HHS wants $10 million potential payday for Medicare fraud whistleblowers

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Health and Human Services Secretary Kathleen Sebelius
Health and Human Services Secretary Kathleen Sebelius

The Department of Health and Human Services is trying to encourage Medicare fraud whistleblowers by substantially increasing their potential reward. The current maximum award of $1,000 would go up to $9.9 million per whistleblower if a recently proposed rule takes effect.

HHS based this change on a similar award program the IRS put in place for tax fraud whistleblowers. Due to increased whistleblower reports of “sanctionable activity,” the federal government will recover an additional $24.5 million per year if the rule is enacted, HHS estimates. The agency also anticipates savings will come from providers' scrutinizing bills more closely.

“In order for an individual to be eligible to receive a reward, the information must relate to the activities of a specific individual or entity and must specify the time period of the alleged activities,” the proposed rule states. “Examples of specific activities include, but are not limited to, billing for services never rendered, and billing for supplies not ordered.”

The proposed rule will be published in the Federal Register on April 29, and comments will be accepted through June 28. The proposed rule calls for awards of up to 15% of the first $66 million in recovered funds, and HHS is seeking comments on whether the whistleblower payouts should be increased to the 30% range.

The rule could increase the number of whistleblower suits brought against nursing homes. Long-term care stakeholders have noted that these cases already seem to be on the rise. Recent high-profile examples include a $2.7 million settlement in a therapy billing case involving Grace Healthcare and a $25 million settlement in a kickback case involving Amgen and Kindred Healthcare.