A Punchline or Just Plain Scary? The Big Business of Healthcare Kickbacks

Patient: Are you sure this is the right drug for me?

Doctor: Why, yes, Ms. Smith, I have no doubt this is the absolute best drug I
could prescribe.

Patient: How do you know that, doctor?

Doctor: Well, the company that makes this drug pays me a lot more than the other
drug companies do!

Sound like the punchline to a joke? But what if it isn’t? When we
go to a doctor, we assume he is recommending treatment in order to make
us as healthy as possible. But what if your physician is really deciding
what to recommend based on how much money he personally is going to get
in a kickback?

The Anti-Kickback Statute was Congress’ effort to stop insider dealing
that could skew medical decision-making by physicians. Hospitals, nursing
homes, home health agencies and pharmaceutical manufacturers have been
given fair warning that it is illegal to pay kickbacks to doctors to try
to influence them when they make medical judgments such as what home health
agency to recommend, what drug to prescribe or what medical device to implant.

Astonishingly, some healthcare organizations have tried end runs —
sometimes even direct runs – around the statute. In fiscal year
2014, thanks to DOJ, whistleblowers, and even some industry soul-searching,
the Government recovered nearly $200 million dollars from healthcare organizations
that had improperly billed Medicare and Medicaid for care for people who
had been referred as a result of a kickback.

Omnicare, Inc. – $124.4 million

The Omnicare False Claims Act case has received a great deal of attention,
and I’ve blogged about it before. The company provides drugs and
pharmacy services to nursing homes across the country, and it wound up
paying $124 million after several whistleblowers brought claims that Omnicare
was ripping off Medicare and Medicaid. The whistleblowers accused Omnicare
of a litany of violations. They said the drug supply company was giving
skilled nursing facilities discounts in order to induce them to dispense
pharmaceutical products that Omnicare supplied. They said that Omnicare
figured it made up the amount it lost in discounts to the nursing homes
because it got to charge Medicare and Medicaid for a large volume of drugs.

Several states also claimed they had been ripped off because they had funded
drugs for Omnicare patients through Medicaid. Those states were cut in
when the federal government made its recovery, to the tune of $8.24 million.

Under the False Claims Act, the first whistleblower received $17.24 million
of the amount recovered in the lawsuits. I loved the quote from the U.S.
Attorney for the Northern District of Ohio, where one of the cases was
filed. Steven M. Dettelback said, “Nursing homes should select their
pharmacy provider based on the best quality, service and cost to the residents,
not based on improper discounts to the nursing facility.”

His point is dead on. When families lovingly pick a nursing home or assisted
living facility, they assume the nursing home is going to select medical
care based on what their loved ones need, and not what the nursing home
or ALF is going to get. Kickbacks make families lose their trust in the
nursing home and the healthcare system as a whole.