Nearly two-dozen states have adopted statutes increased enforcement
Texas Insider Report: AUSTIN Texas The alleged scam was discovered by Stephani LeFlore an overnight pharmacist at a CVS who noticed that whenever she rang up a dual eligible patient in the CVS-used computer program named RX2000″ and automatically billing the states Medicaid system it dinged Medicaid for a slightly greater price than it would have a private insurer. She figured out pricing scheme the old-fashioned way by calling both Medicaid and the insurers to ask what prices they thought they were getting. The case may have serious policy consequences in Texas too.
CVS Caremarks $17.5 million prescription overbilling settlement with the Department of Justice will likely fuel calls for the FTC to break up the prescription dispensing conglomerate because it restricts drug pricing competition.
The case behind the settlement alleged CVS used the RX2000″ computer program to automatically overbill state Medicaid when certain types of patients ordered prescriptions. CVS was able to do this because as both a dispensing pharmacy and a prescription benefit manager that negotiates with private healthcare insurers it knew how much private insurers reimbursed for prescriptions while Medicaid did not.
Knowing that Medicaid was operating in the dark CVS charged taxpayers more for prescriptions than the law allows.
Aside from exposing the pricing advantage CVS gets because it is both a PBM and a pharmacy it also points out yet another way that taxpayers are ripped off by the system. Because the law prevents Medicaid from negotiating drug prices they way private insurers do it always has to pay more for drugs the case claimed.
Managed-care fraudsters profit by among other means shortchanging patients or physicians to cut costs while at the same time collecting preset fees from the government. They might refuse to enroll unhealthy people skimp on paying doctors deny patients care or any combination of the three.
In Texas where the issue is being debated in the state legislatures Special Session" it has made it easier for regulators to fine those flunking performance standards such as answering calls or paying doctors on time.
But under debate is whether Texas State Rep. Fred Browns effort to improve & protect State Medicaid oversight which appears to be a sticking point as the
HMOs do not want to be held to a fraud standard is adopted.
Browns Floor Amendment 7 calls for changes to Texas Medicaid program that will affect the economic viability of independent pharmacy in Texas. The threat comes from giving health maintenance organizations (HMOs) and pharmacy benefit managers (PBMs) control of patient access to pharmacy services in the Texas Medicaid Vendor Drug Program.
At issue is that state Medicaid agencies are at the mercy of the provider or local neighborhood pharmacy to accurately calculate the assigned benefit of the drug pricing.
In September 2006 after nine months under the new rules Texas collected fines totaling $1.5 million compared with $18000 from 2001 to 2006 said Stephanie Goodman a Texas Health & Human Services Commission spokeswoman.
Rep. Brown a Republican from College Station Texas wants the
Texas Health & Human Services Commission (HHSC) to stop fraud in contracting by taking note of a companys previous actions. Specifically a managed care organization or pharmacy benefit manager (PBM) providing prescription drug benefits for the Medicaid program would be prohibited if in the previous three years it had been convicted of a material misrepresentation or fraud other violations of state or federal law or had been assessed a penalty or fine of $500k or more in a state or federal proceeding
Were watching by land and theyre coming by sea says James G. Sheehan a former federal fraud prosecutor and now New Yorks Medicaid inspector general.
The reality is weve been doing medical provider fraud for a hundred years; weve been doing managed-care fraud for 10 years.
Cutting Red Tape but Causing New Problems
According to data provided by the
Centers for Medicare & Medicaid Services 32 states have turned their Medicaid systems over to HMOs in hopes of cutting through red tape providing better care to needy patients and saving taxpayers money.
But critics now say that the insurance companies tasked with running the new system and improving patient care are actually denying services to those who need them most.
The effect on patients has been having a harder time getting access to the care they need waiting longer for doctors visits and in some cases services being cut
altogether said Jerry Flanagan the health care policy director at the
Foundation for Taxpayer & Consumer Rights.
The insurance industry disputes these claims and points to independent studies that it says show that the quality of care provided to Medicaid recipients improves under managed care systems.
For years however fighting health-care fraud in government programs largely meant policing doctors hospitals dialysis centers and the like to catch overcharges or billing for treatment never provided. Authorities say they are realizing they must become attuned to more-complex scams carried out by sophisticated corporations and cases from
Florida to
California -- many involving publicly-traded companies -- have provided a wake-up call for regulators.
RX2000 took advantage every time a dual eligible" Medicaid patient asked for a prescription the case alleges. Dual-eligible patients are people who have private insurance but who nonetheless qualify for Medicaid as well. For those patients Medicaid should only be charged what the customer would have been required to pay as a co-pay if the customer was only using their private insurance.
But as Medicaid is not privy to the price agreements between insurers and PBMS it does not know what prices private insurers get. CVS as both a PBM and a pharmacy does know that the case claimed.
In reality RX2000 increased the alleged copay whenever a dual-eligible patient showed up. So for a $25 copay on a common drug like Adderall Medicaid was billed $26.75 the case claims.
As the government increases the private sectors role in delivering Medicare and Medicaid services new kinds of fraud are cropping up that are harder to spot more complicated to prosecute and potentially more harmful to patients. Now regulators are belatedly ramping up scrutiny of the managed-care industry which has grown to cover more than 37 million state and federal beneficiaries.
Medicare the federal health-insurance program for seniors and the disabled and Medicaid a joint state-federal program for the needy together cover about 90 million Americans. Managed-care companies typically receive fixed payments per patient regardless of how many services are provided.
States Experience Problems Fraud
As governments turned to managed care to control program costs in the 1990s many believed the move also would rein in fraud. Advocates reasoned that companies would have strong incentives to prevent overbilling by doctors
hospitals and other medical providers -- and to avoid cheating the government themselves.
But a handful of cases around the country illustrate the potential for fraud and authorities growing understanding of its scope.
Ameichoice of
Pennsylvania a UnitedHealth Group Inc. unit in Philadelphia settled allegations they had misled the state about claims and denied some participants care they were entitled to receive.
In
New York officials said in August that the state recouped $7 million from two Medicaid managed-care plans that had collected duplicate premiums for some patients. Now investigators are combing the records of nearly 30 other health plans and finding bills for dead and nonexistent patients; a report is expected later this year.
In
California top executives at now-defunct Tower Health -- once the largest Medicaid HMO in Riverside and San Bernardino counties -- were charged with siphoning $2 million of Medicaid funds meant to pay physicians instead lending it to the family of Chief Executive.
In
Florida more than 200 federal and state agents descended on the Tampa Fla. headquarters of WellCare Health Plans Inc. in October to examine at least in part whether the companys two Florida HMOs -- the states biggest -- reported spending more than they actually did.
While the state requires plans to report how much they spend on mental-health benefits
Florida officials acknowledge they havent routinely checked whether the reports were accurate. From 2004 through 2006 WellCare consistently returning about 4.3 of the $78 million in premiums it received compared with 14.8 paid back by competitors state records show.
The company says it is cooperating with investigators. A spokeswoman declined further comment.
In
California members of the attorney generals office met in December with regulators for Medi-Cal the states Medicaid program to discuss among other
topics how to better police managed-care fraud.
Says Mark Zahner chief prosecutor with the California Bureau of Medi-Cal Fraud and Elder Abuse: How likely is that -- that somebody hasnt figure out how to skin that cat? A Medi-Cal official said the agency hasnt made referrals because it hasnt seen evidence of fraud.
A $330 million jury verdict against Amerigroup Corp. of
Virginia Beach Va. a publicly traded managed-care company catering to government programs shows how some managed-care fraud can play out and the challenges prosecutors face.
In the end a jury found the company liable for more than 18000 counts of fraud.
Legal experts say managed-care fraud cases rely heavily on insiders to bring potential problems to prosecutors -- as happened in Amerigroups case -- though no firm figures on this have been compiled. Federal law offers such plaintiffs a cut of funds recouped through the lawsuits and last year federal fraud suits of all kinds brought plaintiffs $1.45 billion.
Nearly two-dozen states have adopted similar statutes and federal incentives increasing enforcement funds will likely encourage more.
