiers; billing for drugs dispensed without prior authorization; submitting claims for brand-name drugs when generics were dispensed; and submitting claims for quantities of drugs over approved limits. Manufacturer Part D fraud can also take the form of unlawful kickbacks to either the dispensing provider or the submission of false information in connection with its obligation under the Discount Program Agreement.

  And, pharmaceutical fraud includes such additional practices as: a healthcare provider or pharmacy waives the patient’s copay amount and overbills the insurance plan to recoup the cost; a pharmacy bills for prescriptions that were not dispensed; prescription drug shorting by the pharmacy; i.e., billing for sixty tablets, but dispensing only thirty; a pharmacy adds unauthorized refills to prescriptions; drug diversion; and a pharmacy, beneficiary, or policy holder may forge or alter a prescription. Less often recognized forms of fraud include: a beneficiary or policyholder misrepresenting their personal information such as identity, eligibility, or medical condition in order to receive a benefit illegally; an individual steals or purchases a beneficiary’s or policyholder’s personal information to submit false or phantom claims to obtain the insurance benefit; a beneficiary or policyholder allows a third party to use their benefit information to obtain medication and/or medical services.

  Medical equipment fraud is another source of criminal behavior that ratchets up the cost of medical care in the United States. The fraudulent practices include: failure to report adverse events, off-label marketing, and the provision of financial inducements/kickbacks. The usual origin of the fraud comes from pressure being brought to bear on company employees—particularly sales representatives—to produce results and to cultivate business—irrespective of the actual benefit or cost effectiveness for the patient or the insurance company.

  The specific area of hospital fraud includes: inpatient, outpatient, and cost report fraud. Whistleblower cases related to these forms of violation of the False Claims Act exposing this systemwide fraud are increasing in numbers yearly.

  Inpatient services must be medically necessary and constitute an appropriate level of care. Claims for patient admissions must be medically necessary, and implicit within the payment is that patient discharges are not premature. Claims for inpatients must also avoid upcoding, unbundling of services, or contain duplicates.

  The intentional manipulation of code assignments for outpatient hospital claims to maximize payments and avoid NCCI [National Correct Coding Initiative] edits constitutes fraud. Unintentional misapplication of NCCI coding and billing guidelines may also give rise to overpayments or civil liability for hospitals that have developed a pattern of inappropriate billing. OPPS [Outpatient Prospective Payment System] rules require hospitals to submit claims for all OPPS services provided at the same hospital, to the same patient, on the same day, unless certain conditions are met. The submission of multiple claims for OPPS services delivered to the same patient on the same day may violate the False Claims Act.

  Patient transfers to certain post-acute care settings for certain designated DRGs [Diagnosis Related Groups] must be properly coded so that a hospital will receive a per diem transfer payment, rather than the full DRG payment, or the False Claims Act may be violated. Inappropriate transferring of patients between the host hospital and a hospital-within-a-hospital—such as a rehabilitation center—also runs afoul of the False Claims Act. Other outpatient hospital fraud can take the form of falsely coding hospital-affiliated entities and clinics as “provider-based.”

  Cost report fraud includes improper reporting of “pass-through” new technology and drugs, including costs not related to organ acquisition, and false calculations with regard to GME [Graduate Medical Education] and IME [Indirect Graduate Medical Education] costs.

  -THE END-