Health care fraud a challenge to system reform

Annual federal recoveries continue to top the $1 billion mark, but a new bill proposes to bolster anti-fraud provisions in broader reform legislation.

By Amy Lynn Sorrel — Posted Nov. 16, 2009

Print  |   Email  |   Respond  |   Reprints  |   Like Facebook  |   Share Twitter  |   Tweet Linkedin

Widespread health care fraud continues as lawmakers work to overhaul the health system and tackle long-term financing issues. As scrutiny over fraud intensifies, so must physicians' attention to their own billing and business activities, experts say.

An annual audit of the Health Care Fraud and Abuse Control Program, a joint effort of the Depts. of Health and Human Services and Justice, showed federal enforcement activities yielding $1 billion in fraud settlements and judgments in 2008, mostly from Medicare and Medicaid false claims. Other big cases targeted illegal referrals and kickbacks by physicians and hospitals, improper off-label promotion by pharmaceutical companies, and medically unnecessary services.

Most federal attention is fixed on organized crime groups, where intentional participation by physicians is rare, said Louis Saccoccio, executive director of the National Health Care Anti-Fraud Assn. Still, "doctors are going to have to be careful who they do business with and be more protective of their own business information, because these groups can get a hold of their billing information to file false claims."

The level of recoupment in 2008 slid from the $1.8 billion retrieved in 2007, but experts agreed that the figures typically fluctuate based on when particular major cases happen to be resolved and subsequently reported.

More potential prosecutions are in the works. The study showed that 957 new criminal health care fraud investigations were opened in 2008, up from 878 in the previous year. Prosecutors opened 843 civil cases in 2008, compared with 776 in 2007. A total of 2,911 civil and criminal cases were pending in 2008, up from 2,355 in 2007.

The $1 billion in recoveries represents a mere fraction of the scope of fraud plaguing the health care system. And as criminal tactics evolve, funding, technology and information-sharing are going to be key in the government's fight, Saccoccio said. Although an exact figure is difficult to pin down, he estimated that 3% to 10% of the nation's roughly $2.3 trillion annual health care expenditures are lost to fraud.

"If we're going to reform the system in other ways, we have to go after the fraud aspect," and so far most of the health system reform proposals pending before Congress have taken a stab at addressing the issue, Saccoccio said. "We're going to see much more of a focus on anti-fraud activities not just legislatively, but also in terms of the [federal] strike forces," which are coordinated HHS-Justice teams that operate locally to root out fraud.

More fraud, more tools

Legislation introduced Oct. 28 by Senate Judiciary Committee Chair Patrick Leahy (D, Vt.) and fellow panel members suggest that federal authorities need more help when it comes to curbing fraud.

The Health Care Fraud Enforcement Act would bolster fraud prevention provisions included in broader health system reform legislation pending in the Senate. It would give prosecutors more funding -- $20 million a year through 2016. It also would give enforcement officials the ability to prosecute a broader range of fraud activities and impose harsher penalties.

"We all know rooting out waste, fraud and abuse in both government and private programs is critical to making health reform work," said Sen. Ted Kaufman (D, Del.), a co-sponsor of the bill. "There's more work to be done, however, and [this bill] is an important part of that effort."

Researchers at the George Washington University School of Public Health and Health Services and the National Academy for State Health Policy said in a recent study that scrutiny of potential fraud in both public and private health insurance programs is critical if authorities are going to be successful in attacking widespread fraud.

"And in the case of the private sector, it's not just confined to doctors and hospitals. It is potentially the behavior of the insurance industry itself," said Sara Rosenbaum, chair of GWU's Dept. of Health Policy and lead author of the study, released Oct. 27. Such behavior may include insurers systematically denying or underpaying claims, or even rescinding coverage.

Federal reporting systems tend to capture fraud data only from public health care programs, such as Medicare and Medicaid. Requiring private insurers to report could help quantify and address the full scope of the problem, Rosenbaum said.

The National Health Care Anti-Fraud Assn. also has advocated more information-sharing between public and private insurance programs, a provision that was included in the health system reform bill approved by the Senate Health, Education, Labor and Pensions Committee, Saccoccio said.

Existing fraud controls, particularly in public programs, often confuse payment errors with intentional fraud, and future prevention tools must distinguish between the two, Rosenbaum added.

"A program error is not a good thing, but it's not fraud, and we should stop talking about it as fraud, which has real legal consequences," she said. For example, physicians could face civil liability under the federal False Claims Act for having sloppy billing practices misidentified as fraud.

Back to top


Fraught with fraud

A dip in federal health care fraud recoveries in 2008 does not mean the government is backing off its investigations, experts said. Lawmakers are paying more attention to fraud detection and prosecution efforts as they contemplate the projected costs of health system reform.

2004 $1.5 billion
2005 $1.5 billion
2006 $2.2 billion
2007 $1.8 billion
2008 $1 billion

Source: Dept. of Health and Human Services, Health Care Fraud and Abuse Control Program reports (link)

Back to top

External links

"Health Care Fraud," George Washington University Medical Center Dept. of Health Policy, October (link)

Back to top



Read story

Confronting bias against obese patients

Medical educators are starting to raise awareness about how weight-related stigma can impair patient-physician communication and the treatment of obesity. Read story

Read story


American Medical News is ceasing publication after 55 years of serving physicians by keeping them informed of their rapidly changing profession. Read story

Read story

Policing medical practice employees after work

Doctors can try to regulate staff actions outside the office, but they must watch what they try to stamp out and how they do it. Read story

Read story

Diabetes prevention: Set on a course for lifestyle change

The YMCA's evidence-based program is helping prediabetic patients eat right, get active and lose weight. Read story

Read story

Medicaid's muddled preventive care picture

The health system reform law promises no-cost coverage of a lengthy list of screenings and other prevention services, but some beneficiaries still might miss out. Read story

Read story

How to get tax breaks for your medical practice

Federal, state and local governments offer doctors incentives because practices are recognized as economic engines. But physicians must know how and where to find them. Read story

Read story

Advance pay ACOs: A down payment on Medicare's future

Accountable care organizations that pay doctors up-front bring practice improvements, but it's unclear yet if program actuaries will see a return on investment. Read story

Read story

Physician liability: Your team, your legal risk

When health care team members drop the ball, it's often doctors who end up in court. How can physicians improve such care and avoid risks? Read story

  • Stay informed
  • Twitter
  • Facebook
  • RSS
  • LinkedIn