The FCA was born into a war-scarred country during the middle of the Civil War under the administration of President Abraham Lincoln, hence its former name: the Lincoln Law. The act was envisioned as a way for the government to take aim at those individuals making false goods claims. During this time, goods were being sold under government contracts, and many of the livestock, products, and services were far below any acceptable levels. Formation of the FCA was needed to help fight against false representation. In more current times, the changes of 1986 brought about updated laws and enforcement adjustments to better assist in warding against governmental abuse. These modifications were a product of purported incidences of the U.S. Navy paying $600 for a toilet seat and $400 for a hammer, all obvious poaching of government contract inadequacy that needed to be overhauled.
This brief historical review shows that the creation and modifications of the FCA were intended to protect the government from all types of fraud, not only fraud related to the healthcare industry. However, based on 2013 statistics released by the Department of Justice (DOJ), of the $3.8 billion in recoveries made that year under the act, $2.6 billion were from the healthcare industry. This leaves a substantially lower recovery amount of $890 million in procurement fraud (mostly defense contracting issues), of which 75 percent came from one individual case that totaled a $664 million judgment against a Connecticut-based defense contractor, United Technologies Corp. (UTC). These statistics quantify the allegedly biased agenda of the FCA reviews toward healthcare. Are we to believe that there exist such extensive FCA violations in healthcare, but such limited FCA violations in all other areas?
The FCA in its original formation was enhanced by U.S. Sen. Jacob M. Howard (R-Mich.) to make rewards available to “realtors” coming forward with information to assist in the prosecution of criminal wrongdoing. Interestingly enough, Howard was quoted noting that his motivation of such rewards was to entice a “rogue” to catch a “rogue.” The following is his quote on the issue:
“I have based the (qui tam provision) upon the old-fashioned idea of holding out a temptation and ‘setting a rogue to catch a rogue,’ which is the safest and most expeditious way I have ever discovered of bringing rogues to justice.”
Today, far more credence is given to the “realtor,” i.e. whistleblower, than in Howard’s day. In fact, in 2013 more than $345 million was paid to these individuals, who typically receive anywhere from 15-25 percent of the recoveries. The 1986 changes marked the first year of increased rewards to whistleblowers, followed by the Fraud Enforcement and Recovery Act in 2009, which strengthened fraud statutes and then increased incentives (which came along with the passage of the Patient Protection and Affordable Care Act).
These most recent changes have helped almost double the number of whistleblower cases, with 433 cases in 2009 and a staggering 752 in 2013. These 752 whistleblower cases make up nearly 90 percent of the 846 total new FCA investigations in 2013. Under the FCA, only an additional 94 cases were opened, which indicates that far more credence is given to a whistleblower’s suspicions than to the suspicions of the DOJ. The DOJ has indicated that out of every 10 cases submitted, it only intervenes in 20 percent. That is a great way to tiptoe around saying that out of every 10 cases they look at, two represent noteworthy odds of being a developed FCA case.
Based on the reported statistics, the DOJ does make careful selection of the cases in which they intervene, based on the recoveries involved. According to a Gibson Dunn Publication (2013 Year-End False Claims Act Update), “of the $27.2 billion in total recoveries between fiscal years 1987 and 2013, qui tam actions in which the government declined to intervene recovered only $991 million.”If there are true concerns of fraudulent behavior, shouldn’t all cases be reviewed on merit and content rather than recoveries involved?
This is not to say that we do not need safeguards such as the FCA and investigating entities such as the DOJ. As taxpayers, we should want all government expenditures reviewed for potential fraud, abuse, and misuse – not just healthcare concerns. True fraud does exist in the healthcare industry, but also in every other working industry, yet based on reporting and statistics, it would appear that there are few to no providers filing valid claims in those other fields.
And to what industry can we compare ourselves? Is there any other industry with more than 10 different auditing entities? The FCA continues to stalk their prey and solicit more whistleblowers to come forward and assist them with their duties by offering handsome rewards. Due diligence is required by all medical facilities and providers to ensure that services are executed correctly, documented appropriately, and reimbursed accurately to protect each entity.
A compliance audit should be viewed as an investment into the health and financial stability of an organization. Entities that are compliant and have a focused agenda regarding how to maintain compliance lack resources for whistleblowers. Protect yourself, and form a plan, execute it, and maintain it.
About the Author
Shannon DeConda is the founder and president of the National Alliance of Medical Auditing Specialists (NAMAS) as well as the President of Coding & Billing Services and a Partner at DoctorsManagement, LLC. Ms. DeConda has over 16 years of experience as a multi-specialty auditor and coder. She has helped coders, medical chart auditors, and medical practices optimize business processes and maximize reimbursement by identifying lost revenue. Since founding NAMAS in 2007, Ms. DeConda has developed the NAMAS CPMA® Certification Training, written the NAMAS CPMA® Study Guide, and launched a wide variety of educational products and web-based educational tools to help coders, auditors, and medical providers improve their efficiencies.
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