August 1, 2012

Partnering With Former Fraudsters and Conflicted Parties to Root Out Health Care Fraud — Is the Government Letting the Fox Guard the Hen House?

 By Marlene Koury

The government announced last week that it would be partnering with Amerigroup in its new public-private partnership to prevent health care fraud.  If “Amerigroup” and “fraud” in the same sentence sound all too familiar, it is not because of the company’s track record in fighting fraud.  Rather, it is likely because Amerigroup paid $225 million in 2008 to resolve claims that it defrauded the Illinois Medicaid program by refusing to enroll pregnant women and other high-risk patients in its government-funded managed care program.  So why has the government now chosen Amerigroup to join it in its crusade to root out healthcare fraud?  Maybe it’s a simple case of “it takes one to know one.” 

Whatever the reason, this new partnership raises deeper questions over the private companies with which the government contracts to uncover health care fraud.  With Medicare and Medicaid fraud topping $60 billion per year, eliminating fraud and waste in these government programs is an important governmental priority and a key goal of the Obama Administration.  Given the size of these  programs, however, the government apparently cannot do it alone even with all of the help it receives from whistleblowers.  So, the Centers for Medicare and Medicaid Services (CMS) which oversees the Medicare and Medicaid programs contracts with independent, private-sector companies to help perform many essential payment, oversight, and administrative functions. 

One of the key functions  these companies perform is identifying health care fraud by reviewing thousands of claims for red flags in billing patterns.  But in a recent study, the government found that a majority of independent firms bidding for these contracts have business or contractual relationships with the firms they seek to investigate – relationships that potentially pose serious conflicts of interest.  That may explain the low scores the government recently received from the Government Accountability Office on the government’s outsourcing of its fraud-busting efforts.

The study examined bids from roughly one-hundred potential contractors and subcontractors over a year-long period, finding nearly two thousand relationships that posed potential conflicts of interest.  Although potential conflicts are not an automatic bar to being awarded a contract, full disclosure of these conflicts is essential so that CMS can properly evaluate their significance. The report advised that CMS provide clearer guidance in the Request for Proposals regarding which relationships are potential or actual conflicts and that CMS adopt formal, written policies outlining how it should review conflict of interest information.

As for Amerigroup, regardless of whether its business or contractual relationships would have posed a conflict of interest in partnering with the government, certainly its recent scheme to bilk Illinois Medicare out of millions raises serious questions as to whether this particular company is the best fit for the job.  In that vein, while the CMS is revamping its system to ensure its partners are conflict-free, it should pay equally close attention to whether its would-be partners have themselves engaged in the very fraud they are being tasked with uncovering.

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