Chairman Johnson Releases Report on How Medicaid Has Helped to Fuel the Opioid Epidemic

WASHINGTON — U.S. Sen. Ron Johnson (R-Wis.), chairman of the Senate Homeland Security and Governmental Affairs Committee, released a report Wednesday, “Drugs for Dollars: How Medicaid Helps Fuel the Opioid Epidemic,” detailing cases involving Medicaid fraud and how the Medicaid program has contributed to the opioid crisis. Johnson also sent a letter and provided a copy of the report to Health and Human Services Acting Secretary Eric Hargan and Centers for Medicare and Medicaid Services Administrator Seema Verma. Chairman Johnson asked HHS and CMS to explain in detail what the Administration is doing to prevent Medicaid fraud relating to obtaining and selling opioids.

“The opioid epidemic is the nation’s most pressing public health crisis. Although there are many factors contributing to the epidemic, and while Medicaid undoubtedly assists in treating opioid abuse, this examination presents evidence that the Medicaid program itself is also playing a role in driving the opioid epidemic. This facet of the opioid epidemic cannot be ignored. It is my hope that HHS and CMS will do a thorough review of Medicaid and work to stem the opioid epidemic.”

The letter to HHS Acting Secretary Hargan and CMS Administrator Verma can be found here.

10 highlighted cases are located on pages 20-48 in the report.

Key Findings of the report:

  • Medicaid has contributed to the nation’s opioid epidemic by establishing a series of incentives that make it enormously profitable to abuse and sell dangerous drugs.
  • At least 1,072 people have been convicted or charged nationwide since 2010 for improperly using Medicaid to obtain prescription opioids, some of which were then resold on the nation’s streets. The number of criminal defendants increased 18 percent in the four years after Medicaid expanded, 2014-2017, compared to the four years prior to Medicaid expansion.
  • The criminal activities range from beneficiaries simply selling opioids they obtained through the Medicaid program to more attenuated health care fraud involving Medicaid reimbursement.
  • The cases reflect massive frauds and bizarre twists, from a $1 billion scheme to defraud Medicaid and Medicare involving numerous health care providers, to a New York doctor and oxycodone distributor who blamed her actions on an alternative personality named “Nala.”            
  • Prosecutors are increasingly targeting suboxone—a drug that treats opioid addiction but itself can be addictive—meaning that the epidemic has reached the point where people are defrauding Medicaid using the very drugs designed to help the victims.
  • The case numbers are a conservative estimate, because evidence shows crime is under-reported; health care fraud in particular is rarely detected, including by government agencies; most health care fraud investigations never lead to prosecutions; and Medicaid anti-fraud efforts have fallen short. 
  • More than 80 percent of the 298 separate Medicaid-opioids cases identified were filed in Medicaid expansion states, led by New York, Michigan, Louisiana, New Jersey, and Ohio. The number of criminal cases increased 55 percent in the first four years after Medicaid expansion, from 2014 to 2017, compared to the four-year period before expansion.
  • Other preliminary data suggests a connection between Medicaid expansion and opioid abuse. Drug overdose deaths per one million people are rising nearly twice as fast in expansion states as non-expansion states, while opioid-related hospital stays paid for by Medicaid massively spiked after expansion.
  • Medicaid spending to treat victims is escalating, especially in expansion states. Spending on a single opioid overdose medication, for example, increased an astonishing 90,205 percent between 2011 and 2016, with costs rising “most notably after 2014.”
  • Other federal programs are also being exploited to obtain or sell opioids.  In preliminary research, majority staff found 243 instances in recent years of opioid-related Medicare fraud.  In November 2017 alone, the Department of Veterans Affairs had 60 ongoing criminal investigations concerning diversion of opioids.   Majority staff also found instances of opioid-related fraud in the food stamp program involving dangerous drugs such as oxycodone, vicodin, hydrocodone, and morphine.

The report can be found here

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