Psychiatrist’s Fraud Investigation Highlights Need for Further Oversight

A Chicago psychiatrist is responsible for the latest lawsuit involving fraud in the pharmaceutical industry.  According to the Justice Department, he received illegal kickbacks from pharmaceutical companies and submitted at least 140,000 false claims to Medicare and Medicaid for antipsychotic medications he prescribed for thousands of mentally ill patients in area nursing homes. Included in his scheme were at least 50,000 claims to Medicare and Medicaid, falsely stating that Dr. Michael Reinstein provided “pharmacologic management” for his patients at more than 30 area nursing homes and long-term care facilities, the lawsuit alleges.

According to Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, this lawsuit seeking triple damages under the False Claims Act (31 U.S.C. Sections 3729–3733), plus a civil penalty of $5,500 to $11,000 for each alleged false claim is “the largest civil case alleging prescription medication fraud against an individual ever brought in Chicago.”

According to the lawsuit, Reinstein was committing fraud using two basic routes. Most of his patients were indigent nursing home residents, so he routinely prescribed antipsychotic and other psychiatric medications, knowing that pharmacies would be dispensing the medications and submitting claims to Medicaid, and, beginning in 2006, to Medicare Part D. Additionally, Reinstein submitted Medicare and Medicaid claims for the pharmacologic management of his patients, with full knowledge that he was not engaging in substantive evaluations of his patients’ medical and psychiatric conditions to properly manage their medications. Instead, he allegedly prescribed medications to his patients based on his receipt of kickbacks from pharmaceutical companies.

 The government became aware of the potential fraud when it took a look at what Reinstein was prescribing. “Reinstein’s inordinate prescribing of clozapine stands in stark contrast to its extremely limited use by other physicians,” the lawsuit states. While generally only four percent of schizophrenia patients who were prescribed antipsychotics received clozapine, during the time Reinstein was allegedly accepting kickbacks from a pharmaceutical company, more than 50 percent of his patients were prescribed IVAX’s clozapine. At one nursing home, Reinstein had 75 percent of the 400 residents on IVAX’s clozapine.

Investigations like this reveal that CMS’ reliance on program sponsors to monitor data is beginning to pay off. Earlier this year, the OIG released a report on retail pharmacies with questionable billing.  It mentioned that CMS requires sponsors to have compliance plans that contain measures to detect, prevent, and correct fraud, waste, and abuse. CMS also recommends that sponsors use data analysis to detect and prevent fraud, waste, and abuse. Specifically, sponsors should use data analysis to recognize unusual trends and identify problem areas and to target their audits of contractors and subcontractors, including pharmacies.  That was the case with Dr. Reinstein.  His unusual prescribing habits attracted attention and as a result, he is now being charged with fraud.

And this isn’t the only way the government is combating this type of fraud. Set to go into effect early next year is the Physician Payments Sunshine Act, which requires companies to begin recording any physician payments that are worth more than $10 in 2012 and to report them on March 31, 2013. That includes stock options, research grants, knickknacks, consulting fees and travel to medical conferences at chi-chi hotels. The details will be posted in a searchable database starting Sept. 30, 2013. To read more about the Physician Payments Sunshine Act, and how it will be used to help target fraud, stop back at our blog next week!