Dec 29, 2018

The big business of health care fraud

Illustration: Aïda Amer/Axios

Every year since 2010, the Department of Justice has recovered at least $2 billion from hospitals, doctors, pharmaceutical firms and other health care companies for allegedly defrauding the federal government.

The big picture: Federal fraud settlements from the health care industry totaled $2.5 billion in the 2018 fiscal year alone, according to newly released figures. A look at those settlements shows the wide variety of tactics health care companies have allegedly used to steer money to themselves.

The details: A slew of allegations in large cases cropped up this year.

  • Exaggerating how sick Medicare Advantage patients are, leading to a $270 million settlement against DaVita.
  • Pressuring doctors to admit patients from emergency rooms, leading to a $260 million deal against a hospital system that is now owned by Community Health Systems.
  • Using a charitable foundation as a way to fund patients' drug copays, leading to a $24 million settlement against Pfizer.
  • Numerous settlements against hospitals and other providers for things like false billing practices or paying kickbacks for physician referrals.

What's next: The 2019 fiscal year is off to a fast start, with a few prominent settlements involving allegations of hospitals purposely overpaying for physician practices, orthopedic providers willfully gaming the billing system, and a broadening investigation into Medicare Advantage coding.

  • The health care industry is asking for more wiggle room on the federal law that outlaws kickbacks.
  • But government watchdogs will more closely scrutinize overbilling.

The bottom line: Large settlement amounts indicate the government is willing to hunt down bad actors, but also that the industry knows the health care system is still ripe for abuse — or, as the industry argues, overly burdened with regulations.

  • That likewise makes it unclear if DOJ penalties deter fraudulent behavior, or if corporate health care just views settlements as the cost of doing business.

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