Recent Pronouncements May Foreshadow Surge In Government Pursuit Of Health Care Fraud

Posted On Monday, October 12, 2015

The DOJ’s $69.5 million settlement with North Broward Hospital District and $115 million settlement with Adventist Health System (both relating to allegations of fraud and abuse), on the heels of DOJ’s release of its September 9 memorandum on Individual Accountability for Corporate Wrongdoing, provided health care executives with further warning about the government’s widespread strategies to curb fraud and abuse in health care. While the DOJ’s September 9 memorandum has made significant news since its announcement, a less heralded piece of correspondence may be an important driver in the way HHS pursues allegations of fraud and abuse.

In a previously undisclosed letter, dated February 26, 2015, OMB Director, Shaun Donovan, called upon HHS Secretary Sylvia Burwell to be more aggressive in preventing improper payments to Medicare and Medicaid health care providers. The existence of Director Donovan’s letter was first reported on by NPR and the Center for Public Integrity.

Citing HHS’s FY 2014 report of improper payments, totaling $12.2 billion in the Medicare and Medicaid programs, Director Donovan urged Secretary Burwell to work with his office to “continue to explore new and innovative ways to address the problem and continue to attack the challenge with every tool at our       disposal. . . .”

In the letter, Director Donovan also instructed Secretary Burwell’s agency to “re-examine improper payment reduction strategies on a number of fronts” through the use of the recently revised OMB Memorandum M-15-02, Appendix C to OMB Circular A-123, Requirements for Effective Estimation and Remediation of Improper Payments.  Appendix C details agency requirements for effective estimation and remediation of improper payments and is a direct result of the enactment of the Improper Payments Elimination and Recovery Improvement Act of 2012.

Director Donovan set a date of April 30 for the completion by HHS of a “comprehensive corrective action plan” that “describes the problem’s root causes, establishes critical path milestones to meet improper payment reduction targets”.  Director Donovan also asked for a plan to improve the integrity of the Affordable Care Act insurance programs by May 31, 2015.  According to the reporting of NPR and CPI, it is unclear if the requested documents were ever produced.

In his letter, Director Donovan posed to Secretary Burwell several self-reflective questions, including “[h]ow has your agency advanced data analytics and improved technology to prevent and reduce improper payments?”  This question coupled with many of the requirements set forth in Appendix C to OMB Circular A-123; suggest a more aggressive approach in the offing.  Appendix C includes guidance that states:

“Agencies should refer matters involving possible fraudulent activities to the appropriate parties as determined by specific agency policy.  Such parties may include, but are not limited to, the Office of Inspector General or the Department of Justice.”

This tone, combined with the DOJ’s recent pronouncements regarding pursuit of individuals, suggests that the recent wave of large financial settlements with the DOJ may be a foreshadowing of the government acting even more aggressively in pursuing claims of fraud and abuse against both health care organizations and individual executives and managers.