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Crime doesn’t pay


Conspiracy, money laundering, drug possession, racketeering, kickbacks—these aren’t part of a gangster movie plot. They’re the underpinnings of the biggest rip-off of the U.S. healthcare system. Fraud, abuse, and waste are draining our country’s precious resources and endangering patients. We spend more than $2.2 trillion on health care each year, and estimates of fraud and abuse range from 3% to 10% of this total—from $66 billion to upwards of $200 billion.

With no requirement for private insurers to report their fraud rates, it’s impossible to know exactly how much fraud and waste occur. In fiscal year (FY) 2009, the government reported $54 billion was spent on improper payments to Medicare fee-for-service, Medicaid, and Medicare Advantage providers. How can this happen? Each day, Medicare processes 4.4 million claims to 1.5 million providers and suppliers, amounting to $431 billion annually. Those claims are paid within 30 days, with only 3% reviewed before payment. With the magnitude of dollars changing hands, greed, inefficiencies, and criminal intent result in improper payments.

Federal laws exist to protect the fiscal integrity of Medicare and Medicaid. The Health Insurance Portability and Accountability Act established the Health Care Fraud and Abuse Control Program (HCFAC) to fight fraud in health plans. The 2010 Patient Protection and Affordable Care Act provides new tools to prevent fraud, including tougher provider eligibility screening and modeling software to detect suspicious trends. The Centers for Medicare & Medicaid Services Medicare Integrity Program (MIP) uses these strategies to promote more effective enrollment. MIP’s Recovery Audit Contractor program focuses on early detection and correction of improper payments based on utilization review of medical necessity. Many well-respected hospitals have paid back millions of dollars to settle allegations related to inpatient medical necessity.

The same types of illegal activities that plague Medi­care apply to Medicaid. Forty-eight states and the District of Columbia have formed Medicaid Fraud Control Units to investigate and prosecute provider fraud and patient abuse and neglect. Last year, annual expenditures for HCFAC and MIP totaled about $1.7 billion. Since its inception in 1997, HCFAC has returned more than $18 billion to the Medicare Trust Fund.

The Department of Health and Human Services and the Department of Justice (DOJ) have joined forces in the HEAT initiative—the Healthcare Fraud Prevention and Enforcement Action Team—to reduce improper payments. HEAT Medicare Fraud Strike Forces are targeting seven communities with a high incidence of fraud.

The Federal Bureau of Investigation (FBI) has primary jurisdiction to investigate both public and private insurance programs and to prosecute criminal activity. In FY 2010, the FBI successfully convicted 726 healthcare fraud criminals and the federal government recovered $2.5 billion in fraud judgments and settlements. Another $2.86 billion was transferred to the Medicare Trust Fund and $683.2 million in federal Medicaid money was transferred to the Treasury.

Disreputable providers and organizations put patients at risk through unnecessary surgeries, prescribing drugs without medical necessity, and providing substandard care. Targeted fraudulent activities include:

  • sales of counterfeit or illegal prescription drugs and controlled substances (by Internet pharmacies)
  • inflating prices or providing unnecessary equipment
  • charging for high-cost drugs (especially HIV drugs) that were never infused (by infusion therapy companies)
  • charging for services not rendered
  • upcoding (charging for a higher level of service)
  • providing excessive or medically unnecessary services
  • kickbacks
  • making duplicate claims.

The Office of Inspector General has posted its first “Ten Most Wanted Health Care Fugitives.” (See www
.oig.hhs.gov.) DOJ recently reported that six RNs and two licensed practical nurses pled guilty to one count of conspiracy to commit home healthcare fraud; they were sentenced to 5 to 30 months in prison and paid fines ranging from $65,900 to $699,000. (See http://
oig.hhs.gov/publications/docs/hcfac/hcfacreport2010.pdf) Last month, doctors, nurses, physical therapists, and executives were among the 100 people charged with $225 million in false billing claims in a Medicare Fraud Strike Forces sweep.

What can you do? Never agree to participate in documentation or billing that you don’t understand. Listen
to patients when they report or question the need for treatments, medications, or equipment. Observe and report practices you find questionable. Educating yourself about fraud is a good way to help your patients. You can read about Medicare fraud at www.cms.gov/

Pamela F. Cipriano, PhD, RN, FAAN, NEA-BC


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