We all know that healthcare fraud is a growing concern. Private (e.g. Blue Cross Blue Shield, Aetna etc.) and public insurers (e.g. the government – Medicare and Medicaid) are both susceptible to fraud with the latter receiving the biggest hit. We know that fraudsters steal money – but how do they do it? In an article released by the United States General Accounting Office (GAO) they highlight some of the major and most prominent healthcare fraud schemes.

1. Rent-a-Patient Scheme
In this scheme organizations pay for—or “rent”—individuals to go to clinics for unnecessary diagnostic tests and cursory examinations. The scary thing is that licensed physicians sometimes participate in the rent-a-patient scheme. Case and point: Robert Bourseau, 75, was sentenced to 37 months in prison and ordered to pay $4.1 million in restitution for his role in a scheme to defraud Medicare and Medi-Cal. He pleaded guilty in June to paying a recruiter to deliver homeless patients to his hospital for unnecessary medical services.

2. Pill Mill Scheme
In this scheme, separate health care individuals and entities (usually including a pharmacy) collude to generate a flood of fraudulent claims that Medicaid pays. After a prescription is filled, the beneficiary sells the medication to pill buyers on the street who then sell the drugs back to the pharmacy. Example: Rick Kloxin, pharmacist in charge of Hogan’s Pharmacy in Lyons, Kans., was found guilty in an internet pill mill scheme. Kloxin pled no contest and was found guilty of 14 misdemeanor counts of violating Kansas Pharmacy laws.

3. Drop Box Scheme
This scheme uses a private mailbox facility as the fraudulent health care entity’s address, with the entity’s “suite” number actually being its mailbox number. The fraudulent health care entity then uses the address to submit fraudulent Medicare, Medicaid, and other insurance claims and to receive insurance checks.

4. Third-Party Billing Scheme
The third-party billing scheme revolves around a third-party biller—who may or may not be part of the scheme—who prepares and remits claims to Medicare or Medicaid (electronically or by paper) for health care providers. It is possible, however, for a third-party biller to defraud Medicare, Medicaid, and others by adding claims without the providers’ knowledge and keeping the remittances or by allowing fraudulent claims to be billed to Medicare or Medicaid through its service. Example: Recently, in Miami, Ihosvany Marquez and several alleged conspirators were indicted on charges of having filed $55 million in phony Medicare claims for HIV, AIDS, cancer, pain and varicose vein treatments.

With weight-loss drugs all the rage these days I thought this post to be especially important. This is in response to an older post about counterfeit drugs. They are out there – even with over-the-counter medications like Alli. Tests conducted by drug maker GlaxoSmithKline show that counterfeit versions of Alli do not contain the active ingredient orlistat but instead a controlled substance called sibutramine. Sibutramine should not be taken without a doctor’s supervision and monitoring. Some frequent side effects include dry mouth, paradoxically increased appetite, nausea, strange taste in mouth, upset stomach, constipation, trouble sleeping, dizziness, drowsiness, menstrual cramps/pain, headache, flushing, or joint/muscle pain.

Counterfeit Alli looks similar to the authentic product, however some notable differences occur with packaging.
1. Outer cardboard packaging missing a “Lot” code
2. Expiration date that includes the month, day and year – authentic Alli only includes month and year
3. Packaging in a plastic bottle that has a slightly taller and wider cap with coarser ribbing than genuine product
4. Plain foil inner safety seal under the plastic cap without any printed words – authentic Alli seal is printed with “SEALED for YOUR PROTECTION”
5. Contains larger capsules with a white powder instead of small white pellets

See FDA’s full report here including pictures.

Remember – be a conscientious consumer and watch out for counterfeit medication, it could have very adverse outcomes on your health.

The False Claims Act was passed by Congress in 1863 and allows people who are not affiliated with the government (Congressmen, the President etc.) to file actions against federal contractors claiming fraud against the government.

In our current economic forecast with fraud running rampant (the Madoff scandal, the collapse of the financial market etc.) the False Claims Act is still relevant. Even with the abundance of accounting fraud, the major focus of the False Claims Act is still healthcare fraud. According to an article in the American Medical News, “Healthcare cases made up the lion’s share of false claims settlements and judgments in the fiscal year, brining in $1.6 billion, or two-thirds of the total $2.4 billion recouped.

Read full article here.

Healthcare fraud is a huge industry for the ethically challenged in our country. Keep reporting – it is a great deterrent.

A global crackdown on counterfeit drugs has uncovered more than 700 alleged packages of fake or suspicious prescription drugs including Claritin, Viagra and Vicodin. Some of the drugs might have had 3 times the active agreement than normally prescribed, others were placebos and some drugs contained materials typically not found in medications including drywall material, antifreeze and yellow highway paint.

See article for more information.

With the increasingly high costs of prescription medications, many people are turning to the Internet to fill their prescriptions. Internet pharmacies are a hot bed for counterfeit drugs. However, don’t assume you’re safe if you purchase from a brick and mortar pharmacy – counterfeit drugs can make their way into the supply chain anywhere.

Counterfeit drugs are currently a $28 million industry. Don’t let yourself be a victim. Below are some tips that will help.

1. If you take a medication for a chronic condition – save the packaging from the month before and compare the bottle, packaging or the pill itself.

2. If you only receive the pill in a generic bottle compare a picture of the tablet at www.fda.gov by simply searching for the medication.

3. If you are taking a medication and it just doesn’t feel the same or is not working like it normally does, see your doctor and show the medication to your pharmacist.

4. If the medication is deemed counterfeit, save a sample until you see your doctor to make sure there will be no long term complications or side effects.

Healthcare fraud is everywhere – even in countries that have government run programs. Below are some examples:

Healthcare fraud knows no boundaries. The U.S. Medicare and Medicaid programs are equivalent to many government-sponsored programs in other countries. Regardless of country, the existence and roles of players within the healthcare continuum are the same. All healthcare systems have patients, providers, TPAs (third-party administrators) that process reimbursements to third parties, plan sponsors (usually government programs or private-pay activities) and support vendors.

Examples of international healthcare fraud are plentiful. In France, a psychiatric nursing home took advantage of patients to obtain their property. In 2004, a newspaper in South Africa reported “a man who posed as a homeopathic doctor was this week sentenced to 38 years in jail – the stiffest term ever imposed by a South African court on a person stealing from medical aids.” An Australian psychiatrist claimed more than $1 million by writing fake referrals of patients to himself; he also charged for the time spent having intimate relations with patients.

In Japan, as in the United States, there are examples of hospitals incarcerating patients, falsifying records and inflating numbers of doctors and nurses in facilities for profit. A U.K. medical researcher mislead his peers and the public by using his own urine sample for 12 research subjects. Switzerland, know for its watches, had providers sanctioned for billing 30-hour days.

Excerpt from Healthcare Fraud: Auditing & Detection Guide by Rebecca Busch

Medical Business Associates, Inc. has been chosen as one of the 30 semi-finalists (over 130 companies applied) for Innovate Illinois – a statewide entrepreneurial and innovation competition recognizing high-growth entrepreneurs.

The next round of the competition, taking place September 24th at the University of Illinois Urbana-Champaign, includes a 5-minute pitch followed by a short question and answer session.

Grand prize is $30,000 in grant money. Good luck Rebecca Busch and Medical Business Associates!

Read more about Innovate Illinois.

In 1927, on the eve of the Great Depression, Baylor Hospital in Dallas entered into an agreement with the local teachers’ union. The agreement involved an employee deduction per paycheck paid in advance to the hospital. In turn, the hospital offered hospital-based care for these teachers and their families. This deduction was determined using a community-based rating model. Eventually, an organization known as Blue Cross emerged and started to provide the same type of program. Note, however, that a model known as prepaid practice groups (PGPs) already existed. Prior to this time period, private insurance did not exist for healthcare services. Health insurance offerings were avoided because appropriate premium rates were too difficult to predict, unlike rates for insurance upon the death of an individual. Private insurance plans started to appear in the late 1930s. These plans, however, were driven by risk-based models. They focused on the experience of the group. Blue Cross now had competition and was losing its customer base because of the new private-payer offerings. Blue Cross shifted toward a modified adjusted community rate plan, eventually abandoning it completely and joining the private-payer risk model plans. Eventually Blue Shield emerged to serve coverage for professional services.

This introduction illustrates one of the very first critical “cost shifting” market movements. What does cost shifting mean? It is when the cost of certain activities is shifted to another party. The question is, to whom? Private payers profited by removing high-risk individuals from their plans – they were growing at a rapid rate because during WWII a wage hold was put into place. Employers started to realize that benefit plans could be seen as a non-wage form of compensation. The tax code encouraged employers to view benefit plans as a cost of doing business, and employees never had to claim their benefits as income.

The benefit plan offering generated a significant amount of cash in the healthcare system. During the 1940s and going forward, teaching hospitals were also recipients of large amounts of cash infusion by the government’s investment in research and technology. The flow of cash from both areas generated a significant offering of healthcare diagnostics and treatment options. By 1946, the healthcare market had increased cash flow for hospital coverage. This resulted in increased utilization of hospital services. The amounts of insurance payments and premium programs went up. Hospitals expanded because of the available cash. The market had a significant buildup of resources. The amount of technology was growing at an accelerated rate. This fueled additional use and sale of insurance. The gap between the haves and have-nots exploded. From 1930 to 1965, there was the first big cost shift of high-risk individuals to uninsured status. Who were these people? They were the elderly, the unemployed, the self-employed, the retired and the disabled. With the aggressive advancements in healthcare, the disproportionate offerings between the haves and the have-nots became obvious.

The political arena debated the concept of compulsory insurance or a nationalized health plan. Instead, in 1965 Medicare was born to serve the have-nots. Medicare takes a social insurance approach, and its members are referred to as beneficiaries. Medicaid was also established; it is managed at the state level. Medicaid, however, uses a welfare approach, and its members are referred to as recipients. The market at the time believed that employer-linked insurance would eventually serve as a form of nationalized health insurance. Medicare Part A was created to pay hospital services, and Medicare Part B was created to serve the professional component. To devise a nationalized healthcare program was not necessary. The market, it was thought, would take care of itself.

Excerpt from Healthcare Fraud Auditing & Detection Guide by Rebecca Busch