KHN Morning Briefing

Summaries of health policy coverage from major news organizations

DOJ Investigates Alleged Fraud By Drugmakers; Sanctions On WellCare Lifted

News outlets focus on alleged fraud in the drug and insurance industries.

"A $112 million settlement involving alleged drug kickbacks that the Justice Dept. announced with the nation's largest nursing home pharmacy and a generic drug manufacturer on Nov. 3 is part of a wide-ranging investigation of suspected Medicaid fraud by the pharmaceutical industry," Business Week reports. "Critics say the continuing probe, which involves Johnson & Johnson (JNJ) and other major drugmakers, highlights what they describe as an industry practice of paying money to outfits that provide drugs to consumers, in return for preferential treatment." The practice has "the effect of compromising patient care and driving up costs for government and private health insurers," and specific incidents "could bolster opposition to the controversial deal the Obama Administration reached with the pharmaceutical industry to win its support for health-reform legislation. Many Democrats say the Administration should have asked for much bigger cost savings from drugmakers" (Meyer, 11/4).

Meanwhile, "WellCare Health Plans Inc. said Wednesday it will start marketing Medicare drug and Medicare Advantage programs in the next few days, as most of the government's fraud sanctions on the company are being lifted," Forbes/The Associated Press reports. The company paid $80 million in restitutions earlier this year following federal charges of fraud in Florida. "WellCare said it will enroll members for coverage starting Jan. 1. It will be subject to increased monitoring, and some of its contracts will not be renewed because the Centers for Medicare & Medicaid Services chose not to lift them until the end of 2009, when the contracts will be expiring" (11/4).

Health News Florida: "Federal sanctions imposed on WellCare Health Plans in March were lifted Tuesday, just in time for the company to sell its Medicare drug and health plans for 2010. The suspension had been imposed after officials said they were inundated with complaints...The letter of notification includes a revelation that some WellCare managers told employees to alter documents before a federal audit. The event occurred in late May, only weeks after the company settled criminal charges of Medicaid fraud by agreeing to pay $90 million in fines."

"CMS said it is reinstating WellCare's privileges to enroll beneficiaries in health and drug plans because the company resolved the problems that led to its suspension. While the company may face some discipline from the latest escapade, it apparently won't be punished severely because executives took immediate action. They notified CMS' Program Integrity Office and conducted an independent investigation into the matter" (Gentry, 11/4).

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