1.0 Introduction
Medicare fraud refers to obtaining money from the Medicare system under false pretense. Many Americans cannot afford to pay for health services. As a result, the Social Security Act in 1965 gave rise to Medicare in order to finance diverse forms of medical care for the vast number of Americans who cannot afford medical insurance. Different forms of Medicare fraud have evolved in the recent past but the bottom line for all of the forms is to illegitimately collect money from the Medicare system. Medicare fraud is just a fragment of the much bigger and intricate web of health care fraud. Reports indicate that Medicare fraud is so lucrative that drug dealers, thieves, prostitutes and other criminals have abandoned their trades in favor of it. It is estimated that in 2010 alone, payments totaling $ 47.5 billion were made under the false pretexts.
A 2011 crackdown on health care fraud led to the prosecution of 111 health care professionals who included doctors, nurses and health care company executives. The schemes that they were charged with ranged from various medical procedures such as physical therapy and nerve conduction tests to durable medical equipment such as wheel chairs. The prevalence of Medicare fraud is not just limited to USA. Doctors in South East Asia have been known to overcharge American citizens through Medicare or exaggerate the cost of the medical care that they have accorded the patients. The Medicare system is prone to fraud because it is a system that was built on the premise of honesty. It was meant to pay doctors who treated patients who could not afford access to treatment or health insurance policies.
Given the enormous profits that can be made through this form of fraud, there are different types of fraud that are carried out. The first form is known as phantom billing in which the health care provider bills Medicare for procedures that were never performed, equipment that was never used, unnecessary tests or tests that were never performed in the first place. In recent years, Medicare fraud has diversified to other aspects such as ambulance fraud and hospice care fraud. The other form of Medicare fraud involves patient billing. A patient trades his Medicare number for kickbacks from a health care provider who has been fraudulently billing Medicare. The patient lies that he or she received medical care from the health care provider whenever he or she is called upon to verify the claims that have been made by the health care provider. This paper shall examine the prevalence of Medicare Fraud, the causes and ways to address it.
2.0 Prevalence of Medicare fraud in the United States
Southern Florida has in recent times been regarded as the focal point of Medicare fraud. According to surveys conducted in 2008, it is reported that the region accounted for over $400 million payments by Medicare that were billed under false pretenses. In the same year, Miami Dade County billed Medicare six times more that Los Angeles county in spite the fact that the Medicare population in the latter is three times more. The problem is so deeply rooted in Southern Florida that more than half the suppliers of durable medical equipment were found to be non-compliant with the Medicare regulations in 2008. The laxity of the law in punishing those who are involved in Medicare fraud makes it a crime of choice given that an individual charged with Medicare fraud is treated as a white collar criminal.
One of the biggest forms of Medicare fraud was the Columbia/HCA fraud cases. The uncovering of the scheme was the result of a series of stories that ran in the New York Times which would later on be followed by raids at the company’s premises by the Federal Bureau of Investigation. A scrutiny of the companies’ records revealed deep seated rot and exploitation of Medicare under the stewardship of the company CEO, Rick Scott. The scheme at HCA revolved around several fraudulent activities which included: falsification of diagnostic codes in order to inflate the bills that were sent out to Medicare and other government agencies, offering incentives to doctors so that they would bring in patients to the facility and charging the government for laboratory tests that were unnecessary. Although the CEO was never charged, he was eventually ousted from the company. The criminal charges against HCA were eventually dropped in 2001 but the company was ordered to pay 631 million US dollars to Medicaid and other agencies and an additional $250 million that had previously been paid to Medicare.
3.0 Types of Medicare Fraud
Medicare fraud is not just limited to health care professionals and the patients but it also encompasses other players. The increase in the cases of Medicare fraud has been attributed to the increase in the number of Americans who are uninsured and underinsured. An understanding of how medical professionals and health care providers are paid is important if one is to understand the forms of Medicare fraud that are committed. Services that are rendered by health care facilities and medical professionals are paid for by a third party which could either be an insurance company or government agency such as Medicare. The payment system is based on a series of numbers which are used when reimbursing health care facilities. The “coding” system is comprised of more than 500 groups and includes 3,500 medical procedures and 12,500 medical procedures. The forms of medical fraud include; up coding, phantom billing, bogus billing, unnecessary services, pharmacy fraud and double billing.
Up coding involves charging the patient and the third payer for a diagnosis which carries a higher code. Few people understand medical diagnosis hence the physicians exploit this loop hole to come up with diagnoses that cost more to treat and detect than the actual diagnosis. Phantom billing involves billing the third party in this case Medicare for services that were not provided. Phantom billing can take two forms; the first form involves health care providers keying codes for procedures or services that were never rendered in the first place. The second form entails billing Medicare for procedures or services provided to nonexistent patients. The latter form is more common in nursing homes where the health care providers bill Medicare for patients who are already dead.
Bogus billing occurs when the health care providers alter a billing code so as to be reimbursed for a procedure that is not covered by the insurance company or Medicare. This normally takes place when new drugs are introduced to treat certain conditions or experimental drugs are being used to treat a patient. The health care providers find a billing code for a procedure that is covered and use it to get reimbursements for the treating a patient with novel drugs or experimental drugs. Billing for unnecessary services is most common among those who provide ambulance care facilities. The patient may undergo routine urinalysis tests, blood tests and radiographs yet they are perfectly normal hence they do not need such tests. It is hard to deter physicians from billing for unnecessary services because they might claim that they were performing the tests in order to be on the safe side.
Pharmacy fraud occurs in two distinct formats. The first form involves issuing generic drugs to the patient then billing the third party for the brand name which costs more. The difference in price goes into the pockets of the pharmacy. The second form involves issuing the drugs to the patient, billing Medicare for them then buying them back from the patient. The drugs are then sold to other patients at a much higher price. Double billing involves billing the third party twice or billing two different third parties for the same procedure.
In their defense, physicians cite the complexity of the coding system as the reason for the cases of fraud. They say that they are often too busy to ensure that they have keyed in the correct code hence they should not be held accountable and be labeled fraudulent. They also claim that they are often prosecuted for the mistakes of employees yet they are trained in medicine and not coding. Physicians say that the system is designed in such a way that there is presumption that they are guilty even before actual proof of any wrong doing has been provided. There are several acts that have been enacted in order to streamline billing Medicare as outlined in the next section of the paper.
Legislation aimed at curbing Medicare Fraud
In 1996, one of the first acts aimed at curbing Medicare and health fraud was enacted. The Health Insurance Portability and Accountability Act (HIPPA) was passed with the aim of reducing the cases of Medicare Fraud and abuse of Medicare. It initiated the enactment of various reforms that would form the basis for detecting cases of fraud, prosecuting them and recovering money that has been reimbursed from the Medicare system via fraudulent means. HIPPA focuses on fighting Medicare fraud proactively although this has not been without challenges. There are three major programs under the HIPPA which have been designed to fight fraud: the Beneficiary Incentive Program, the Medical Integrity Program and Fraud and Abuse Control Program. HIPPA not only provides the legal framework for the programs to run but it also expands the penalties that are meted out for fraud, defines crimes that are related to health care fraud, protects arrangements on risk sharing from illegal kickbacks and establishes a national data base for reports regarding health care fraud.
The Fraud Abuse and Control Program conducts several functions: it conducts financial audits, evaluates the claims filed, investigates cases that are suspected to be fraudulent and issues opinions on how to eliminate procedures that give room for fraud. It also has provision for fraud alert. In the period between 1997 and 2006, this program was responsible for the recovery of about $10.4 billion US dollars which was given back to the Medicare Trust fund. Since the program began its work, the conviction rates for cases of health care fraud have gone up by up to 240% and the taxpayers have been saved $ more than 38 billion.
The Medical Integrity Program is funded by the Medicare program and is in charge of compiling a list of providers of durable medical equipment and public education. It also gives the Department of Health and Human Services the right to conduct cost report audits, probe and report cases of health care fraud and determine the mechanisms of payment of health care service providers. The department has the right to contract private companies to assist them in the execution of their duties. The Beneficiary Incentive Program is aimed at providing incentives to those who willingly offer information that will lead to the prosecution of perpetrators of Medicare fraud in addition to the recovery of the money reimbursed under false pretenses. Monetary rewards are often given to those who give relevant information that leads to prosecution and money recovery. In order to prevent the program from receiving frivolous information, the program spends a considerable amount of time education the beneficiaries of Medicare/ Medicaid services on how the system works.
Another statute aimed at the protection of Medicare from fraud is the Medicare and Medicaid Patient Protection Act (Anti Kick Back Act). The violation of this act could result in fines of up to $ 25,000 or 5 years in prison or both. The Act prohibits any health care providers from knowingly from receiving payments in the form of cash or kind that are made directly or indirectly in exchange of treatment or service recommendation or prescription that will ultimately be paid for by Medicare or any other government agency. The burden of proof lies with the government which may at times be difficult given that they are required to prove of the intent. There is a loophole in this act given that kickbacks are not clearly defined hence a health care provider receiving a box of chocolate may be regarded as a kick back.
The False Claims Act outlines the penalties that are meted out to for those who indulge in false billing claims or those who fail to return overpayments. Conviction under the False Claim Act requires that the individual pay the government up to three times the cost of the falsified claim. Hefty fines are also meted out to those convicted under this Act with fines of up to $ 10,000 being imposed. The act also has provisions for private citizens to file a suit on behalf of the government and claim up to 15% of the money that is recovered. This serves as an incentive to whistle blowers especially in cases involving up coding or bogus billing.
The Prescription Drug Marketing Act outlaws the sale or trade of drug samples. It was meant to mitigate the abuse of drugs that is promoted by medical practitioners who repackage and resell drug samples. Violation of the Act can result in up to 10 years of imprisonment or fines of up to $ 250,000.
Ways to prevent Medicare health care fraud
While the programs and the statutes have to a large extent led to the recovery of money, it must be noted that recovery of money defrauded from the Medicare Trust is not enough. There are several flaws in the health care system which can be exploited hence the need to rectify them in order to prevent fraud and abuse of Medicare.
The health care system is run by computers hence once a claim has been submitted there is little scrutiny by human beings. Perpetrators of Medicare fraud often exploit this by hacking into the systems, using the weaknesses of the systems and robbing Medicare. By the time a discovery has been made regarding an instance of Medicare fraud, the perpetrator has stolen huge sums of money from the Medicare trust. It is important that human scrutiny be involved more often prior to filing the claims and making reimbursement from the Medicare Trust Fund.
The software that is utilized in the health care system ought to be upgraded to include more functions. There has been a recent advancement in the software to include a decision making functions, predictive modeling software and advanced analytics software. Advanced analytics software can scan millions of records at a time and compare them with billing norms and defined patterns hence a departure from the norm can be detected. It can tell if a physician is carrying out too many surgeries or bills a patient twice for the same procedure or sends out bills to the different third parties. Decision technology software has been used by insurance companies to reduce losses made as a result of fraud, improve productivity and the financial reports. The software analyzes records and claims that have been keyed into the system then gives the employee with a score based on the rate of errors that have been detected. If the system is correctly used, it can assist health care professionals to detect errors and correct them before they escalate into fraud. Predictive modeling technology is the most advanced form of technology that can be used in the prevention of Medicare fraud. This technology analyses records against other claims that have been made in the past and predicts the likelihood of fraud for the claim.
Organizations can also come up with compliance programs which allow for claims of medical fraud to be dealt with internally. A series of internally developed controls are developed in order to ensure that the health care facility is following the federal and the state regulations which govern federal health care agencies such as Medicare. A compliance program can be made up of: legal reviews of the contracts signed into effect and the operating procedures that have been performed, training programs for the employees and procedures for reporting violations of health care programs. The compliance programs have a hotline which health care professionals can call if they want to report cases of Medicare fraud. There are also procedures that are put in place to prevent retaliation against those who report cases. The consumers need to be involved in the efforts geared towards prevention of Medicare fraud. They need to keep track of the expenses that they have incurred in the course of seeking treatment.
Works Cited
Andrea, Allmon. "Deception Detection. Intelligent Software Keeps Medicare Fraud in Check." Healthcare Informatics; the Business Magazine for Information and Communication Systems 22 62. 12 January 2005: 62.
Bennett R. S., and D.M. Medearis. "Health Care Fraud; Recent Developments and Timeless Advice." Texas Medicine (2003): 50-56.
Rebecca, Cady. "“Health Care Fraud: A Primer for the Nurse Executive." Jona’s Healthcare, Law, Ethics, and Regulation (2007): 54-61.
Sultz and Harry A and Kristina M. Young. Health Care USA: Understanding Its Organization and Delivery. Massachusetts: Jones and Bartlett Publishers, 2006.
United States. Dept. of Health and Human Services and Dept. of Justice. "Health Care Fraud and Abuse Control Program Annual Report for FY 2006." April 2008. Human and Health Services. 21 April 2012
