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Posted: September 3rd, 2023

Health Care Fraud

Health Care Fraud: Ongoing Threats and Efforts to Curb Abuses
Health care fraud continues to pose serious challenges for patients, providers, and taxpayers. By some estimates, fraud accounts for up to 10% of total health care spending in the United States each year, amounting to tens or even hundreds of billions in losses (1). While the specific tactics used by fraudsters evolve over time, certain types of schemes remain common, such as billing for services not provided, upcoding of bills, and kickbacks. However, authorities have also strengthened anti-fraud efforts in recent years through increased oversight, data analytics, and whistleblower incentives. This article examines the ongoing threats from health care fraud as well as recent progress in curbing various abuses.
Subtitle: Common Schemes Used to Defraud the System
As noted, certain fraudulent practices have endured despite crackdowns. Billing for services not rendered still plagues public programs like Medicare – this involves submitting claims for appointments, procedures, or equipment that were never actually provided to patients. Upcoding, or billing using codes that command higher reimbursement than warranted, is another long-standing issue. For example, a provider may bill for an advanced imaging scan but only perform a basic x-ray.
Duplicate billing, in which the same services are billed to multiple payers, also persists as a problem. Kickbacks remain an area of concern, such as pharmaceutical companies offering lavish perks to induce prescriptions of certain brand-name drugs over cheaper generics. Unbundling bills by itemizing components that should be billed together at a lower aggregate cost continues as well. Additionally, some fraudsters have turned to more sophisticated schemes using electronic health records, such as altering patient visit notes after the fact.
Subtitle: Investigations and Enforcement Actions
However, authorities have made progress in detecting and punishing various forms of health care fraud. The Department of Health and Human Services Office of Inspector General (HHS-OIG) oversees Medicare and Medicaid program integrity through audits, investigations, inspections, and compliance efforts (2). In fiscal year 2021 alone, HHS-OIG reported over $5 billion in expected recoveries from health care investigations – a record level that was well over double the amount from just five years prior (3).
The Federal Bureau of Investigation (FBI) also maintains a significant health care fraud program, partnering with HHS-OIG and the Department of Justice on cases. In 2021, the FBI reported over $2.3 billion in health care fraud losses prevented or recovered through its efforts (4). State Medicaid Fraud Control Units further aid in investigations and prosecutions. Whistleblower lawsuits filed under statutes like the False Claims Act have additionally helped expose massive schemes; the Department of Justice recovers billions each year from such “qui tam” cases (5).
Subtitle: Advanced Analytics and Industry Safeguards
To augment traditional investigative approaches, authorities now leverage advanced data analytics and machine learning. For example, the HHS-OIG uses predictive modeling to identify aberrant billing patterns indicative of potential fraud (6). Private insurers similarly analyze claims data for “red flags” that warrant further review. The Centers for Medicare and Medicaid Services (CMS) also requires compliance programs of certain health care providers receiving over $5 million in annual Medicaid payments (7).
Overall, while health care fraud will likely remain an ongoing challenge given the size and complexity of the U.S. system, authorities have strengthened deterrents and made important strides. Continued innovation in oversight, along with compliance measures and whistleblower protections, offer hope that more fraud can be prevented or uncovered going forward. However, further resources and policy reforms may still be needed to curb the estimated tens or even hundreds of billions lost annually to unscrupulous schemes.
Sparrow, M. K. (1996). License to steal: Why fraud plagues America’s health care system. Boulder, CO: Westview Press.
Office of Inspector General, U.S. Department of Health and Human Services. “About OIG.” Accessed September 1, 2023. https://oig.hhs.gov/about-oig/index.asp
Office of Inspector General, U.S. Department of Health and Human Services. “Fiscal Year 2021 Record Results.” November 15, 2021. https://oig.hhs.gov/newsroom/spotlight/2021/fy2021-results.asp
Federal Bureau of Investigation. “Health Care Fraud.” Accessed September 1, 2023. https://www.fbi.gov/investigate/white-collar-crime/health-care-fraud
Department of Justice. “Justice Department Recovers Over $2.2 Billion from False Claims Act Cases in Fiscal Year 2022.” December 15, 2022. https://www.justice.gov/opa/pr/justice-department-recovers-over-22-billion-false-claims-act-cases-fiscal-year-2022
Office of Inspector General, U.S. Department of Health and Human Services. “Data Analytics.” Accessed September 1, 2023. https://oig.hhs.gov/data-analytics/index.asp
Centers for Medicare and Medicaid Services. “Provider Compliance.” Accessed September 1, 2023. https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/MedicareProviderSupEnroll/ProviderCompliance

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