Healthcare Fraud: $4 Billion Recovered

Medicare, Medicaid, CHIP Recoveries Highest Ever Howard Anderson (ismg_editor) • January 25, 2011

The federal government recovered $4 billion in fraudulent healthcare payments through civil and criminal penalties in fiscal 2010, the highest ever recovered in a single year, says Kathleen Sebelius, secretary of the Department of Health and Human Services.

The fraud-fighting results are included in a new Health Care Fraud and Abuse Control Program report. The amount was recovered from hospitals, physicians and other healthcare providers, as well as suppliers, who participate in the Medicare, Medicaid and Children's Health Insurance Program.

Federal prosecutors opened 1,116 criminal healthcare fraud investigations in 2010 and filed criminal charges in 488 cases involving 931 defendants. Some 726 defendants were convicted for healthcare fraud-related crimes during the year.

In addition to the criminal cases, more than $2.5 billion was recovered in civil cases under the False Claims Act.

Fraud Crackdown

Joint efforts of HHS and the Department of Justice, including The Health Care Fraud Prevention & Enforcement Action Team, or HEAT, and a Medicare Fraud Strike Force played key roles, Sebelius says.

The healthcare reform bill, known as the Affordable Care Act, provided $350 million for healthcare fraud prevention and detection. Seven cities now have Medicare strike force prosecution teams that are using data analysis techniques to identify potentially fraudulent activities. Those strike forces were responsible for:

140 indictments of 284 defendants who billed the Medicare program more than $590 million;

217 guilty pleas negotiated and 19 jury trials litigated, winning guilty verdicts against 23 defendants;

Imprisonment for 146 defendants sentenced during the fiscal year, averaging more than 40 months of incarceration.

New Anti-Fraud Rule

A final anti-fraud rule to carry out healthcare reform's mandated programs has been published in the Federal Register. That rule, which will be effective March 25:

Creates a more rigorous screening process for providers and suppliers to help keep fraudulent organizations out of the federal programs.
Requires a new enrollment process for Medicaid and CHIP providers. Those that have been kicked out of Medicare or another state's Medicaid or CHIP program will be barred from all Medicaid and CHIP programs.
Gives federal authorities the power to temporarily stop enrollment in the programs in a geographic area or for a category of providers/suppliers if predictive modeling software identifies patterns of fraud.
Gives authorities the power to temporarily stop payments to those for whom there has been a credible fraud allegation until an investigation is completed.

Anti-Fraud Efforts Questioned

Late last year, Sen. Chuck Grassley, R-Iowa, asked the administration to prove that its spending to fight Medicare fraud is yielding adequate results. He's ranking member of the Senate Finance Committee, which has jurisdiction over Medicare and Medicaid.

The senator expressed concern about what he portrayed as a stagnating number of criminal prosecutions for healthcare fraud despite increased federal spending to fight fraud.

"Despite the record number of defendants, actual criminal convictions for healthcare fraud violations are flat, resulting in a falling conviction rate," Grassley said.