Gov't Recovers Record $4.2 Billion Lost to Fraud

A record $4.2 billion in health care fraud judgements and settlements was returned to federal programs in 2012. The majority of detected fraud relates to health care services delivery and billing; however, the pharmaceutical industry also contributed.

This article published with permission from The Burrill Report.

The government in fiscal year 2012 won or negotiated a record $4.2 billion in health care fraud judgments and settlements thanks to improved coordination between the departments of Health and Human Services (HHS) and Justice.

The money was returned to the Department of the Treasury and the Centers for Medicare & Medicaid Services. Over the last four years, the Obama administration’s enforcement efforts have recovered a total of $14.9 billion, up from $6.7 billion during the prior four-year period.

HHS Secretary Kathleen Sebelius and Attorney General Eric Holder announced the recoveries as part of an annual report on the Health Insurance Portability and Accountability Act. The act established a comprehensive program to combat fraud committed against public and private health plans and required the establishment of a national Health Care Fraud and Abuse Control Program.

“Our historic effort to take on the criminals who steal from Medicare and Medicaid is paying off: We are gaining the upper hand in our fight against healthcare fraud,” says Sebelius. “This fight against fraud strengthens the integrity of our health care programs and helps us fulfill our commitment to our seniors.”

While the majority of detected fraud relates to health care services delivery and billing, the pharmaceutical industry also contributed to the record recovery.

As a result of investigations by the U.S. Food and Drug Administration’s Pharmaceutical Fraud Program in 2012, Merck, Sharp & Dohme paid more than $1.5 billion for violations associated with Vioxx. And GlaxoSmithKline paid $3 billion, plus interest, from its unlawful promotion of certain prescription drugs, failure to report certain safety data, and civil liabilities for alleged false price reporting practices. Fraudulent activity was connected with 10 GSK drugs, including Paxil, Valtrex, Avandia and others, leading the company to enter into a five-year Corporate Integrity Agreement with HHS and the Office of the Inspector General in exchange for the government’s agreement not to seek to exclude GSK from participation in Medicare, Medicaid or other federal health care programs.

Other large pharma-related violations in the report included McKesson Corporation’s $190 million payment to resolve claims related to inflated pricing information for several prescription drugs, which caused Medicaid to overpay for those drugs, and Dava Pharmaceuticals' $11 million payment to settle allegations that it misreported drug prices in order to reduce its Medicaid Drug Rebate obligations.

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