NHS in England: Medical device "hospitality" may land doctors in jail.

Jeremy Hunt: NHS bosses face jail over links to drug firms

By Tim Ross,   @TimRossDT  Senior Political Correspondent

10:00PM BST 22 Aug 2015

Senior medical staff will be forced to declare all gifts and hospitality they receive from drug companies or face the sack and the threat of jail.

In a major crackdown on corruption in the NHS, all hospitals and GP groups will be required to keep a register of hospitality and gifts from pharmaceutical firms to health service staff.

Jeremy Hunt, the Health Secretary, says he was forced to act after the Telegraph uncovered “disturbing” evidence of senior NHS managers being paid thousands of pounds and taken on expensive trips by firms lobbying to get their drugs used.

The transparency, or “Sunshine rule”, will be mandatory from next year and any member of staff who fails to declare full details of perks they receive will face disciplinary action.

If they are found guilty of wrongdoing – such as for accepting gifts or luxury foreign trips in exchange for influencing the NHS to buy particular products – they could be prosecuted under the Bribery Act, which can result in unlimited fines and up to 10 years in jail.

The NHS in England buys £7 billion of drugs each year, meaning that the taxpayer-funded health service is a lucrative business opportunity for drug companies and manufacturers of medical devices and equipment.

However, a report from Lord Carter earlier this year found huge variations in the amounts different hospitals pay for particular items –such as latex gloves or syringes - and in the cost and effectiveness of certain treatments, including varieties of replacement hips. This prompted concerns that billions of pounds was being wasted on inefficient systems.

Last month, an undercover investigation by The Telegraph disclosed that senior health staff who help choose drugs for the NHS were paid to work as consultants to pharmaceutical firms keen for the health service to "switch" to their products.

Some NHS managers charged up to £15,000 to organise “advisory board” meetings for drugs companies – often in luxury hotels around the world, the investigation found.

Writing in The Telegraph today, Mr Hunt says it is "shocking" that thousands of sales reps are targeting the NHS. He says he has seen evidence that 65 reps were on site at one hospital at the same time.

Mr Hunt pays tribute to the Telegraph investigation for shedding further light onto the practice and uncovering “disturbing evidence of NHS staff and professionals, alleged to have received payment or hospitality from pharmaceutical firms and medical device manufacturers to influence NHS purchasing decisions.”

A government report by Lord Carter found some hospitals paid 2p for one particular medicine, while one hospital spent £150 on a slightly different variant.

“Even worse, the Telegraph’s investigation suggested that some NHS staff and professionals making these decisions may have been influenced by extravagant hospitality," Mr Hunt says. "It’s hard not to conclude that some sales reps have ben ripping the NHS off, and diverting taxpayers’ money away from patient care.”

The minister says he does not want to stop “sensible” collaboration between private firms and the health service “but we must not tolerate abuse”. Only a tiny minority of staff have been accused of wrongdoing “and the overwhelming majority would be horrified” that drugs and equipment were being bought for any reasons other than that they were best for patients and taxpayers, Mr Hunt says.

The Sunshine rule is based on a similar initiative that was introduced in 2013 in America. The Department of Health said corrupt health staff would face disciplinary action, including the sack, and potentially prosecution which could result in fines or even jail.

The Human Medical Regulations 2012 ban the offering of gifts in connection with the promotion of medicines to anyone who is qualified to supply or prescribe medicines. Convictions under these laws can result in a two year jail term. Acts of bribery or fraud are covered by the Bribery Act 2010 and the Fraud Act 2006. Convictions under the Bribery Act can lead to up to 10 years imprisonment and an unlimited fine.

The Sunshine rule registers will be maintained by NHS hospital trusts, and Clinical Commissioning Groups, which oversee GP services and are responsible for purchasing drugs and equipment.

http://www.telegraph.co.uk/news/health/11818749/Jeremy-Hunt-NHS-bosses-face-jail-over-links-to-drug-firms.html

The first thing that must done to end profit from patient harm.

http://www.ted.com/talks/lawrence_lessig_we_the_people_and_the_republic_we_must_reclaim.html

In 2011, Lawrence Lessig founded Rootstrikers, an organization dedicated to changing the influence of money in Congress. In his latest book, Republic, Lost, he shows just how far the U.S. has spun off course -- and how citizens can regain control. As The New York Times wrote about him, “Mr. Lessig’s vision is at once profoundly pessimistic -- the integrity of the nation is collapsing under the best of intentions --and deeply optimistic. Simple legislative surgery, he says, can put the nation back on the path to greatness.”

Read an excerpt of Lessig's new book, Lesterland >>

Knowingly implant a failed medical device for profit.

New York Times     EDITORIAL

What a Company Knew About Its Metal Hips

Published: February 10, 2013   FiDA Highlight

                                   

All-metal hip replacements have failed at a high rate and harmed many patients in recent years. Now there is evidence that a major manufacturer was aware of a serious problem with one of its models yet failed to alert patients or doctors and continued to market it aggressively.

The all-metal hips, in which a ball and a cup component are both made of metal, were thought to be superior in some respects to traditional hip replacements made of plastic and metal. Some 500,000 people in this country received all-metal devices over the past decade. They were not adequately tested because of regulatory loopholes the Food and Drug Administration is now moving to close, and began failing not long after implantation.

Thousands of patients have had to replace them in painful operations; hundreds more have suffered internal damage. Court documents now show that a major manufacturer, the DePuy Orthopaedics division of Johnson & Johnson, buried the bad news about a model known as the Articular Surface Replacement, the most failure-prone of the implants. The implants were recalled in 2010, but the documents show that as early as 2008 DePuy executives were told by a number of surgeons, including its own consultants, that the device appeared flawed. That was never disclosed to doctors who were putting the device into patients, nor were other unfavorable internal studies. By the time of the recall, the device had been implanted in about 93,000 patients around the world.

Surgeons have largely stopped using the device; even so, the company is facing more than 10,000 lawsuits in this country related to past implantations. Though the company says the evidence will ultimately show that it acted appropriately, it clearly has a lot of explaining t

MN Congressman Erik Paulsen Follows the Money

Erik Paulsen pushes medical device tax repealwhile getting megabucks from medical industry

By Aaron Rupar Fri., Feb. 8 2013 at 1:42 PM  FiDA highlight

On Wednesday, Republican U.S. Rep. Erik Paulsen introduced a bill to repeal the medical device tax included in Obamacare. In 2012, by a wide margin, Paulsen led the House in money received from medical supply companies.

Following the money suggests there's more to Paulsen's medical device tax view than a concern about stifling economic activity.

Seems like there's probably a connection between those two things, right? But Paulsen denies it.

Asked today by the Star Tribune whether the $110,100 he received from the medical supply industry last year plays a role in his interest in the medical device tax, Paulsen said: "No, none whatsoever." It's unclear whether his nose grew as he uttered those words.

Paulsen's push to repeal the tax is also supported by Amy Klobuchar and Al Franken, and guess what? Last year, Klobuchar received the third most money from medical supply companies of any Senator ($90,025); Franken clocked in at 12th ($30,349).

Of course, we're not exactly breaking news by suggesting financial contributions play a role what legislation various elected officials support. To take just one additional example, around this time last year, Klobuchar and Franken both supported anti-piracy legislation that would've benefited big media. And as we reported, both senators received hundreds of thousands of dollars from big media companies in the preceding years.

Last  year, Paulsen wanted to make up for the $29 billion that would be lost if the device tax were repealed by reducing health care subsidies for the poor. But as you'd imagine, that proposal wasn't popular with Democrats, and this year's bill doesn't specify what would make up for the lost revenue.

 Read my blog:  Failed Implant Device Alliance.  It records all the reasons why the public is now paying for the 'innovation' failures of the medical device industry.  Rep. Erik Paulsen ignores patient harm caused by medical products and thereby puts patients and medical device industry jobs in conflict.  Follow the money:  it is definitely corrupting our healthcare system. Secure Minnesota jobs are dependent upon creating value, not aggressively pursuing profit at all costs to ethics and morality.  Patient safety must be the first consideration and our government leaders pledge to put citizens rights before business interests.

021013 

New York Times: Medical Device Regulation Weak

LINK

EDITORIAL

Cozy Deal

Published: April 28, 2012  New York Times  (FiDA Blog bold added.)

                                   

Congress long ago shirked its responsibility to provide the Food and Drug Administration with sufficient money to do its job. So the companies that make drugs and medical devices — complaining that it took too long to win approval for their products — offered to pay “user fees” if the F.D.A. would hire more people to evaluate their applications. Critics charge that those cozy cash-fed agreements have given industry far too much influence over the regulatory process. Industry says that without the money, patients would have to wait far too long to get access to new treatments.

The F.D.A. needs more resources to do reviews. But Congress, which must ratify a new round of deals by the end of the year, needs to do a better job of ensuring that regulations are not weakened in the process.

The user fees, which cover more than 60 percent of the cost of reviewing drug applications and 20 percent of reviewing devices, have cut F.D.A. review times. But legitimate concerns have been raised that the negotiations have given away too much to industry — with too much emphasis on quick approvals while weakening protections, like the quick removal from the market of drugs or devices that are found to be dangerous.

In some cases Congress, heavily lobbied by industry, has impeded the F.D.A.’s ability to act, as when it required the agency to use the “least burdensome” approach for seeking information from industry. In some cases, the agency seems to have been loath to bite the hand that is financing it. A survey last year by the Union of Concerned Scientists found that 40 percent of the agency’s scientists felt that the consideration accorded to business interests was “too high.” A recent report from Public Citizen, a consumer advocacy group, noted that device-related deaths had been running above 2,000 a year and the average number of high-risk and moderate-risk recalls had doubled in recent years.

Regulation of devices has always been far less rigorous than drug regulation, and last week the Senate health committee approved a bill that would partly address that problem by beefing up the agency’s ability to require post-market surveys of medical devices and impose more stringent rules on devices that raise safety concerns.

But the Senate bill and pending House legislation would fail to close a worrying loophole. Currently, the vast majority of medical devices are cleared for marketing without clinical testing or weighty evidence that they are safe and effective; a manufacturer simply has to show that its device is “substantially equivalent” to one that has previously been cleared — even if the earlier device was recalled by the manufacturer after safety problems.

The best approach would be for the government to fully finance the F.D.A. That is unlikely to happen. So before it ratifies any new deal on “user fees,” Congress must ensure that patient safety is the first priority.

Pharma Lobbying ROI-77,500%

LINK

Big Pharma Gets 77,500% Return On Lobbying Investment

ZAID JILANI 4.3.2012 at 3:30 PM  United Republic

Investing is a time-honored American tradition. Millions of Americans have some sort of investment, and the stock market is an honored cultural institution. But investing your money in a publicly traded company isn’t the only way to make a buck. Let’s say you’re a powerful industry that wants to make a lot of money with an enormous Return On Investment (ROI). One way you could do so is by investing in lobbyists.

We here at United Republic have put together some stats about the sort of ROI Big Money expects for its lobbying dollars in Washington. As one example, an average American can expect a ROI of 11 percent for investing in one Blue Chip stock in the Dow Jones Industrial Average in 2010. Meanwhile, Big Pharma has a ROI of 75,500 percent for the lobbying dollars it spends to bar the government from bargaining for cheaper drug prices through Medicare:

 Of course, that money that Pharma and the rest of the industries on the chart are making is at expense of American taxpayers and American consumers. But as long as we have a political system that bends to the whims of Big Money, the best ROI you can get is to be a lobbyist.


My comment:
The #1 expenditure of Medicare is joint replacement. The IOM (Institute of Medicine) 7/29/12 reported that the 510(k) clearance of implanted medical devices should be scrapped because it does not assure safe and effective devices. The orthopedic PAC was larger than the AMA in the last election. Connect the dots. Patients are in medical and legal purgatory globally because of the entitlements that ROI bought.

CONSUMER BEWARE ! YOUR SAFETY IS NOT VALUED ! Implanted medical device profit prevails.

LINK HERE: FDA/politicians/lobbyists prefer profit over safety of implanted medical devices
Follow the link above or read the copy below for an excellent analysis in today's Sunday Business section of the Minneapolis StarTribune 2/26/12

(Disclosure:  I have added bold and underlines and Steven Baker-FDA MedWatch adverse event #5009052- is my brother. The metal piece he is holding was removed by the designer/surgeon just 4 months after the original implant.)

Minnesota resident Steven Baker says the FDA-approved prosthetic elbow implanted in his arm has never worked properly and continues to cause excruciating pain. Records show that the part of the prosthesis that malfunctioned in Baker’s arm had been the subject of two recalls in Canada and an “adverse event report” of the U.S. Food and Drug Administration.

 Medical device makers gain political momentum

Article by: JIM SPENCER and JAMES WALSH , Star Tribune staff writers Updated: February 25, 2012 - 3:39 PM

Consumer safety proponents press for tougher standards while firms want faster approvals.

WASHINGTON - Steven Baker's artificial elbow locked up as he was going through a metal detector at a Senate office building recently. The malfunctioning FDA-approved joint left the 56-year-old Minnesota millwright in a world of hurt.

Not unlike the consumer movement he represents.

As victims of faulty medical devices press for tougher standards, the focus of the debate in Congress has shifted from consumer safety to quickening the approval process for new devices. Critics and proponents alike agree that the medical device industry, which has deep roots in Minnesota, has successfully pushed a D.C. agenda that seeks to simplify federal oversight of product development.

"Well-funded lobbyists are skewing the vision," said Baker, who came to Capitol Hill as part of an effort by the Consumers Union Safe Patient Project to show what happens when medical devices fail.

Despite such efforts, the device industry's political momentum is building along a number of fronts. Among them:

•A bill in the U.S. House aims to change the mission statement of the Food and Drug Administration to include "job creation" as well as safety.

•Another bill, introduced by Rep. Erik Paulsen, R-Minn., gives private reviewers outside the FDA new powers in the approval process for some life-sustaining and permanently implanted medical devices.

•In the Senate, Minnesota Democrat Amy Klobuchar introduced legislation that, in part, loosens conflict-of-interest rules for those who review the safety of medical devices.

•An FDA-funded report by the Institute of Medicine has gone nowhere, despite strongly concluding that a program allowing certain devices to go to market without testing was not in the public's best interest. In fact, the device industry so effectively countered concerns raised by the institute that one congressman suggested the FDA seek a refund.

Meanwhile, rules to create an identification system for medical devices to help recall unsafe products remains stalled, several months after they should have been published. The medical device industry has called the ID system burdensome. A high-ranking FDA official said he cannot say if the administration will release the rules this year.

Steve Ubl, who helps represent the interests of the medical device industry, acknowledges that policy discussions among Congress and federal regulators have broadened and become less acrimonious over the past year.

"Today, we're discussing the role of FDA regulation in the context of innovation, investment, economic growth and global competitiveness," said Ubl, president of AdvaMed, which bills itself "the world's largest medical technology association."

Officials with Medtronic, the world's largest device maker, say they like the direction of policy proposals in Washington.

"We look forward to continuing to work with FDA to strengthen the process and assure that safe and effective technologies get to market in the U.S. in an appropriately timely manner," said Amy von Walter, spokeswoman for Medtronic, which is based in Minnesota.

Boston Scientific, which also has a huge Minnesota presence, agreed:

"Boston Scientific's first priority is patient safety," said Denise Kaigler, senior vice president of corporate communications. "The FDA routinely requires the submission of extensive testing results and scientific data."

Balancing speed and safety

Regulators, businesses, politicians and patients have battled for years over whether America's public health is better served by avoiding risks or by faster innovations in the medical device industry.

For people like Baker, who received a device that doesn't work properly, the fast-track process frustrates and confuses. For Minnesota's 400 medical technology companies and their 35,000 employees, changes to the system could be time-consuming and costly.

Experts agree that roughly 1 percent of medical devices introduced in the U.S. get recalled. Where they struggle is reaching consensus over whether that is a positive outcome.

Industry representatives and some patient groups say time is the problem. They say inefficient device approval procedures keep Americans from getting cures or pain relief as fast as patients in many other countries, especially the European Union.

The medical device industry "is behaving as they are supposed to," said Eric Campbell, director of research at the Mongan Institute for Health Policy at Harvard Medical School. "The first thing people have to realize is that they make a product to sell a product."

What consumers need, Campbell said, is "a policy champion who is an elected official." Otherwise, no one addresses situations like Baker, who lives with excruciating pain from an FDA-approved medical device that he says never worked right.

Baker met with staff members in the offices of Paulsen, Klobuchar and Sen. Al Franken. In statements after the meetings, the Minnesota trio affirmed their commitments to patient safety while emphasizing the need for faster device approval.

"We need to ensure patients have access to safe, lifesaving treatments and services," Klobuchar said. "This includes preventing regulatory burdens from getting in the way of delivering lifesaving products to patients who need them, while still ensuring the highest level of patient safety."

Patients share their stories

Dr. Jeff Shuren, the physician who directs the FDA's section on medical devices, said the agency is "not moving away from patient safety." He defended the current device approval system as "safe and effective."

"All devices have risks," he said. "What we look for is where are there problems. We don't have to make a major overhaul."

Lisa McGiffert, director of the Consumers Union Safe Patient Project, says it's critical that patient advocates demonstrate the serious consequences when a medical device fails.

"Statistics are one thing," she said. "Real people have a much stronger impact and are harder to ignore."

Medical device victims like Baker and Jim Shull of Browns Mill, N.J., hope so.

On a recent day, Shull shifted awkwardly from sitting to standing as he waited to testify before a House subcommittee. Shull lives with constant nerve pain and a long, disfiguring scar that marks the removal of a malfunctioning piece of FDA-approved surgical mesh implanted during a hernia operation.

Most of the testimony concerned getting medical devices to market faster. There was little talk about protecting patients.

"For me to get their attention," Shull mused, "I would need to take every one of these committee members into a back room, drop my drawers and show them what happened."

Jim Spencer • 202-408-2752 Jim Walsh • 612-673-7428

ACTION ALERT !!! Please join me in supporting FDA employees that are doing their jobs.

LINK HERE: Give FDA Medical Device Safety Whistleblowers your support!

	Stop the FDA's Harassment of Whistleblowers The FDA's illegal program of singling out whistleblowers for special monitoring has become national news. When the FDA found out that employees had reported dangerous medical devices, it decided to squash the employees rather than the faulty products. FDA managers put industry interests above patient safety. Senator Grassley and Representative Issa have now launched Congressional investigations of the FDA, demanding answers about why whistleblowers were singled out for special surveillance Please follow the link above and support the federal employees that are doing their jobs:  protecting the citizens of the United States.

2011 report: 10% of Medicare payments go toward fraudulent claims.

MedPage 2/14/2011 Emily P. Walker LINK HERE

2011 Healthcare Fraud Recovery Largest Ever

By Emily P. Walker, Washington Correspondent, MedPage Today

Published: February 14, 2012

WASHINGTON -- The federal government recovered $4.1 billion in fraudulent healthcare payments in fiscal 2011, the largest amount ever collected in a single year, federal officials announced Tuesday.

Ramped-up fraud-fighting efforts led to a 50% increase from 2009 to 2011 in judgments and settlements of payments fraudulently obtained from Medicare and Medicaid, according to the Justice Department and the Department of Health and Human Services (HHS).

The payback results from another record number: criminal charges were filed against 1,430 defendants for healthcare fraud-related crimes, according to HHS.

A total of 743 defendants were convicted during the year, HHS said. The cases included durable medical equipment fraud; illegal marketing of medical devices or drugs for uses not approved by the FDA, including unlawful pricing by drugmakers; and violations of self-referral and anti-kickback laws.

Much of the success stemmed from the Health Care Fraud Prevention & Enforcement Team (HEAT), a task force created in 2009 to prevent fraud, and the Medicare Fraud Strike Force teams.

Those teams use data analysis to identify high billing levels in healthcare fraud hot spots -- such as Detroit and Miami -- to target for investigation and possible prosecution. In 2011, the teams added Chicago and Dallas to their "hot spot" list, which brought the total number of targeted cities to nine, including Los Angeles, Houston, Brooklyn, N.Y., Baton Rouge, La., and Tampa, Fla.

"Fighting fraud is one of our top priorities and we have recovered an unprecedented number of taxpayer dollars," said HHS Secretary Kathleen Sebelius in a press release. "Our efforts strengthen the integrity of our healthcare programs and meet the president's call for a return to American values that ensure everyone gets a fair shot, everyone does their fair share, and everyone plays by the same rules."

The Affordable Care Act includes $350 million in healthcare fraud-fighting funds. One new provision in the law requires those providers and suppliers wishing to participate in Medicare, Medicaid, and the Children's Health Insurance Program that have been deemed to be at higher risk of fraud or abuse to undergo licensure checks and site visits to confirm legitimacy.

The $4.1 billion was either paid back to the U.S. Treasury or to the Centers for Medicare & Medicaid Services, transferred to other federal agencies that administer healthcare programs, or paid to private persons who were the victims of Medicare fraud.

Since the Health Insurance Portability and Accountability Act established a national healthcare fraud and abuse program in 1997, $20.6 billion has been paid back to the Medicare program.

A government report from 2011 found that nearly 10% of all Medicare payments go toward fraudulent claims.

1 Comment

Joleen Chambers

Today 2/15/12 at 10 ET the House Energy and Commerce Committee/Subcommittee on Health will be discussing Reauthorization of MDUFA: What It Means for Jobs, Innovation and Patients. The #1 expenditure of Medicare is joint replacement and the IOM 7/29/11 reported that the FDA mechanism for clearing implanted medical devices - 510(k)- is legislatively flawed and should be scrapped. Victims of failed implanted medical devices are in medical and legal purgatory and our economy is in peril as a result of these expensive mistakes. Innovation does not equate success. Our economy will be sustainable when citizens have jobs that enhance our nation. The medical industry does not get a "pass". It is revealing that "patients" are mentioned last-again!

Knee replacements have tripled from 1997 to 2009

(Link here) 5% of Americans over age 50 have artificial knees!

The article was published today by AP reporter, Lindsey Tanner.   The US does not have a national registry of implanted devices and the medical device industry has resisted it for 20 years.  Consumer/taxpayer outrage must counter the powerful lobby of the medical device industry to propel Congress to change the charter of the FDA.  Give us our damned data so that we can make life-enhancing decisions!  Joint replacements are the #1 expenditure of Medicare.  Taxpayers paid for a large majority of procedures and the aggregate data generated from those purchases should be made available to patients/citizens/taxpayers.  It is NOT proprietary information!

The Department of Transportation investigates/regulates/recalls effectively:

(Link here) Toyota RAV4 recalled for power window switch defect that may cause fire.

Product Safety Commission investigates/regulates/recalls effectively:
(Link here) Coffee makers recalled for burn risk.

The FDA missed the failures of 37,000 failed J&J metal on metal hips.

Our economy is dependent upon getting this right.  No more victims of medical and legal purgatory of failed implanted devices!

Congress: put public health before medical device industry

U.S. Victims bravely tell their stories. This is so very wrong.

My brother and I are grateful to be with the Consumers Union Patient Safety Project.  We have met with Congressional office holders and their staffs to demand better regulation of implanted medical devices.  The response has been discouraging since there are 12 proposed pieces of legislation pertaining to medical devices, but none includes patient safety and public health protections.  The medical device industry is lucrative and has a powerful lobby.  This is an election year and politicians are raising money.  That is an excuse for not doing their job: protecting American citizens from unsafe and unproven implanted medical devices.  Corporations that have been granted the privilege (not entitlement) by the citizens of the United States to do business in our country must act as lawful and ethical businesses.  Using influence to corrupt regulations so that failed medical devices are not identified and banned and obscuring information that would inform patients so they can select life-enhancing devices is criminal.  It must stop.
Steven Baker, MedWatch # 5009052 came to Washington, DC and encountered the metal detector at the Senate Hart Office Building.  He was asked to take off belt and shoes and his implanted elbow suddenly went "out of alignment" .  During his presentation he was asked if we should call an ambulance.  It is unreasonable to ask the victims to do anymore.  It is time for the medical device industry to be honest, responsible and account for the failures as well as the successful innovations that it produces.  Our economy cannot sustain this and no patient deserves this medical and legal purgatory.

Health Leaders article: Docs Need to Blow the Whistle on Fraud

Doctors need to blow the whistle on fraud. (Link to Health Leaders/Joe Cantalupe article)

Docs Need to Blow the Whistle on Fraud

Joe Cantlupe, for HealthLeaders Media , December 15, 2011

Without skipping a beat, a huge medical device manufacturer allegedly found an easy way to influence physicians to use that company's brand of defibrillators and pacemakers.

How? By giving doctors kickbacks, the Justice Department says.

In a settlement agreement reached this week, Medtronic Inc. of Fridley, MN, agreed to pay $23.5 million to resolve allegations that it used physician payments as kickbacks to "induce doctors" to implant the company's products.

Daniel R. Levinson, inspector general of the U.S. Department of Health and Human Services, noted in a statement, "Patients trust that decisions to implant certain pacemakers or other medical devices are based on their own health interests and not influenced by kickbacks."

This kind of news can certainly erode patients' trust in doctors. And there's more.

The Justice Department's announcement about the Medtronic settlement was barely 24 hours old when, in a separate, unrelated case, several dozen federal and state investigators swooped into a radiology and diagnostic facility in Orange, NJ, arresting 13 doctors and a nurse practitioner in a cash-for-tests referral scheme.

"When physicians take kickbacks that influence how they practice medicine, it has the potential to taint the medical advice and care that is provided to their patients," Office of Inspector General Special Agent Tom O'Donnell said in an official statement.

Bribes and kickbacks are only part of the problem in healthcare fraud, which includes identity theft, illegal prescription drug sales, and countless other areas of wrongdoing. These transgressions do occasionally involve doctors.
The wrongdoing at Medtronic unraveled after two whistleblowers sued the company and alerted authorities to the problem, according to the Justice Department.

Because of their role, the do-gooders will receive a tidy sum of more than $3.96 million. Neither whistleblower was a physician. Justice Department officials declined to comment when I asked how many physicians may have been involved in the Medtronic case.

That's too bad. Physicians need to step up to ferret out fraud, not be a part of it. Most are honest, upholding the profession's reputation. The actions of a few can cast a long, foreboding shadow on the legions of honorable practitioners.

Shortly after he resigned as head of CMS, Don Berwick, MD, touched on the fraud issue in a conversation with journalists. In his 18-month tenure, Berwick said he found that fraud, waste, and abuse were more significant problems than he previously thought. Apparently, Berwick didn't realize how widespread the problem really is.

That's surprising. There were plenty of clues before Berwick stepped into his office in April 2011 that fraud was a big and burgeoning trouble spot in healthcare. Now that he has left, CMS appears to be struggling still with how to uncover fraud, as the behemoth agency tries to raise quality standards under healthcare reform, while also dealing with inadequate data systems that would improve its watchdog functions (more on that in a moment).

As for Berwick, one federal official who is knowledgeable about these decisions told me the CMS leader "was concentrating on other things," such as forming Accountable Care Organizations.

It seems that fraud in Medicare and Medicaid will be a major challenge for Berwick's successor to overcome. Federal officials want physicians to play an instrumental role in helping to stop fraud, and they're backing up that desire with the power of the dollar. Healthcare reform provides fiscal incentives to do so. Berwick had estimated that fraud, waste, and abuse total about $30 billion a year for the whole healthcare system, including up to $10 billion just within CMS.

The week Berwick talked about fraud with journalists, Gary Cantrell, assistant inspector general for the Office of Inspector General (OIG) at HHS, addressed the extent of Medicaid fraud in Congressional testimony. His comments didn't make headlines, but they were revealing nevertheless, as he described the widespread scope of Medicaid fraud, including prescription drug abuse and problems in the home health care services arena.

"We are now seeing more Medicaid fraud cases involving home health services than any other single program area," Cantrell told two House subcommittees. One investigation of a leading home health services company, Maxim Healthcare Services, led to a $150 million settlement of fraud charges.

Fraud in home health services is not a new problem. There have been repeated warnings that CMS needs to address the issue.

"Auditors have been concerned about fraud in home health care for years, but the problem never seems to get solved," according to a 2009 report from the Cato Institute, a think tank in Washington, D.C.

As in Medicare, Cantrell identified "persistent fraud trends" involving misuse of prescription drugs in Medicaid. He referred to a case in Washington state in which a physician established connections with local heroin users and wrote medically unnecessary prescriptions for narcotics, including Oxycodone and Vicodin.

Cantrell also revealed that the OIG has a list of the 10 "most wanted" healthcare fugitives. Among them: an Illinois physician, Gautam Gupta, MD, sought for allegedly defrauding Medicaid and private insurance companies of more than $24 million, through weight loss clinics.

Whether it's improper billing procedures or weight loss fraud, Medicaid investigations are hampered by a lack of "national-level, timely Medicaid data," he says. While the Medicare databases are efficient, Medicaid's Medicaid Statistical Information System (MSIS) is the only source of nationwide Medicaid claims, but it is typically 1½ years old when released by CMS to users for data analysis purposes, which renders it ineffective for investigative purposes. "In law enforcement, a 1½-year time lag is an eternity," Cantrell says.

Essentially, the OIG is waiting for CMS to get its act together.

In the meantime, Cantrell says he's hoping that providers and patients get more involved in thwarting fraud. The OIG's website offers a tip line for fraud cases. And the OIG recently published a white paper, A Roadmap for New Physicians: Avoiding Medicare and Medicaid Fraud and Abuse.

This roadmap offers a journey worth taking, because the integrity of the profession is at a crossroads.

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Joe Cantlupe is a senior editor with HealthLeaders Media Online. He can be reached atjcantlupe@healthleadersmedia.com.

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Back

Insurance decision delayed is treatment denied for patients . . . profit for industry.

Link to Huffington Post story about insurance shenanigans that hurt patients/consumers.
Tom Wilson, CEO of Allstate, earned $9.3 million in 2010.

Insurance Claim Delays Deliver Massive Profits To Industry By Shorting Customers

First Posted: 12/13/11 05:24 PM ET Updated: 12/13/11 05:52 PM ET

WASHINGTON -- Unlike many other businesses, the insurance industry is bound by law to act in good faith with its customers. Because of their protective role in the lives of ordinary citizens, insurers have long operated as semi-public trusts. But since the mid-1990s, a new profit-hungry model, combined with weak regulation, has upended that ancient social contract.

"Claims has been converted into a money-making process," said Russ Roberts, a New Mexico-based management consultant and former business professor at Northwestern University who has studied the insurance industry's evolution from a service business to a profit-driven machine.

The change started when consulting giant McKinsey & Company sold Allstate and other leading insurance companies on a new system to boost the bottom line: Rather than adjusting claims the traditional way, which gave claims managers wide latitude to serve customers, insurers embraced a computer-driven method that produced purposefully low offers to claimants.

Those who took the low-ball offers received prompt service, while those who didn't had their claims delayed and potentially were reduced to bringing expensive lawsuits to fight for their benefits. As former Allstate agent Shannon Kmatz told the American Association for Justice, the trial lawyers' lobby, the strategy was to make claims "so expensive and so time-consuming that lawyers would start refusing to help clients." The strategy was dubbed "Good Hands or Boxing Gloves" by the consultants, riffing on Allstate's advertising slogan.

McKinsey, which was reportedly hired by Allstate in 1992, prepared about 12,500 PowerPoint slides to present its plan. The slides were introduced in litigation in 2005, when the insurer turned them over under a temporary protective order. David Berardinelli, a New Mexico-based trial lawyer who was working on the case, detailed the slides in his 2008 book, "From Good Hands to Boxing Gloves: The Dark Side of Insurance."

McKinsey's strategy put profits above all. One slide in the McKinsey presentation illustrated this philosophy by painting the insurance business as a zero-sum game: "Improving Allstate's casualty economics will have a negative economic impact on some medical providers, plaintiff attorneys, and claimants. ... Allstate gains -- others must lose."

Allstate has certainly gained: It made $4.6 billion in profits in 2007, double its earnings in the 1990s. The stunning increase, said Russ Roberts, came through "driving down loss values to an average of 30 percent below the actual market cost" -- that is, paying dramatically less on claims.

"An insurance company can make a lot of money on the small claims," said Jay Feinman, a professor at Rutgers University School of Law, "because if you save a few dollars on a huge number of claims, it's worth more than saving a lot of dollars on a very small number of claims."

Allstate is the best-known user of the McKinsey model, topping the list of the "Ten Worst Insurance Companies in America" published by the American Association for Justice. But Allstate's rise in profits has led most of the industry to adopt the same approach. McKinsey has worked with State Farm, another insurance giant, and other companies in redesigning their claims systems. Feinman cautioned in his book "Delay, Deny, Defend" that the two major names "are just the largest players in the industry ... [the ones] whose involvement with McKinsey & Company in the transformation of claims is the best documented."

Roberts told HuffPost that, by his estimate, the companies that take in 70 percent of total insurance profits in the United States now abuse their obligations to their policyholders. When Allstate CEO Tom Wilson earned $9.3 million last year, he was not even on the top 10 list of best-paid insurance executives, compiled by New York Law School's Center for Justice and Democracy. (The top 10 list was led by William R. Berkley of W.R. Berkley, who made $24.6 million in 2010.)

Yolande Daeninck, spokeswoman for McKinsey & Company, said, "In line with our firm's longstanding policy to not discuss our client work, we decline to comment."

A HOUSE BURNS DOWN

According to an unpublished Harris Interactive Poll conducted in September, 16 percent of surveyed adults have experienced financial hardship while waiting for an insurance claim to be settled or know someone who has. The same poll found that 59 percent of adults believe that most insurers intentionally delay claims -- and those with an income of $35,000 or less were more likely to agree.

With 15.3 percent of Americans -- about 46.2 million people -- living in poverty, close to 10 percent unemployment, and roughly 2 million people who've been looking for work for more than two years, Allstate's business model is profiting off many consumers at their most vulnerable. A claim delayed by even a month can spell financial disaster for a family. As a National Bureau of Economic Research study found, about 25 percent of Americans could not come up with $2,000 in a 30-day period.

Madeleine Burdette, a retiree, is an Allstate customer who reported her experience on the popular website AllstateInsuranceSucks.com. When her Georgia home burned in November 2010, Burdette was in Ohio, where she lives most of the year. She said the fire marshal in Georgia told her that her house would have to be torn down. "The entire middle of the house was gone," Burdette said. "It took out everything. Just the outside walls were left untouched."

The next day, she said, Burdette's Allstate adjuster told her the house could be repaired. Allstate also said it would have to do a thorough investigation to determine if the fire was caused by arson. If it was arson, the adjuster told Burdette, Allstate would not pay for any damages. According to former employees, such investigations are a common practice at Allstate and are encouraged by supervisors as a way to avoid paying claims quickly.

Burdette, who lives on her Social Security checks, flew from Ohio to survey the damage herself. While in Georgia, she contacted public adjuster Anita Taff. Public adjusters serve as advocates for individuals who feel they need another set of eyes on a claim. Taff met with Burdette at the house, Burdette said, and discussed the damage with the contractor Burdette had hired. Upon returning to Ohio, Burdette spoke with Taff over the phone to find out what her impression was. Burdette said Taff warned her that the contractor might go along with Allstate's insistence that the house could be repaired.

"I believe [delaying claims] is an effort to put the squeeze on policyholders," Taff told HuffPost. She explained that while a claim is being held up, the insurance company may stop paying the policyholder's additional living expenses, forcing the policyholder to cover mortgage and rent entirely out of pocket. "That's something that many people cannot afford to do, so they're forced to take a lower settlement," Taff said.

Burdette said she immediately called the contractor and told him not to go near her house. According to Burdette, she received a phone call within 10 minutes from her Allstate adjuster asking her not to hire Taff or any other public adjuster. "He said, 'If you hire a public adjuster, I'm going to deny and delay this claim for as long as possible,'" Burdette told HuffPost. Taken aback, she then asked if it wasn't in his best interest to settle the claim. "Not really," he replied, according to Burdette.

Although the Allstate adjuster eventually agreed to work with Taff on Burdette's claim, her troubles did not end. The contractor who had been banned from her property nevertheless worked on the house and billed Allstate for $22,000. Burdette had explicitly told Allstate not to pay the contractor a dime, she said, but the company paid him under her policy anyway. The contractor couldn't be reached for comment.

More than a year later, Burdette's home is still being repaired and Allstate refuses to reimburse the $22,000. She consulted four different lawyers to see if she had a legal case. While she said they all agreed that she was entitled to reimbursement, she said they also agreed that she lacked the funds to fight the insurance giant. "They told me, 'You'll run out of money,'" she said.

NO FLUKES

Roberts, the management consultant, said that companies like Allstate attempt to pass off claims delays as fluke occurrences. But, he said, they are actually routine and intentional products of the McKinsey system: "The Allstate/McKinsey system for 'lowballing' claims payments ... is driven by the claims performance management and pay systems from the top to the bottom of the organization."

Feinman, the Rutgers law professor, also suggested the deck is stacked against individuals who make claims. "You have an accident or a fire in your house. You call up the insurance company. You describe the circumstances. Maybe they send an adjuster out, and they say it's not covered, or it's covered but here's the dollar amount that we're obligated to pay you," he said. Most people, Feinman said, do not have the expertise "to know whether or not that's right."

Allstate spokeswoman Laura Strykowski said the company can't comment on specific cases because of privacy requirements, but considers its claims process both legal and effective. "Our customers and claimants receive prompt and courteous claim service and our goal is to settle each claim fairly and efficiently," she wrote to HuffPost. "As a regulated company, Allstate's claim practices are available to and regularly reviewed by state departments of insurance."

But experts like Feinman argue that insurance regulation has become little more than a fig leaf. State insurance departments are usually understaffed and overwhelmed. And even if they had the legal firepower to contend with giant insurance companies, Feinman said, "the regulators are closer to the industry than they are consumers." Eleven of the past 15 presidents of the National Association of Insurance Commissioners (NAIC) went on to work for the insurance industry after leaving office, while a 17-year study from two Georgia State University professors found that around half of state-level insurance commissioners did so as well.

When combined with penalties that Feinman described as "laughably low" in many states, this close relationship means that regulation does not provide an effective check on insurance companies. And state governments themselves have incentive to place consumers on the backburner. Because insurance taxes are a major source of revenue for the states, said Roberts, insurance oversight commissions are usually more concerned with keeping companies solvent than resolving the problems of policyholders.

With the exception of the federal Affordable Care Act, insurance is regulated on a state-by-state basis. Although most states set a specific timeline for how quickly an insurance company must initially respond to claims, there is much more leeway when it comes to settling those claims. For example, in Missouri, an insurer must acknowledge receipt of a claim within 10 days and either pay or deny it within 15 days of receiving all necessary documentation. However, if the insurer decides it needs more time to investigate, it may keep delaying as long as it updates the policyholder every 45 days. In Georgia, where Burdette's house burned down, the insurer must notify the policyholder if it will affirm or deny a claim within 60 days. However, the insurer does not have to settle the amount it will pay within that period. Many states have similar provisions that allow insurers to put off paying claims indefinitely.

According to NAIC data, claim delays have long been the most frequent cause of policyholder complaint. As of Nov. 28, 2011, the NAIC had received 11,053 delay-related complaints this year alone, comprising almost a quarter of the year's total complaints. These data only reflect confirmed complaints -- the ones that the state insurance commission has investigated -- so the actual number of delayed claims is likely much higher.

Complaining to state regulators about the insurer's delay is always an option, but its effectiveness is questionable at best. "I have not seen it be successful," said Taff.