Medicaid and Medicare Fraud Fraud

Medicaid and Medicare Fraud

FRAUD STATISTICS

FEDERAL & STATE STATUTES

LIST STATUTE

DEFINE & EXPLAIN STATUTE

PROVIDE EXAMPLES of FRAUD UNDER STATUTE

LIST PENALTY PROVIDED UNDER STATUTE

ANALYSIS & RECOMMENDATIONS

PROVIDE ANALYSIS of FRAUD OCCURRENCES

DISCUSS WHY the FRAUD OCCURS

PROVIDE RECOMMENDATIONS to the FRAUD

SUMMARIZE TOPIC and CONCLUDE

MEDICARE & MEDICAID FRAUD

In the past few years, an increasing amount of fraudulent claims have been detected in the Medicare and Medicaid programs, raising concerns among taxpayers, the elderly, government agencies and police authorities alike. One of the most significant problems with this activity is that both programs are already facing the depletion of available funds, and in much need of reforms. After working their entire lives, elderly people look forward to many relaxing years ahead with a little medical care and a few prescription drugs. However, the majority of this population do not have any way of paying for healthcare, and soon, neither will the government. This once unimaginable scene is very close to becoming a reality in just a few years time, an atrocity attributable to the high volume of abusers of the government-assistance programs. The national government insurance program that covers nearly 41 million seniors and disabled citizens, Medicare, has raised many substantial concerns concerning its' state of financial crisis. The National Center for policy Analysis (2001) has reported that fraud and abuse cost Medicare and Medicaid about $33 billion each year. As a result, the courts have enacted several statutes with severe legal ramifications for those engaging in Medicare and Medicaid fraud. This paper will provide an overview of the fraud that occurs in the Medicare and Medicaid programs, and will conclude with recommendations for the future of these programs.

Federal and State Statutes variety of both federal and state statutes address Medicare and Medicaid fraud, providing prosecutors with many options, and correspondingly subject health care providers to many different types of liability. Under the False Claims Act, 18 U.S.C. 287, any health care provider who presents a false or fictitious claim or demand to the government seeking reimbursement for medical goods or services can be liable. The prosecutor need only prove that the provider intentionally submitted the claim knowing that it was false, fictitious or fraudulent (Bennett, 2007). This can be shown by showing that the claim was for goods or services that were not provided, were not provided as stated, or were provided but not medically necessary (Bennett, 2007). Offenders of this statute are commonplace; for example, in Florida fraudulent activity involving Medicaid amounted to $6.7 billion, after an eight-month investigation of the federal-state health program for the poor. In this case, the statewide grand jury indicted six doctors and 44 others on criminal fraud charges, with swindles ranging from simple forgery to complicated "ghost operations," kickbacks, patient brokering and money laundering (National Center for Policy Analysis, 2001).

The Medicaid fraud in Florida indicated that there were too few procedures to find out if those who sign up as providers are legitimate, and the state paid claims quickly before verifying them. As a result, the Florida State Agency for Health Care Administration has recently implemented anti-fraud measures, and with 80% of the new procedures in place, the agency's director claims they have prevented $1 billion in payments on crooked claims (National Center for Policy Analysis, 2001). Under the federal statute, the punishment for a conviction under the False Claims Act is up to five years imprisonment and a fine of $250,000.00 for an individual and $500,000.00 for a corporation for a felony conviction; or $100,000.00 for an individual and $200,000.00 for a misdemeanor conviction (Bennett, 2007). This penalty is very severe, as these amounts are per occurrence. Other provisions in related acts provide for liability concerning false statements in connection with health care fraud.

The False Statements Act, 18 U.S.C. 1001 imposes liability on a health care provider that in a communication submitted to the government, makes false or fraudulent statements or representations, false writings or documents, or that falsifies or covers up a material fact. Like the false claims act, the health care provider need not necessarily have made the statement directly to the federal government; it is enough that the false statement was made to a state agency or insurance company and submitted to the government (Bennett, 2007). Examples of this violation occurred even as early as 1987, in a case where a hospital supply company marked up supplies to hospitals, who then submitted the marked up costs to the insurance companies acting as fiscal intermediaries for the Medicare and Medicaid programs. More recent violations of this act include one individual that stated she collected $7 million by charging the government $5 to $7 dollars for gauze surgical wrapping that cost one penny each (National Center for Policy Analysis, 2001). In order to show a violation of this act, the government must prove that the health care provider willfully submitted the false statement or representation to the government, knowing it to be false, and that the statement was material, or that the statement was of the type that has the natural tendency to influence the agency's action.

The penalty for a conviction under the False Statement Act is a fine of not more than $10,000.00 or imprisonment of more than 5 years, or both, and as with the False Claims Act, this penalty can be assessed for every violation (Bennett, 2001).

Another act that provides for fraudulent violations of the Medicare and Medicaid programs is falls under the Social Security Act, 42 U.S.C. 132Oa-7b (b), otherwise known as the "anti-kickback" provision. This statute prohibits anyone from knowingly and willfully soliciting or receiving any remuneration such as kickbacks, bribes or rebates, directly or indirectly in return for referring an individual to a person for the furnishing or arranging of furnishing any item or service for which payment is made under the Medicaid Act or a State health care program, or in return for purchasing, leasing, ordering, or arranging for or recommending any good, facility, service or item for which payment may be made, in whole or in part under the Medicaid Act or a State health care program (Bennett, 2007). Violation of the statute is considered a felony, and the statute makes it a misdemeanor to knowingly and willfully offer to pay or to pay such remuneration in connection with these activities. However, the provision does not apply to discounts or other price reductions obtained by health care providers if the reduction is properly disclosed and reflected in costs claimed or charges made. Violations of the anti-kickback provision can result in a fine of not more than $25,000.00 or imprisonment for not more than 5 years, or both. (Bennett, 2007).

Also under the Social Security Act is 42 U.S.C. 132Oa-7b-, which covers false statements or representations with respect to the condition or operation of health care facilities. It provides that whoever makes or induces a false statement or representation of material fact of the conditions or operations of an institution so that the institution may qualify as a hospital, rural primary care hospital, skilled nursing facility, nursing facility, intermediate care facility for the mentally retarded, home health agency, or any other agency for which certification is required under a Federal Health Care Program, or who makes false statements with respect to information required under Part B Medicare disclosure requirements shall be guilty of a felony (Bennett, 2007). Examples of this type of fraud are widespread; the crime involves first registering as providers of equipment or services and then filing a variety of exploratory claims through the payment system. As soon as types of claims that are automatically approved by Medicare and Medicaid computers are found, numerous claims are simultaneously filed. Since these claims are automatically computer-approved, they go virtually undetected. The National Center for Policy Analysis (2001) reports that crime technologists state that the health care industry suffers a rapidly spreading plague of fly-by-night medical businesses that set up in storefronts, register as providers, bill fast and furiously for a short while, and then disappear without a trace.

Unfortunately, these criminals rob the Medicare and Medicaid programs of high volumes of funds. For example, in 1988, a Bronx shoe store owner fraudulently collected $1.1 million from the New York state Medicaid program. In Florida, a business consisting of two rented mailboxes and a beeper phone number was paid $2.1 million by Medicare in five months before the owner vanished (National Center for Policy Analysis, 2001). Other reports indicate that Medicare and Medicaid will pay out an estimated $2.2 billion this year to these fraudulent "businesses," with insurance companies losing millions more (National Center for Policy Analysis, 2001). The cause of fraud under this statute is that in nine states, anyone can open a home health agency without any experience, and reports by the General Accounting Office reveals that Medicare home health care benefit controls are "essentially non-existent." Furthermore, the General Accounting Office indicates that few home health claims are subject to medical review and most claims are paid without question (National Center for Policy Analysis, 2001). Fraudulent activities such as these resulted in violations under the act, including a fine of not more than $25,000.00 or imprisonment for not more than five years, or both.

Analysis of Current Fraud legal analysis of the current fraud committed in the Medicare and Medicaid programs indicates that reforms are in place to detect this fraud, and the involvement of governmental, local and federal police and investigation authorities has increased as well. For example, the National Center Policy for Analysis (2001) reports that 350 FBI agents are now investigating a record 2,300 potentially fraudulent cases in the medical industry. In addition, various government antifraud units are being allowed to tap into the Medicare trust fund for the first time to fund their budgets; $104 million for 2001 and more than $200 million for 2002. As a result of the high volume of Medicare and Medicaid fraud, in the past few years investigators have shifted the emphasis in their investigations from small amount abusers to large medical organizations and institutions, some of which have been known to bill Medicare for patient treatments which were never performed or equipment which was never ordered or used. The health programs most concentrated on by investigators are those that have grown rapidly in the past few years, and Medicare's home healthcare program, where bills have tripled in five years.