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Healthcare Fraud Essay

On May 14, 2013 Attorney General Eric Holder and Department of Health and Human Services (HHS) Secretary Kathleen Sibelius announced “nationwide takedown” by Medicare Fraud Strike Force operations, in eight cities that resulted in charges against 89 individuals, which included doctors, nurses and other licensed medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $223 million in false billings. In Chicago, seven individuals were charged, including two doctors, with a variety of health care fraud schemes. This (sixth) nationwide takedown targeted eight cities: Miami, Houston, Los Angles, Detroit, Tampa, Brooklyn N.Y, and Chicago.

On April 16, 2013, the owner, senior executive of Sacred Heart Hospital, along with four physicians in the west side facility were arrested for conspiring to pay and receive illegal kickbacks. The kickbacks included more than $225,000 in cash, along with other forms of payment, in exchange for the referral of patients insured by Medicare and Medicaid to the hospital. On Oct 19, 2012, a west suburban dermatologist, Robert Kolbusz, was indicted in U.S. District Court on four counts of wire fraud and three counts of mail fraud.

He was accused of submitting false claims for hundreds of patients, according to FBI officials. The Department of Health aand Human Services reported that in fiscal year 2011, in Illinois alone there were: 326 Medicaid fraud investigations, 48 were indicted on Medicaid fraud charges, 30 were convicted, 18 cases of civil settlements/judgments, and $47.8 million dollars was recovered in Medicare fraud cases. There are abundant news stories in the media today about the federal government enforcements against hospitals, laboratories, medical equipment suppliers, hospices, home health agencies, physicians and other health care service providers.

Unfortunately, these cases are just the tip-of-the-iceberg with many health care fraud cases going undetected and or unreported. According to Black’s Law Dictionary fraud is defined as “some deceitful practice or willful device, resorted to with intent to deprive another of his/ her right, or in some manner to do him an injury. It is distinguished from negligence, and is always intentional”. Healthcare fraud is a white-collar crime that usually involves filing health care claims by healthcare service provider to turn a profit for the healthcare service providers.

It involves “an unlawful act, generally deception for personal gain”, and encompasses a wide range of irregularities and illegal acts that are characterized by intentional deception. (Pozgar, 2011) According to the FBI (Federal Bureau of Investigations) healthcare fraud in our country costs an estimated $80 billion a year- making it one of the biggest “white-collar-crime”. Health care fraud is committed when a dishonest provider or consumer intentionally submits or causes someone else to submit false or misleading information for use in determining the amount of healthcare benefits payable. (Pozgar, 2011) Health care fraud usually includes insurance fraud, drug fraud and medical fraud.

There are several ways by which the health care insurance fraud can be committed by fraudulent health care service providers: 1.) billing for services not rendered, 2.) up-coding of services which is billing the Medicare for services that were more expensive than the ones provided, 3.) up-coding of items which is billing for more expensive items than was provided, 4.) unbundling, wherein a corrupt healthcare service provides bills that stagger over time in order to claim more monies from Medicare, 5.) unnecessary services, 6.) duplicate claims- Medicare is charged twice for the same service and 7.) Kickbacks, which are rewards in cash or kind received by healthcare professionals for recommending or referring specific services for example referring a patient for an MRI even when it’s not required.

The findings from the Office of Management and Budget’s fact sheet “Transforming and Modernizing America’s Health Care”, revealed that the United States spends approximately $8,000 per person on health care. This figure is expected to rise to approximately $4 trillion by 2017. Even the most conservative estimates of the cost of fraud abuse within our health care system range from between $66 billion and $220 billion per year. With the increasing cost of health care in America, the cost of health care fraud abuse could easily rise above $400 billion per year by the year 2017. (Office of Management and Budget’s fact sheet).

Therefore, it is safe to say that health care fraud is not only an economic drain on our health care system, but costs our nation the health of its citizens (Semi-Annual Report to Congress, 2009) as it robs the system of the money that would be far better spent on making sick people healthy. Health care fraud not only costs our nation in terms of health care dollars and patient care. It is one of the important factors that has contributed to the increasing cost of the health care services.

Due to the immense role played by the healthcare fraud on the economic drain on our health care system and also on the health of the nation, it is receiving a tremendous attention from both the government and the people. Increasing cost of healthcare is a valid concern for American families and a primary concern for the American government. It affects all individuals, directly or indirectly as the billions of dollars that are lost to the healthcare fraud lead to increased health care costs and increasing the cost of potential coverage, which may further lead to loss of personal income savings leading to ruined credit.

Health care fraud is not a victimless crime. (Price & Norris, 2009) The money lost due to fraud increases the costs of providing a full range of legitimate medical services tremendously. Physicians may perform unnecessary procedures to increase reimbursement, which may compromise the safety of the patient. Further, when medical providers bill for services that were never rendered, they end up creating a false medical history for patients which may hinder them from obtaining disability or life insurance policies, at a later date. An inaccurate medical history also influences treatment decisions and allows some third party insurance companies to deny coverage based on a previous medical condition. Health care fraud also tarnishes the reputation of the medical profession and other health care service providers.

Additionally, the efforts by the federal and the state government cost taxpayers billions of dollars a year, thus diverting the scarce tax money from other essential services and meeting the needs of elderly and the poor. This diversion of the taxpayer’s money often results in reduced benefit coverage, changes in eligibility for programs such as Medicaid, higher premiums for individuals or their employers, or higher copays. Health care fraud has become a primary issue for people and the government. In the last ten or so years, the government has invested a lot of effort and time on investigating health care fraud with the goal of decreasing its occurrence, and the government continues to initiate new policies, and create investigative bodies to deal specifically with health care fraud.

Health care fraud is a critical issue for the government for a variety of reasons. Firstly, given that the government is the principal payer of health care, it is obviously concerned about how that money is spent. Secondly, health care fraud is a waste of taxpayer money. Third, it is the government which is in charge of regulating the health care system. Last but not the least, it is the government that is entrusted with protecting its citizens from all sorts of criminal and crimes. Health care fraud is a serious problem affecting every patient and consumer. The devastating situation is rooted not only in the excessive financial losses incurred, which often extends into the billions of dollars every year, but also in patient harm.

The Department of Justice has declared health care fraud to be its second highest priority, following violent crimes (Kalb, 1999). In the past fifteen years the government has spent millions of dollars fighting health care fraud. In May 2009, the HHS and Department of Justice (DOJ) collaborated to create the Health Care Fraud Prevention and Enforcement Action Team (HEAT). With the creation of HEAT, the battle against the healthcare fraud especially against Medicare and Medicaid fraud became a cabinet-level priority. The HEAT’S mission is to

1.) “Gather resources across the government to help prevent waste, fraud, and abuse in the Medicare and Medicaid programs.

2) Crack down on the people and organizations who abuse the system and cost Americans billions of dollars each year.

3) Reduce health care costs and improve quality of care by preventing fraudsters from preying on people with Medicare and Medicaid.

4) Highlight best practices by providers and organizations dedicated to ending waste, fraud, and abuse in Medicare.

5.) Build upon the existing partnerships between HHS and DOJ to reduce fraud and recover taxpayer dollars.” (HEAT Task Force Mission) In addition, to creating a task force, the administration also encourages ordinary citizens to report against health care fraud.

There are several ways to report a healthcare fraud – a patient or health care provider who may have witnessed a fraud, may report to FBI, at their local office, or telephone and or online forms. “Stop Medicare fraud” website also provides various tips to citizen to protect themselves from healthcare fraud. Understandably, to completely stop healthcare fraud is a difficult task, but “the more we know about it, the easier it is to stop” (Blue Cross Blue Shield)

Black’s free online law dictionary Definition of Fraud. (2nd Edition) Retrieved June 13, 2013 http://thelawdictionary.org/fraud/
Blue Cross Blue Shield. Healthcare Fraud Regence. Retrieved June 17, 2013 from htttp://www.regence.com/docs/legal/provider-fraud-brochure.pdf. Centers
for Medicare & Medicaid Services, Office of the Actuary. National Health Expenditure Projections 2007- 2017 Chicago Tribune, Featured Articles. Retrieved June 13, 2013 from http://articles.chicagotribune.com/2012-10-19/news/ct-tl-downers-dermatologist-charged-20121019_1_medicare-fraud-fraud-cases-medicare-medicaid-services Federal Bureau of Investigations. Healthcare Fraud. Retrieved June 14, 2013 from http://www.fbi.gov/about-us/investigate/white_collar/health-care-fraud Illinois Policy Institute. News & Blogs. Retrieved June 14, 2013 from http://illinoispolicy.org/blog/blog.asp?ArticleSource=5746 Kalb, Paul, E. “Health Care Fraud and Abuse”. Journal of American Medical Association 282 (1999): 1163-1168. Price. Marilyn & Norris, Donna. Health Care Fraud: Physicians as White collar criminals? Journal of American Academy Psychiatry Law 37:286–9, 2009 Pozgar, George. D (2011). Legal Aspects of Healthcare Administration (11th Edition) Sudbury, MA: Jones & Bartlett Learning. Semi-Annual Report to Congress October 1 2008-March 31-2009, Office of the Inspector General Stop Medicare Fraud. HEAT Task Force Mission. Retrieved June 17, 2013 from http://www.stopmedicarefraud.gov/index.html US Department of Health and Human Services. News and Press Release. Retrieved June 13, 2013 from http://www.hhs.gov/news/press/2013pres/05/20130514a.html US Department of Justice. News and Press Release. Retrieved June 13, 2013 from http://www.justice.gov/usao/iln/pr/chicago/2013/pr0416_01.html

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