Naples Shared Insight on Treasury Incentives to Healthcare Whistleblowers

Pat said that though the False Claims Act (FCA) has already made whistleblowers eligible to share in government recoveries, the Treasury is creating a separate initiative. 

“The two programs are complementary but distinct: the FCA targets false claims submitted to the government, while the Treasury program targets the financial crimes and money laundering that often accompany healthcare fraud schemes,” he said.

Pat said that the new Treasury program could lead to an increase in whistleblower complaints and enforcement activity, including complaints “based on new and untested theories on healthcare fraud.”

This program could potentially incentivize financial institution insiders and other business partners to flag suspicious transactions, Pat noted, adding that the Treasury’s announcement is “just the latest in a series of actions signaling scrutiny of foreign involvement in health care reimbursement.”

“The accompanying advisory specifically highlights how transnational criminal organizations allegedly use shell companies and non-resident individuals to submit fraudulent claims to Medicare and Medicaid, and then launder the proceeds through wire transfers, digital assets, and other methods,” he said.

The federal government has a growing focus on healthcare fraud and abuse enforcement and has grown more aware of fraud in “nontraditional healthcare settings,” such as telemedicine and cybersecurity protections for medical records, the combination of which “puts vendors, like medtech companies, who traditionally may have been considered witnesses, at increased risk of becoming targets of investigations,” Pat said.

Pat added that artificial intelligence (AI) is and will continue to play an increased role in government healthcare fraud investigations, pointing to the US Department of Justice’s (DOJ) new DOJ/Department of Health and Human Services (HHS) False Claims Act Working Group and the Health Care Fraud Data Fusion Center. 

The Center uses AI-driven analysis of nationwide claims to identify anomalies. 

“DOJ can then begin its investigations based upon those anomalies, instead of waiting for a whistleblower to come forward,” he said.

“Given the convergence of new enforcement tools such as the new whistleblower program, the expanded [Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP)], and CMS’s heightened enrollment and billing scrutiny, medtech firms should also review and, if necessary, strengthen their internal compliance programs and ensure they have clear protocols for investigating and escalating potential misconduct,” Pat said.

Pat also noted that another key trend in healthcare fraud enforcement involves durable medical equipment (DME). In February, the Center for Medicare and Medicaid Services (CMS) announced it would not allow new DME suppliers to enroll in Medicare for six months as part of an effort to stamp out an alleged pattern of abuse in the sector. The ongoing Comprehensive Regulations to Uncover Suspicious Healthcare (CRUSH) initiative, which was announced alongside the DME enrollment moratorium, asked for input from the public on strategies CMS could use to fight fraud and abuse, including in rapidly growing areas like genetic testing and molecular diagnostics.

“The message from this administration has been clear and consistent,” Pat said. “Companies who suspect fraud should voluntarily report such fraud and do so quickly.”

The DOJ’s recently issued CEP says that the DOJ will not prosecute companies if they voluntarily disclose misconduct, fully cooperate with DOJ’s investigation, and work to remediate the issue in a timely manner.

“Even for ‘near miss’ disclosures that do not fully qualify, companies may still receive non-prosecution agreements with fine reductions of 50% to 75%,” Pat said. “Notably, the CEP gives companies a 120-day window to self-report after receiving an internal whistleblower report, even if that whistleblower has also submitted information to DOJ –underscoring the critical importance of acting quickly.”

Overall, Pat advises medtech firms who are concerned about fraud to carefully scrutinize their business partners, especially those based overseas, to ensure “robust compliance with all applicable federal laws and regulations.”

“Given the convergence of new enforcement tools such as the new whistleblower program, the expanded CEP, and CMS’s heightened enrollment and billing scrutiny, medtech firms should also review and, if necessary, strengthen their internal compliance programs and ensure they have clear protocols for investigating and escalating potential misconduct,” he said. 

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