Fraud Grows as Private Managed Care Takes Over More
Medicaid, Medicare Patients
Wall Street Journal looks at new types of fraud; CVS
pays millions for over-billing Medicaid
March 19, 2008 The Wall Street Journal today
asserts that as the government shoves more Medicaid and Medicare
beneficiaries to private sector managed care plans, new types of fraud
are emerging. This report hits on the same day as the report that the
giant pharmacy chain CVS agreed to pay nearly $37 million to settle
claims that it fraudulently billed Medicaid. The WSJ also examined the
growing practice of hospitals to reuse medical devices that have
designated for one time use.
Increase in Medicare, Medicaid Managed Care
Plans Has Led to 'More Complex' Health Care Fraud, Wall Street Journal
Reports
The Wall Street Journal on Wednesday examined how
as the private sector is increasingly providing more Medicare and
Medicaid services, new types of fraud are "cropping up that are harder
to spot, more complicated to prosecute and potentially more harmful to
patients," prompting the federal government to increase scrutiny of
managed care.
States and the federal government began shifting
Medicaid and Medicare beneficiaries to managed care plans in the 1990s
to control program costs, and many believed the shift also would reduce
fraud because "companies would have strong incentives to prevent
overbilling by doctors, hospitals and other medical providers -- and to
avoid cheating the government themselves," the Journal reports.
However, some states reduced the number of health
care fraud investigators, and a recent federal review of health programs
for low-income children found that states mostly rely on HMOs to
regulate themselves.
The Journal reports that traditional fraud
prevention for government programs consisted of "policing doctors,
hospitals, dialysis centers and the like to catch overcharges or billing
for treatment never provided."
CVS to pay $37 million to settle Medicaid suit -
Pharmacy chain accused of switching to more expensive drug
March 19, 2008 CVS Caremark Corp., one of the
nation's largest pharmacy chains, has agreed to pay nearly $37 million
to the federal government, 23 states and the District of Columbia to
settle claims that it fraudulently billed Medicaid for a more expensive
form of a drug used to treat ulcers and heartburn, reports Monifa
Thomas in the Chicago Sun Times.
The settlement announced Tuesday resolves a
whistleblower lawsuit filed five years ago by Northbrook pharmacist
Bernard Lisitza, who also brought similar claims against Omnicare Inc.
in an unrelated lawsuit that was settled for $49.5 million in 2006.
Read the rest of the story
However, according to the Journal, "[m]anaged care
fraudsters profit by ... shortchanging patients or physicians to cut
costs while collecting preset fees from the government," as well as by
"refus[ing] to enroll unhealthy people, skimp[ing] on paying doctors or
deny[ing] patients care." Regulators say "they are realizing they must
become more attuned to more-complex scams carried out by sophisticated
corporations," the Journal reports.
The Journal also profiled several fraud cases in
Pennsylvania, California, New York, Texas and Virginia that "have
provided a wakeup call for regulators" and "illustrate the potential for
fraud and authorities' growing understanding of its scope" (Francis,
Wall Street Journal, 3/19).
Wall Street Journal Examines Cost-Reducing
Practice of Reusing Some Products
The Wall Street Journal on Wednesday examined
efforts by some U.S. hospitals to reduce health care costs by recycling
certain medical devices that have been labeled for single use. According
to the Journal, the practice is legal as long as hospitals follow
FDA regulations for reprocessing devices, such as scissors, clinical
scrubs and sharp blades used by surgeons to cut through bones.
However, the Journal reports that the process,
"which involves shipping devices to reprocessing facilities to be
cleansed, sterilized and tested for reuse, has raised concerns about
safety." Manufacturers of the devices say their products are not
designed to withstand the strong chemicals and sterilization methods
used at reprocessing plants. In addition, devices with porous surfaces
or small gaps could still contain traces of blood, tissue or other
bodily fluids that could transmit viral and bacterial infections,
manufacturers say.
Hospitals, reprocessing firms and environmental
groups say that reprocessed devices are just as safe as new devices
because of modern sterilization methods. Supporters of the practice also
say that recycled devices cost 40% to 60% less and reduce medical waste
at landfills by thousands of tons.
Kenneth Kizer -- a consultant and former
undersecretary for health at the
U.S. Department of Veterans Affairs, who testified last year at a
congressional hearing on the issue -- said the agency could save as much
as $30 million in 2008 by using reprocessed devices.
Kizer said, "Single-use labeling is a real scam for
a lot of devices, and by not using reprocessed devices where possible,
it is wasteful and not environmentally responsive, since these items
have to be disposed of as biomedical waste."
He added, "The reuse of medical devices that are
labeled for single use only is a well-established and safe practice
regulated by the FDA and utilized by most of the top-ranked hospitals in
the country."
In addition, a
Government Accountability Office report released in January that
analyzed eight years of FDA data concluded that there is no evidence
reprocessed single-use medical devices increase health risks for
patients.
As many as 100 single-use devices, or 2% of all
single-use devices, currently are reprocessed for further use.
The Journal reports that while the GAO study "tilts
the debate strongly in favor of reprocessing and opens the door to more
widespread use," device manufacturers "are sticking to their guns" and
are lobbying several states to pass legislation that would require
hospitals and other care providers to obtain "informed consent" from
patients before reprocessed devices are used in medical procedures (Landro,
Wall Street Journal, 3/19).
March 19, 2008 The Wall Street Journal today
asserts that as the government shoves more Medicaid and Medicare
beneficiaries to private sector managed care plans, new types of fraud
are emerging. This report hits on the same day as the report that the
giant pharmacy chain CVS agreed to pay nearly $37 million to settle
claims that it fraudulently billed Medicaid. The WSJ also examined the
growing practice of hospitals to reuse medical devices that have
designated for one time use.