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The Center for Public Integrity is delivering more bad news about the budget cuts to the fraud-fighting arm of Medicare and Medicaid. In my whistleblower law blog entry, Now Here’s A Bad Idea: Government Decreases Funding to Fight Medicare Fraud, I blogged about how severe these budget cuts will be, and why it would be penny-wise and pound-foolish to cut the funding for the office that draws money back into Medicare. Why would you cut funding to an organization that is making money for you, like the Department of Health and Human Services’ Office of the Inspector General?

The Center for Public Integrity has published new details about what OIG has decided to cut. OIG is dropping a program that would investigate hospitals accused of providing poor care to patients, and axing another investigation into whether nursing homes are overusing antipsychotic drugs, at enormous cost to Medicare and untold cost to the patients.

One of the cuts that simply staggers me is the plan to axe a review of the drugs that Medicare has paid for and yet that were never approved by the FDA. Apparently Medicare suspects that it may have paid as much as $3 billion for drugs under Medicare Part D, even though those drugs had not even been through the FDA review process. Medicare intended to investigate to try to find out whether this was true and what drugs were involved, but now cannot afford to do so.

I hope whistleblowers will come forward with the information, because it is outrageous that the Government has been charged $3 billion for pharmaceuticals that had never been approved. If the Government does recover money, the whistleblower who came forward with original information and who properly filed suit under the False Claims Act will be entitled to between 15% and 30% of what the Government has collected.

The agency also is cutting a study of durable medical equipment providers, which is simply terrible news. The fraud by suppliers of durable medical equipment (DME) has been appalling and open. This area has been an easy target for fraud because the DME companies are virtually unregulated and the state and federal governments have erected very few barriers to entry. Doctors and hospitals have far more reason to avoid fraud; they know that they can lose their licenses, or nearly as bad, their qualification for treating Medicare and Medicaid patients. The DME business, however, is so unregulated that I have seen situations where a company that is shut down just reopens under a new name, and keeps right on defrauding Medicare and Medicaid in the exact same way it was doing before.

Harvard Professor Malcolm Sparrow predicts we will regret these cuts three years from now. I agree. Given that government spending on medical care is ramping up, there is absolutely no excuse for cutting the existing mechanisms to stop fraud. If anything, HHS should be increasing the funding so that it can recapture the money being stolen from it and direct the funds back into its healthcare programs.

The OIG budget cuts make it critical that healthcare whistleblowers step forward. The Government’s resources have always been overwhelmed by the sheer volume of fraud, and now the mismatch will be even more pronounced. If medical insiders turn a blind eye to the fraud, the healthcare system will not be able to absorb the heavy cost of the fraud. We need honest people from all over the field — doctors, nurses, physicians’ assistants, anesethesiologists and anesthetists, billers, and coders — to step forward to let the Government know when it is being defrauded. Medicare and Medicaid will not be able to handle the job of funding healthcare and also the lining the pockets of hospitals, doctors, and medical practices that are willing to cheat the government in order to get more money.


Lee’s peers have named her a Georgia SuperLawyer every year for two decades.