October 5, 2018

One Step Forward – One Step Back for Healthcare Fraud

In the ongoing struggle against healthcare fraud, government entities over the course of the last six months have taken one step forward and one step back.


In the ongoing struggle against healthcare fraud, government entities over the course of the last six months have taken one step forward and one step back.

The step forward is the proposed rule by the federal Department of Health and Human Services Office of the Inspector General permitting the state Medicaid Fraud Control Units (MFCU) the use of federal matching funds to identify fraud through the screening and analyzing of State Medicaid claims data.

The new rule found in 42 CFR Part 1007 will allow MFCUs to use Federal Financial Participation (FFP) to cover costs for activities known as data mining. See, State Medicaid Fraud Control Units; Data Mining, 76 Fed. Reg. 14637- 14641 (Mar. 17, 2011) (to be codified as 42 C.V.R. pt. 1007). Data mining refers to the electronic sorting of Medicaid claims through statistical models and intelligent technologies to reveal patterns and relationships in said claims activity and history to identify aberrant utilization and billing practices that are potentially fraudulent. Historically, the burden of analyzing state data has fallen on the MFCUs. With limited resources and technology, the MFCUs had to depend on referrals from other MFCUs or outside sources regarding potential fraudulent activity. By allowing MFCUs to claim FFP, the state entities will be able to conduct more efficient data mining with better technology. This will enhance the MFCU’s ability to identify early fraud indicators and detect emerging fraud and abuse schemes and trends. The federal government believes that allowing the MFCUs to participate in FFP it will allow MFCU to marshal their resources more effectively and take full advantage of their expertise in detecting and investigating Medicaid fraud. Id. at 14638.

Coupled with the Medicaid Fraud Strike Forces and HEAT task forces discussed in an early blog, it looks like the government has placed a high priority on detecting, investigating and putting a stop to Medicaid fraud. These actions have the potential to save the taxpayers a lot of money as the rampant fraud existing today costs millions of dollars each year. Perhaps then the Medicaid program can focus on its primary objective – providing quality health care to those citizens most in need.

The one step back was taken by New York Governor Andrew Cuomo when he recently asked for James Sheehan’s, the state’s first Inspector General for New York’s Medicaid program, resignation. Mr. Sheehan, appointed by former Governor Eliot Spitzer had come to New York from the United States Department of Justice’s Philadelphia office with an impressive resume of prosecuting healthcare fraud matters, handling over 550 matters, as well as managing all civil litigation for the federal Eastern District of Pennsylvania. The Corporate Crime Reporter in its July 18, 2011 article titled, “Why Did Andrew Cuomo Get Rid of James Sheehan,” noted that with Mr. Sheehan at the helm, New York State in 2008 recovered more than 550 million from Medicaid fraud. According to this article, that was double the goal set for the state. See, “Why Did Andrew Cuomo Get Rid of James Sheehan,” 25 Corporate Crime Reporter, July 18, 2011 available here.

So why did the Governor ask for the resignation of such a highly successful civil servant? Bluntly stated, the health care lobbyists pressured him into it. The hospital and pharmaceutical industry complained, a lot apparently, that Mr. Sheehan was too aggressive. Too aggressive against companies that routinely defraud the government health care programs, programs that provide health care to those people who otherwise could not afford access to such care? Sadly, Mr. Sheehan’s success could not withstand the hospital and pharmaceutical industry’s lobbying efforts. It will be interesting what Mr. Sheehan’s successor will accomplish.”

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