Ileana Hernandez of Manatt Talks About How the Government is Responding to Increasing Healthcare Fraud

With healthcare costs continuing to skyrocket and the uncertainty of how the new presidential administration will handle health care reform and Medicaid, many people are starting to be concerned about the effect healthcare fraud is having.

Ileana Hernandez of Manatt, Phelps & Phillips recently sat down with us to talk about what she views as the greatest areas of fraud in health care today.

She says that one area that has really exploded lately is the fraudulent billing of Medicare, where medical supplies are billed to Medicare but are not actually used. According to Hernandez, this type of fraud has become so prevalent that the government began requiring certain medical supply companies to have better security measures in place, such as requiring their employees to request identification if they see something over a certain dollar amount being charged.

Another area of growing concern is the increased use of pharmaceutical drugs that are not FDA approved but are being used anyway.

“For example, there was a physician who bought an unapproved drug for hepatitis C because he could no longer get access to the medication he needed through his insurance company because it was too expensive. So instead of prescribing something that wasn’t FDA approved, he bought it himself and then just charged his patients for it.”

It’s cases like this that Hernandez says the government is starting to take more seriously. “The feds are paying a lot of attention to physicians who order off-label drugs and supplies because there have been several recent prosecutions in medical device cases, where physicians have been criminally prosecuted for ordering something off-label, but billing Medicare for it.”

“There are some key areas of fraud that are emerging now,” Hernandez said. “The government is paying attention to them and starting to prosecute people in these areas aggressively.”

When asked what physicians need to know about fraud, she emphasized that they need to be very careful when ordering off-label drugs or supplies. “I would advise them not to do it unless there are extenuating circumstances.”

She also suggested that doctors review their insurance coverage for drugs and supplies regularly to identify when there is a problem with coverage quickly.

“You need to know that if patients come in who are having trouble affording their drugs or supplies, that you can get them some assistance. You don’t want your patient telling you they’re coming back because they can’t afford the medication, but then you have no way to help them.”

Hernandez pointed out that the government is also very serious about physicians who are not treating enough patients to maintain their financial stability, which makes them more likely to do something illegal. “The physician comes in and says ‘I need money because I’m about to lose my home or go bankrupt,’ so they enter into some sort of agreement,” Hernandez said. “There’s a lot of attention on physicians who are making this sort of claim. The government is very concerned about people who are in that situation and is paying close attention to them.”

Another area where the government has been stepping up its efforts recently is civil monetary penalties and exclusion, she explained. “It’s a permanent revocation of their ability to participate in Medicare and Medicaid.”

The final area where the government is starting to focus its attention more heavily is with people who provide incentives to physicians or patients for prescribing or purchasing things that are not medically necessary or authorized by law.

Hernandez was quick to point out that even though it might seem like there’s more enforcement taking place, this is not an indication that physicians are under greater scrutiny. “The government always could do what they’re doing now; they’ve just decided to be more proactive about it.”