by Morgan True vtdigger.org At the suggestion of the Attorney General’s Office, Senate lawmakers will introduce false claims legislation this week targeted at preventing fraud in the state’s health care system.
“As we’re moving to a world where the state’s role in health care is greatly expanded, ensuring that Vermont has the tools to protect its money from waste fraud and abuse is critically important,” said John Treadwell, chief of the criminal division in the Attorney General’s Office.
Vermont’s planned universal health care program would make state government the primary payer of nearly all medical claims, hence the aphorism single-payer.
Vermont AG William Sorrell, right, and Assistant Attorney General John Treadwell. VTDigger file photo
The legislation will mimic the federal False Claims Act, which dates back to the Civil War and was designed to punish unscrupulous vendors for selling the Union faulty weapons or other equipment.
Passing a Vermont false claims act targeted at fraud in the health care system, specifically Medicaid – which receives federal matching dollars but is a large expense to the state – will have immediate benefits, Treadwell said.
If states pass their own federally compliant false claims acts, they can keep a larger percentage of the money recovered from resulting lawsuits and settlements.
In the past four years, Vermont’s Medicaid fraud unit, with help from the U.S. Attorney’s Office and the Department of Justice, has collected $23.5 million in settlements.
Currently, that money is a 60-40 split, with the federal government taking the lion’s share, Treadwell said. States with federally compliant false claims acts, which essentially broaden the tool kit for state prosecutors to go after fraud, split settlement money evenly with the feds.
Though some amount of Medicaid fraud takes place at the beneficiary level, much of the costly fraud takes place when providers engage in “phantom billing,” charging Medicaid for services not rendered, or “up-coding,” where providers bill less expensive services as more costly procedures, Treadwell said.
There have also been instances in which large pharmaceutical companies have been caught paying kickbacks to physicians to prescribe their drugs, leading to significant multistate settlements, he added.
While Vermont’s health care reform agenda creates a compelling reason to ensure the state has a strong health care-oriented false claims act, the statute could be written broadly to include any situation where the government is being defrauded, Treadwell said.
Ohio’s false claims act is expansive, and has allowed the state to more effectively tackle fraud in the transportation sector, he said.
“That’s a question of drafting, which will be up to the legislators,” Treadwell said, “Our preference would be to have a statute that allows us to protect all state dollars.”
The Attorney General’s Office has been in discussions with the Senate Finance and Judiciary committees, and has worked with attorneys from the Legislature on draft language.
When the legislation is introduced next week, the Senate will look to tack it on to either the budget bill or the miscellaneous tax bill, said Sen. Dick Sears, D-Bennington, chair of Senate Judiciary.