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May Legislative Update: New Focus on Federal Fraud, Waste & Abuse

New Focus on Federal Fraud, Waste and Abuse

Ernest Boyd, Executive Director, Pharmacist

I attended a meeting hosted by the Centers for Medicare and Medicaid (CMS) last week entitled:  Health Care Fraud Prevention Summit.  The program featured speakers including Eric Holder, Jr., Attorney General of the United States; Kathleen Sebelius, Secretary of Health and Human Services; and HHS Inspector General Daniel Levinson.  The meeting focused on the new, increased focus that various Federal agencies have on being sure that Medicaid and Medicare fraud is stopped, both through prevention and by enforcement.  It is important for pharmacists to have a strong background and education in what they need to be aware of to stay within the law.  As more prescriptions are paid by Medicaid and Medicare because of their expanded programs, our risk of having issues is increased, and the penalties are severe.  Regardless of your place of employment, you need to spend some time, beyond reading this article, understanding what our responsibilities are.  Under the Federal Deficit Reduction Act, the Medicaid Integrity Program (MIP) was created within CMS.   Under this program, CMS is hiring contractors to educate providers and others about payment integrity.  One of their contractors, StrategicHealthSolutions, LLC, has created an electronic newsletter that you should consider subscribing to.  Just send an email to, with the subject line “subscribe.” 

I’m going to simply review some of the most important statutes that impact pharmacists.  This, sadly, does NOT include all the laws we must comply with, or every section of the law affected.  However, it should give you a good overview of what you should review to stay within the law. 

OIG Exclusion Statute

It is absolutely critical that you check ALL your employees against the OIG Exclusions List, whether they are pharmacists, clerks, or anyone who has anything to do with providing services to any federal payment system.  This list includes those individuals or businesses that have been convicted of a criminal offense involving a number of areas of the law.  These individuals are prohibited from participation in all Federal health care programs.  The penalties for allowing someone to fill prescriptions or serve these patients is severe:  triple the value of all Medicare and Medicaid billings, plus a serious fine.  It is quick and easy to check this list at  This should be checked as part of your pre-employment process, as well as checked regularly on all employees.  Keep in mind that a violation may not show up on this list for awhile (sometimes years), and the employee may not have admitted any problem to you.  After searching the database by name, it is advisable to print out the resulting form showing a clean record, and save it. 

False Claims Act

Basically, this act states that it is illegal to submit claims for payment to Medicare or Medicaid that you know, or should have known, are false or fraudulent.  The penalties are up to three times the program’s loss, plus $11,000 per claim filed.  This one is especially dangerous, since no specific intent to defraud is required.  The civil False Claims Act defines “knowing” to include not only actual knowledge, but also instances in which the person acted in deliberate ignorance or reckless disregard of the truth or falsity of the information.  There also is a “whistleblower” provision in the act that allows a private individual to file a lawsuit on behalf of the United States, and gives that individual a percentage of the recovery.  There is also a criminal False Claims Act that has penalties including imprisonment and criminal fines.  Be diligent in being sure that any claim billed is legitimate.

Anti-Kickback Statute (AKS)

This is a criminal law that prohibits the knowing and willful payment of “remuneration” to induce or reward patient referrals or the generation of business involving any item or service payable by the Federal health care programs (e.g., drugs, supplies or health care services for Medicare or Medicaid patients).  Remuneration includes anything of value, and takes many forms besides cash, such as free rent, hotel stays and meals, and excessive compensation for medical directorships or consultancies.  The penalties fall on both the payer and the receiver of remuneration.  There are some “safe harbors,” including personal services and rental agreements, but be sure to check with your attorneys on any exemptions. 

Pharmacy is a partner with the Federal government on the provision of drugs, services, and DME.  It is important for both your business and your personal liability to be aware of what the government is looking for with regard to fraud, waste and abuse, and do everything reasonable to avoid it.  As we get more involved in the provision of MTM, we’ll have to be even more aware of problems in that arena.  If you wish to see real-life cases of Medicare fraud and abuse, along with consequences, visit  

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