DoD Wants to Impose CMPs on Those Who Defraud TRICARE

A blue door with two small holes in it.

Plagued by fraud and abuse targeting its TRICARE program, the U.S. Department of Defense, on May 1, issued a proposed rule that would allow it to impose civil monetary penalties (CMPs) against providers and suppliers who commit fraud and abuse against the TRICARE program. The new rule would create the “Military Health Care Fraud and Abuse Prevention Program.â€

TRICARE is the federal healthcare program that provides benefits to the military, military retirees and their families. DoD says the authority is necessary because of the Department of Justice’s limited resources to go after those who commit fraud against TRICARE.

Instead of re-inventing the wheel, DoD proposes to adopt “well-established CMP rules and procedures†used by the U.S. Department of Health and Human Services “to enable both TRICARE and TRICARE providers to rely upon Medicare precedents and guidance issued by the HHS Office of Inspector General (OIG) regarding conduct that implicates†the CMP law.

In its proposal, DoD points to the exponential increase in the amount of fraud targeting TRICARE. More specifically, the amount of money that has gone toward the payment for expensive and often unnecessary compound drugs. Last year, TRICARE estimated its pharmacy program lost more than $1.5 billion to fraud, but only recovered an estimated $280 million.

The proposal suggests that creating a CMP program within DoD will serve “a complementary function to the criminal justice process and provide additional deterrence to fraudulent actions against the Federal TRICARE Program and the recovery of funds lost to fraud and abuse.â€

DoD proposes to follow HHS’s process and procedure for imposing CMPs, as well as how it calculates the amount of penalties and assessments.

The proposed rule addresses such matters as:

  • Liability for penalties and assessments
  • Determinations regarding the amount of penalties and assessments
  • CMPs and assessments for false and fraudulent claims and other similar misconduct
  • Penalties and assessments for unlawful kickbacks
  • CMPs and assessments for contracting organization misconduct
  • Procedures for the imposition of CMPs and assessments
  • Judicial review
  • Time limitations for CMPs and assessments
  • Statistical sampling
  • Appeals

As we previously wrote about, TRICARE spending on compounded pain medicines began to skyrocket around 2012 as pharmacies, often working with independent marketing companies, aggressively marketed the drugs to doctors and patients.

Recognizing that there will be some overlap, the proposal states that the Defense Health Agency, which is responsible for the administration of the TRICARE program, will coordinate with DOJ and Defense Criminal Investigative Organizations (DCIOs) to resolve all CMP matters.

“Allegations of fraud will be referred promptly for investigation to the appropriate DCIO … In cases where DOJ or the appropriate DCIO does not participate, the case will be governed by either DHA’s or HHS’s CMPL authorities depending on whether the relevant claims are primarily TRICARE Claims or Medicare Claims,†according to the proposal.

DoD believes the program will reduce Defense Health Program requirements by $74 million from FY 2020-FY 2024. The estimated savings are based on recent history of TRICARE fraud and abuse audits and investigations that, for a variety of reasons, did not result in criminal or civil actions by DOJ under other legal authorities.

While the hope is that giving DoD additional authority to go after healthcare fraudsters will result in an additional layer of deterrence, how it will play out remains to be seen, especially since other agencies also have oversight authority.

DoD is taking comments until July 1.

The Health Law Offices of Anthony C. Vitale will be keeping an eye on future developments. If you have any questions or concerns Give us a call at 305-358-4500 or send an email to and let’s discuss how we might be able to assist you.

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The Health Law Offices of Anthony C. Vitale