AG Nominee Sessions Expected to Keep Focus on Health-Care Fraud

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By James Swann

Nov. 23 — Health-care fraud enforcement is unlikely to change under Sen. Jeff Sessions (R-Ala.), the Trump administration’s nominee for attorney general, former Department of Justice officials and health-care compliance professionals told Bloomberg BNA.

It’s unlikely there will be a significantly reduced focus on anti-fraud programs under a Sessions DOJ, Gejaa Gobena, a health-care attorney with Hogan Lovells in Washington and former deputy chief of the Fraud Section in DOJ’s Criminal Division, said.

“I worked at DOJ in both the George W. Bush and Obama administrations, and I found anti-health-care fraud efforts on the part of DOJ and law enforcement to be fully supported by both administrations, and expect that will carry over into the Trump administration,” Gobena told Bloomberg BNA.

Gobena said that while the Obama administration has provided additional resources for fighting health-care fraud, it did so in conjunction with a Republican-controlled Congress for at least the last few years.

Various estimates claim that fraud, waste and abuse account for anywhere from 3 percent to 10 percent of Medicare and Medicaid spending, Gobena said, so anything that reduces that amount would have a big impact on spending and deficits and be supported by both parties.

“That being said, I’m sure the new attorney general will fully evaluate how the DOJ is approaching health-care fraud to make sure that resources are going to the divisions and components they feel are best positioned to take on health-care fraud,” Gobena said.

Additionally, if certain priorities such as national security are given increased attention, that will filter through the U.S. attorneys and the FBI, and health-care fraud efforts could feel the effect by losing resources diverted to other areas, Gobena said.

A growing federal debt as well as a high return on investment for anti-fraud efforts will likely lead to little change on the enforcement front from a Sessions DOJ, Roy Snell, chief executive officer of the Health Care Compliance Association, told Bloomberg BNA.

The DOJ and the Health and Human Services Office of Inspector General reported a $7.70 return for every dollar spent in 2015 for anti-fraud efforts, which is especially welcome given the federal government’s high debt level, Snell said.

While the new administration could be more lenient toward health-care fraud enforcement, it would have to overlook some really glaring errors, Snell said, referring to potential billing fraud, waste and abuse in federal health-care programs.

“I predict no material changes in the total number of settlements and recoveries for some time to come,” Snell said.

While Sessions has primarily focused on non health-care issues, such as illegal immigration, he has been a vocal critic of the Affordable Care Act and has co-sponsored legislation to repeal it, including the Defund Obamacare Act of 2013.

Prior to becoming a senator, Sessions served as the Alabama attorney general from 1995 to 1997, and U.S. attorney for the Southern District of Alabama from 1981 to 1993.

Funding Issues

The idea of a Sessions-led DOJ keeping a focus on health care anti-fraud efforts was echoed by Kirk Ogrosky, a health-care attorney with Arnold & Porter in Washington and former deputy chief of the Fraud Section in the Department of Justice’s Criminal Division.

“In my experience, no one wants to be viewed as being soft on crime, and dramatic moves or changes in priorities could be interpreted as a lack of commitment,” Ogrosky told Bloomberg BNA.

However, Ogrosky said recent funding provisions have expanded the number of agents and prosecutors working health-care fraud cases, and if those funds are cut, the level of enforcement would drop.

While Sessions has backed a repeal of the ACA, Gobena said, most of the health-care anti-fraud funding is independent of the ACA and wouldn’t be affected by a repeal, at least not immediately.

The vast majority of funding comes from the Health Care Fraud, Abuse and Control (HCFAC) fund, which has seen discretionary funding double between fiscal year 2011 and fiscal year 2015 (from roughly $300 million to over $600 million), Gobena said, and the funding increases have come through spending bills passed on a bipartisan basis.

“Whether funding stays at that level, goes up or decreases will depend on the Trump administration’s own assessment of whether the funding is being well spent and their dialogue with Congress about it,” Gobena said.

Much of the additional HCFAC funding in recent years has gone to the Centers for Medicare & Medicaid Services for program integrity efforts, Gobena said, and that funding is likely to come under scrutiny due to a congressional focus on what the CMS is doing to stop fraudulent payments before they’re made.

Gobena said the bipartisan support for increased funding has been due to the CMS being able to show a significant return on investment when it comes to anti-fraud spending.

HCFAC’s discretionary funding is done in two-year cycles, and Gobena said it will be interesting to see how much the new administration asks for when the current funding cycle ends.

Policy Tension

The incoming administration will also have to address policy tension between an articulated distrust of the federal government and the substantial financial contributions that health-care enforcement makes to the Medicare trust funds, Lewis Morris, an attorney with Hall Render in Annapolis, Md., and former chief counsel to the HHS’s inspector general, told Bloomberg BNA.

Morris said curtailing the scope of the physician self-referral, or Stark law, might be an option, since many perceive False Claims Act enforcement of the Stark law as an abuse of power.

Morris also said a strong argument could made that either curtailing or repealing the Stark law would have a positive impact on enforcement and compliance by refocusing resources on abuses that actually harm federal health-care programs and patients.

The Stark law generally prohibits doctors from referring patients to facilities, such as labs and imaging centers, where they have ownership interests. It was designed to curb overutilization in Medicare and Medicaid.

U.S. Attorneys

The incoming administration may also see some turnover in U.S. attorneys, which are political appointees. For example, Zane David Memeger, the U.S. attorney for the Eastern District of Pennsylvania, resigned Nov. 22.

Memeger was a member of the Attorney General’s Advisory Committee and chaired the committee’s Health-Care Fraud Working Group. During his tenure, Memeger worked on a number of health-care fraud cases, including the case of Matthew Kolodesh, a hospice owner who was accused of defrauding Medicare.

Kolodesh was sentenced to 15 years in jail in 2014 and ordered to pay $16.2 million in restitution to Medicare and $16.2 million in a forfeiture money judgment.

Memeger’s resignation was preceded by the Nov. 14 resignation of David Hickton, U.S. attorney for the Western District of Pennsylvania.

Both Memeger and Hickton were appointed by President Barack Obama.

It’s common for U.S. attorneys to resign when there’s a change in administrations.

To contact the reporter on this story: James Swann in Washington at jswann1@bna.com

To contact the editor responsible for this story: Kendra Casey Plank at KCasey@bna.com

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