IG wants authority to boot corporate execs from Medicare for fraud

Independent federal investigators hoping to rein in Medicare fraud are asking Congress for broad new authority to boot offending corporate executives from the insurance program.

The change is designed to control Medicare claims fraud by punishing culpable owners, managers and other corporate higher-ups, and not just the convicted companies.


“What we’re trying to say to the executives is, ‘This isn’t just going to fall on the company,’ ” Lewis Morris, chief counsel for the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS), told The Hill on Tuesday. “We’ve got to hold the executives responsible.”

Under current law, HHS can exclude from all federal healthcare programs any owner or employee who knew, or should have known, about a healthcare scheme leading to a company’s conviction. But to be subject to the exclusion, the offending person must still be with the company.

That stipulation opens up a loophole: Culpable executives can resign — and offending owners can divest — immediately after a company’s conviction, leaving OIG officials powerless to keep them from participating in federal health programs with other companies.

OIG wants Congress to expand its exclusion authority to include any worker — past or present — found responsible for fraud. That way, Morris said, “he’ll be known as the guy who was excluded from Medicare — so who’s going to hire him?”

Some Capitol Hill lawmakers are eyeing the same reform. Florida Reps. Ron Klein (D) and Ileana Ros-Lehtinen (R) have introduced legislation to tweak the law to include any owner or executive overseeing the company at the time of the fraud leading to a conviction.

“It’s deplorable to think that there are people out there preying on our seniors, but as everyone here knows, it’s true,” Klein said Tuesday, testifying on his bill before the Ways and Means Health subcommittee. “That’s money taken out of the system to line the pockets of criminals and thieves.”

Congress is increasingly looking for ways to eliminate wasteful spending under Medicare, which is estimated to cost taxpayers hundreds of billions of dollars a year.

Morris told lawmakers that OIG efforts to crack down on offenders are working, but much more needs to be done. In 2007, for example, after an agency strike force began targeting fraud in South Florida’s durable medical equipment sector, claims there dropped from $2.76 billion to $1 billion in just one year.

Still, as healthcare providers move from a fragmented system of healthcare delivery to a more integrated model, Morris warned, lawmakers and regulators will also have to adapt if they hope to control the fraud that will inevitably follow.

“Experience,” Morris said, “has taught us that how healthcare programs pay for services dictates how the programs are defrauded.”