Healthcare Fraud and Abuse
Under HIPPA, “fraud is defined as knowingly, and willfully executes or attempts to execute a scheme… to defraud any healthcare benefit program or to obtain by means of false or fraudulent pretenses, representations, or promises any of the money or property owned by…any healthcare benefit.” Unlike Fraud, abuse is, “means that are improper, inappropriate, outside of acceptable standards of professional conduct or medically unnecessary.” Health care fraud arises from an individual or group of individuals filing of a dishonest health care claim in order to turn it into a profit. Abuse; however, is harder for the investigator to identify and establish if the act was committed knowingly, willfully, and intentionally. Healthcare industry is one of the fastest growing sectors of the US economy; almost 10% of the US’s national GDP is consumed by the health care industry. According to Forbes’s report, the US National Healthcare expenditure of 2012 was nearly $3 Trillion. According to the National Healthcare Anti-Fraud Association, nearly $60 Billion is lost to healthcare fraud each year. The healthcare industry is an enormous market; therefore, making it easier for healthcare providers to take advantage of the American population. This paper will focus on why fraud and abuse occurs, different types of fraud, example cases of fraud and abuse, impact to present day healthcare industry, and potential solutions to fixing and preventing fraud and abuse from occurring. According to Hawaii Medical Service Association (HMSA), “Health care fraud occurs when a person or business intentionally misrepresents facts to receive reimbursement for health care services or supplies. It is a criminal offense under state and federal laws and can result in hefty fines, loss of health care coverage, and/or criminal penalties, including jail time.” For an example, if a patient goes to the ER department because the patient has sprained their ankle and the reporting physician only prescribes rest and ice to the patient along with an ankle brace. The patient is later sent home and finds out that they were billed for services that weren’t rendered, such as: X-ray, medication, ambulance transportation, pharmacy fee, etc. This was an intentional attempt by the healthcare provider to charge extra and collect more from the patient. An example of healthcare abuse may occur when a physician determines that he or she needs to see the patient with regular cough more often than eight times a month, which normally isn’t medically appropriate for this type of condition. This type of action results in unnecessary costs from the patient’s wallet to pay for to his or her insurance provider and/or directly to the physician itself. Health care fraud occurs everywhere throughout the industry. It doesn’t necessarily have to be between a provider and a patient. According to Medical News Today, “Medicaid and Medicare are two governmental programs that provide medical and health-related services to specific groups of people in the United States…Medicare is a social insurance program that serves more than 44 million enrollees (as of 2008)… Medicaid is a social welfare (or social protection) program that serves about 40 million people (as of 2007).” Medicare fraud is a generic term that refers to, “an individual or corporation that seeks to collect Medicare health care reimbursement under false pretenses. There are many different types of Medicare fraud, all of which have the same goal: to collect money from the Medicare program illegitimately.” “According to the Office of Management and Budget, Medicare "improper payments" were $47.9 billion in 2010.” Similarly according to the National Association of Medicaid Fraud Control Units, “Perpetrators of Medicaid frauds run the gamut from the solo practitioner who submits claims for services never rendered to large institutions that exaggerate the level of care provided to their patients and then alter...
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