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The next major target of health care anti-fraud enforcement efforts is going to be pharmaceuticals, warns John Bentivoglio, former Justice Department fraud chief now with Arnold and Porter in Washington, D.C. James Sheehan, Assistant U.S. Attorney and civil chief of the Eastern District of Pennsylvania in Philadelphia, likewise predicts "there is a storm rising" in this area, and both agree that it is largely driven by the rising dollars now spent in this area.
According to Carolyn McElroy, who until recently was the head of the Maryland Medicaid Fraud Control Unit (MFCU), there is no shortage of issues on the government’s agenda, which already includes average wholesale price (AWP) and WAC reporting, kickbacks in promotions and marketing, and Medicaid rebate issues.
The problem is that enforcement is now substituting for regulatory leadership, argues McElroy, now with Mintz Levin in Washington, DC. In addition to a growing stream of qui tam suits, she says the U.S. Department of Justice, state Attorneys General, the Department of Health and Human Services’ Office of Inspector General, and now Congress all have their hand in this pot.
The extent to which hospitals get caught up in this storm will turn partly on whether they have owned or managed medical groups, according to Paul DeMuro of Latham and Watkins in San Francisco. "If hospitals own or manage medical groups, they face the same issues as doctors who administer these drugs in their office," he explains.
DeMuro says the problem arises when the acquisition cost, AWP, or other pricing mechanism hospitals use to record price to the Medicaid program differs from the amount it bills Medicaid based on a fee schedule. "That is not enough to make it a crime," he explains. "But if the hospital had a group that it owned or managed, it could arguably be responsible for billings."
Meanwhile, MFCUs routinely handle cases that involve diversion of pharmaceuticals that often implicate hospitals to cases as simple as nurses stealing morphine and clerks calling in false prescriptions.