KHN Morning Briefing

Summaries of health policy coverage from major news organizations

Feds Recover $3 Billion In Health Care Fraud And Other Settlements

CNN: "Government lawyers have recovered a near-record $3 billion this year from health care fraud and other settlements, the Justice Department announced Monday." Assistant Attorney General Tony West said the funds included "a record $2.5 billion in recoveries from huge health care fraud cases against giant pharmaceutical firms. Only in 2006, when the federal government recovered $3.2 billion in total settlements, had recoveries previously hit the $3 billion mark" (Frieden, 11/22).

NPR: Most of the cases against pharmaceutical companies such as Pfizer, AstraZenica and Novartis were initiated "with the help of drug company employees who blow the whistle to the federal government." The Justice Department has used the False Claims Act, "a law from the Civil War era that helps the federal government yank back money when it's been overcharged by contractors," to pursue drug companies "accused of questionable marketing practices or overbilling federal insurance programs. … The law has worked so efficiently in the health care sector that the government is trying to enlist whistle-blowers in all sorts of ways. The Securities and Exchange Commission recently developed a program where corporate insiders can share in the financial rewards if they provide tips on fraud to the federal government, just as the Justice Department initiative works." However, experts say the settlements don't hit companies hard enough to "change the economics of fraud" (Johnson, 11/23).

The Associated Press/ABC News: Of the $3 billion recovered last fiscal year, the "government collected $1.6 billion in settlements with pharmaceutical and medical device companies in cases alleging fraud against Medicare and other federal health insurance programs. This total includes $669 million in Justice's record settlement with Pfizer Inc., which was accused of marketing drugs for uses not approved by the Food and Drug Administration" (11/22).

The Wall Street Journal: "In tandem with the Obama administration's focus on efforts to expand coverage for the uninsured, the Justice Department has highlighted efforts to combat fraud that siphons away government health-care spending." Since January 2009, the department has "recovered more taxpayer dollars lost to health-care fraud than in any other two-year period," according to West (Perez, 11/23).

NextGov: The latest estimates from the Congressional Budget Office reveal that the federal government loses millions each year due to payment errors. "In 2009 alone, the federal government made $110 billion in improper payments -- that's nearly double the amount taxpayers will end up shelling out for the massive financial bailout," the office estimates. "One-third of improper payments can be explained by poor documentation that makes it impossible to verify whether they were accurate, and another third result from failure to confirm individuals are eligible to receive the payments in the first place. The rest boil down to simple program errors, or people duping the system. ..."

"In July, President Obama signed the 2010 Improper Payments Elimination and Recovery Act, saying it would reduce waste and fraud by $50 billion by 2012. The law requires agencies to conduct recovery audits for programs that spend $1 million or more annually, review programs susceptible to significant payment errors every three years, and plan corrective actions for preventing future waste" (Aitoro, 11/22).

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