WALTHAM, MA – Tenet Healthcare, one of the nation’s largest hospital chains, is paying $900 million to resolve charges that it had cheated the government by overbilling Medicare and paying kickbacks to doctors.
It’s not the only healthcare company to face hefty fraud charges. Medco Health Solutions, a manager of prescription drug benefits, is paying $155 million; the managed care company Amerigroup is on the hook for $144 million; and Omnicare, which provides pharmacy services to nursing homes, is paying $49.5 million.
Recent high-profile cases like this prompted Congress to take action last year. A law drafted by Sen. Charles Grassley, R-Iowa, that took effect Jan. 1 requires companies that do at least $5 million a year in Medicaid business to educate all employees and officers on how to detect fraud – and to make it clear that any whistleblowers are not only protected from retaliation, but could also receive from the
government some of the money recovered if their case is successfully prosecuted.
“What they’re saying is that these organizations have to have a pro-active responsibility … to educate their employees,” says Richard Cellini, vice president of marketing for Integrity Interactive, a Waltham, Mass.-based provider of Web-based tools for managing and mitigating corporate ethics and compliance risks.
Cellini points out that the law that went into effect on Jan. 1 doesn’t change the definition of or penalties for fraud – it only holds healthcare companies responsible for educating their employees.
Integrity Interactive has seen its business double each year since it was founded in late 1999, and this year will be no different. For between $200,000 and $500,000, the firm establishes a training program for every one of each client’s employees – usually based on interactive, easy-to-understand scenarios – keeps documented records of employee compliance and offers advisory services.
“It’s like an insurance policy,” says Cellini. “Basically, you can’t afford not to do this.”
In the year that ended Sept. 30, 2006, the government recovered more than $3.1 billion in fraud payments, a record amount. Healthcare fraud accounted for 72 percent of that total. With those numbers in mind, Senator Grassley drafted the law as part of last year’s Deficit Reduction Act, which was signed by President Bush last February. The administration didn’t provide any guidance until December, and companies are now scrambling to make sure they’re in compliance.
“They need to move fast,” says Cellini.
He says too many companies nowadays rely on their in-house counsel to make the old-fashioned speech in the cafeteria, telling all the employees not to do anything wrong and to report any wrongdoing at once to the proper authorities. Aside from growing too large to support one cafeteria – or one counsel, for that matter – today’s healthcare companies face a myriad of legal issues, ranging from identity theft to conflict of interest to data privacy. In addition, different levels of employees need different training. Some of the larger companies spend more than $1 million on a compliance department with dedicated staff, but many others are looking to outsource compliance training, and companies like Integrity Interactive are stepping in.
“There are so many risks that a company can potentially face, that they have to prioritize them,” Cellini says. “And frankly, it pays off.”
Cellini points out that a company with an effective compliance training program in place will see reductions in any penalties imposed by the government for fraud, as long as the program was in place before the fraud occurred.
“Basically, you get credit just for trying,” he said.