Legislature Ought to Increase Rewards up to 10 Million Dollars to Whistleblowers who Combat Medicare Fraud and Abuse

Submitted by Olga Zuyeva, BSN, MSHK, RNIII

Tags: Legislature Medicare Medicare Fraud Whistleblowers

Legislature Ought to Increase Rewards up to 10 Million Dollars to Whistleblowers who Combat Medicare Fraud and Abuse

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The legislature ought to enact the following proposed rule to increase rewards to combat Medicare fraud and abuse, in an attempt to increase more whistleblowers to come forward. My empirical research shows that this proposed rule has had the following good effects to increase rewards up to 10 million dollars to whistleblowers for reporting Medicare fraud and abuse and should therefore be seriously enhanced by legislature.  The role of legislature in combating Medicare fraud and abuse to increase the amount of the rewards paid to whistleblowers whose tips about suspected fraud and abuse lead to the successful recovery of funds up to 10 million dollars. The intent of this proposed rule is to provide reward to whistleblowers in case of actual fraud or reckless disregard in the submission of claims.

The legislature should seriously enhance the proposed rule for reporting Medicare fraud and abuse and whistleblowers would be eligible to recover a reward of 15 percent of the amount recovered up to 10 million dollars.

Billions of federal dollars are lost annually due to health care Medicare fraud, error and abuse.  Whistleblowers play a critical role in keeping Government honest, efficient, and accountable. Whistleblowers root out waste, fraud, and abuse and protect public health and safety. The whistleblowing is a phenomenon that came under increasing moral, social and legal scrutiny in recent years. Centers for Medicare and Medicaid Services (CMS) is proposing to increase the potential reward amount for information that leads to a recovery of Medicare funds from 10 percent to 15 percent of the final amount collected. The current program caps the reward at $1,000, it means that the CMS pays a reward on the first $10,000 it collects as a result of a tip. CMS is also proposing to increase the portion of the recovery on which CMS will pay a reward up to the first $66 million recovered – this means an individual could receive a reward of $9.9 million if CMS recovers $66 million or more.  In 1998, CMS began paying rewards to individuals who reported tips that led to the recovery of funds. To date, CMS has recovered approximately $3.5 million as a result of this program and paid just $16,000 for 18 rewards. The proposed changes are similar to the IRS whistleblower program that has resulted in recoveries of over $2 billion since 2003. 

The False Claim Act/ Whistleblower provision:

The False Claim Act is a federal law that allows individuals with information about fraud against a governmental program to report that information and receive an award for stepping forward. If the government recovers money from the suit, the whistleblower is entitled for reward of government’s recovery.

Whistleblower provision is a federal law, referred as qui tam. It is allow private citizens to bring civil action on behalf United States and share in any recovery obtained. According to the U.S. Justice Department, qui tam settlements, considered recoupled federal dollars, brought in 2.6 billion dollars in settlement and judgments in 2013. The government recovered a total of 4.3 billion dollars in health- care fraud cases and proceedings in 2013. The whistleblower protection includes reinstatement and damages of double the amount of lost wages if the employee is terminated, and any other damages sustained if the employee is discriminated against.

A. CMS Incentive Reward Program – The proposed rule seeks to make changes to the Medicare Incentive Reward Program, enacted in 1998, by paying those responsible for reporting instances of Medicare fraud and abuse a portion of the funds recovered.

B. Code of Federal Regulation (CFR) – 42 C.F.R. § 420.405. Rewards for information relating to Medicare fraud and abuse.

CMS pays a monetary reward for information that leads to the recovery of at least $100 of Medicare funds from individuals and entities that are engaging in, or have engaged in, acts or omissions that constitute grounds for the imposition of a sanction under section 1128, section 1128A, or section 1128B of the Act or that have otherwise engaged in sanctionable fraud and abuse against the Medicare program. CMS applies the criteria specified to determine the eligibility and the amount of the reward:

  1. Information eligible for reward.
  2. Persons eligible to receive a reward
  3. Notification of eligibility
  4. Amount and payment of reward
  5. Submission of information
  6. Confidentiality
  7. Finding of ineligibility after reward is accepted

A. According to Centers for Medicare and Medicaid Services (CMS)

“Over the last three years we have recovered over $14.9 billion in fraud. Some of this has resulted from fraud reporting by individuals – a proven tool for the government to detect fraud, waste and abuse in the Medicare program.” The whistleblower who provide specific information may be eligible to receive a reward of 15 percent of the amount recoverable up to 10 million dollars. Health and Human Services (HHS) now offers a reward of 10 percent up to one thousand dollars under the current incentive reward program.

On April 24, 2013, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would increase incentives for people to report information that leads to a recovery of funds from individuals and entities that have or are engaged in Medicare fraud and abuse. This proposed rule would also improve CMS’ ability to detect new fraud schemes, and help ensure that fraudulent entities and individuals do not enroll in or stay enrolled in Medicare.

B. This proposed rule would strengthen provider enrollment provisions and allowing HHS to deny enrollment of providers who are affiliated with an entity that has unpaid Medicare debt, deny or revoke billing privileges for individuals with felony convictions. Also, would revoke providers and suppliers who are abusing billing privileges.

C. The Senior Medicare Patrol (SMP) is a national, volunteer- based program that empowers Medicare beneficiaries to prevent and report Medicare fraud, waste, and abuse. Thru this organization since 1997, more than 3.5 million beneficiaries have learned how to recognize and fight fraud and abuse. More than 7,000 referrals have been made to CMS and the Office of the Inspector General (OIG) for investigation. SMP projects work to resolve beneficiary complaints of potential fraud in partnership with state and national fraud control/consumer protection entities, including Medicare contractors, state Medicaid fraud control units, state attorneys general, the OIG and CMS.

According to “Whistleblower who got 6 million dollar still on lookout for fraud” Tucson, Arizona article, the Jacqueline Bloink, a former employee of the Carondelet Health Network, initiated legal action the resulted in Carondelet paying a 35 million dollars settlement to the Federal Government in August to settle accusations that it submitted false claims to Medicare and other federal health programs. Bloink filed under the Federal False Claim Act accused Carondelat of knowingly engaging in fraudulent billing and concealing its obligation to pay money back. Also, she found billing discrepancies involving patients enrolled in Medicare, Medicaid, and the Federal Employees Health Benefit Program. Blonk has been training in the highly specialized field of compliance since the 1990s. The U.S. attorney’s Office, which investigated the case, announced the settlement and said the alleged fraud occurred for nearly seven years between 2004 and 2011. Jacqueline Bloink earned nearly 6 million dollars as a whistleblower to prevent health - care fraud. She said “If more people cared, the nation could “plug this gaping hole” and stop money from gushing out of the federal Medicare and the state Medicaid system.” Carondelet settled the case for 35 million, it is the largest payout under the Federal False Claim Act in Arizona history. According to Bloink, “Whistleblowers are good people and they are doing the right thing.”

In July 2006, Tenet agreed to pay the federal government 900 million dollars for billing violation that included kickbacks, up coding and bill padding.

The legislature ought to enact the proposed rule to increase reward up to 10 million dollars to combat Medicare fraud and abuse. This proposed changes would help to fight health care fraud that recovered a record 4.2 billion in taxpayer dollars. This new provision would encourage whistleblowers to come forward and report against Medicare fraud and abuse. It could save billions of dollars by improving the accuracy of payments to Medicare. Whistleblowers are helping to protect taxpayer dollars and anticipates that the Medicare fraud and abuse will be reduced.

Primary Sources

  1. Torras, H. W. (2003). Health Care Fraud and Abuse: A Physician's Guide to Compliance. 2nd Edition, American Medical Association.
  2. CMS.gov. HHH Would Increase rewards for Reporting Fraud to nearly $10 million. April, 2013. http://www.hhs.gov/news/press/2013pres/04/20130424a.html
  3. http://aoa.gov/AoA_Programs/Elder_Rights/SMP/
  4. The False Claim Act
  5. Miss. Admin. Code 32-1-1:1.19 Whistleblower
  6. CMS.gov http://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-Sheets/2013-Facts-Sheets-Items?2013-04-24.html
  7. 42 C.F.R. § 420.405. Rewards for information relating to Medicare fraud and abuse.  July16, 2012.

Secondary Sources

  1. http://oig.hhs.gov/fraud/whistleblower/
  2. http://www.hhs.gov/asa/eeo/resources/
  3. http://www.hhs.gov/open/plan/whistleblower-protection.html
  4. http://ori.hhs.gov/Whistleblower-Rights
  5. http://oig.hhs.gov/newsroom/spotlight/2014/inflated-federal-costs.asp
  6. http://9iacc.org/papers/day3/ws7/dnld/d3ws7_efeldman.pdf
  7. http://www.dol.gov/compliance/laws/comp-whistleblower.htm
  8. http://www.hhs.gov/
  9. “Whistleblower who got $6 million still on lookout for fraud” Tucson, Arizona, October 2014 http://tucson.com/news/science/health-med-fit/whistleblower-who-got-million-still-on-lookout-for-fraud/article_348f1903-9886-5f22-85a2-8551ba86e140.html