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Every year we lose tens of billions of dollars in Medicare and Medicaid funds to fraud.

Von: Raymond (bluerhymer@aol.com) [Profil]
Datum: 07.06.2010 12:54
Message-ID: <13f280f5-f9c5-4aef-a926-bd71e753f478@z10g2000yqb.googlegroups.com>
Newsgroup: alt.politics.usa alt.politics alt.crime alt.health
Every year we lose tens of billions of dollars in Medicare and
Medicaid funds to fraud.
Health Care Fraud: Physicians as White Collar Criminals?
Those billions represent health care dollars that could be spent on
medicine, elder care or emergency room visits, but instead are wasted
on greed.

Marilyn Price, MD and Donna M. Norris, MD

Dr. Price is Clinical Instructor of Psychiatry, and Dr. Norris is
Assistant Clinical Professor of Psychiatry, Harvard Medical School,
Boston, MA. Address correspondence to: Marilyn Price, MD,
Massachusetts General Hospital, Law and Psychiatry Service, 15 Parkman
Street, WAC812, Boston, MA 02114-3117. E-mail:

White collar crimes are characterized by "deceit, concealment, or
violation of trust and are not dependent upon the application or
threat of physical force or violence. Such acts are committed by
individuals and organizations to obtain personal or business
advantage" (Ref. 1, p 3). Health care fraud is a form of white collar
crime that may be committed by health care providers, consumers,
companies providing medical supplies or services, and health care
organizations. There is a trend toward increased participation by
organized crime groups in complex health care fraud schemes.2 There
are many different types of illegal and unethical schemes that
constitute health care fraud. The common types of fraud committed by
physicians include billing for services that were never rendered,
providing unnecessary treatments or tests, upcoding (billing for a
more expensive diagnosis or procedure), falsifying or exaggerating the
severity of the medical illness to justify coding, and accepting
kickbacks for referral.37

Health care fraud has failed to capture the attention of the public or
the media. The scandals at Enron, WorldCom, and Adelphi have
heightened public awareness of the serious consequences of corporate
white collar crime, but there has not been a comparable response to
health care fraud prosecutions. For a comprehensive review of
corporate white collar crime see Price and Norris.8 There has been
renewed interest by political leaders and prominent government
officials in raising public awareness of the enormity of the problem.
In addition, investigation of health care fraud is fast becoming one
of law enforcement's major priorities.

With the Obama administration's commitment to health care reform and
extending benefits to those currently uninsured, there has been a
rigorous effort to curtail the waste due to health care fraud.
Attorney General Eric Holder succinctly summarized the salient
concerns when he pledged:

Every year we lose tens of billions of dollars in Medicare and
Medicaid funds to fraud. Those billions represent health care dollars
that could be spent on medicine, elder care or emergency room visits,
but instead are wasted on greed. This is unacceptable, and the Justice
Department is committed to working with the Department of Health and
Human Services to eradicate it [Ref. 9].

Health care fraud is not a victimless crime. The diversion of funds
due to fraud drives up the costs of providing a full range of
legitimate medical services and may foster mechanisms designed to
recoup these losses. These efforts may result in reduced benefit
coverage, changes in eligibility for programs such as Medicaid, higher
premiums for individuals or their employers, or higher copays.
Physicians may perform unnecessary procedures to increase
reimbursement, compromising patient safety. When medical providers
bill for services never rendered, they create a false medical history
for patients that may later cause them difficulty in obtaining
disability or life insurance policies. An inaccurate medical history
may also influence treatment decisions and allow some insurance
companies to deny coverage based on a previous medical condition.
Health care fraud also tarnishes the reputation of the medical
profession and raises questions about the ethics governing the conduct
of all physicians.24

The Centers for Medicare and Medicaid Services (CMS) projected the
total health care expenditures for Fiscal Year 2008 at $2.4 trillion.
With the changing demographics and escalating costs of medical
treatment by 2018, CMS expects that total health care spending will
increase to $4.14 trillion and account for an even higher percentage
of the gross domestic product (20.3 percent). The National Health Care
Anti-Fraud Association estimated that health care fraud accounted for
3 percent of the health care expenditures, or $68 billion, in 2007,
while the Federal Bureau of Investigation (FBI) estimated losses due
to health care fraud at 3 to 10 percent. At 10 percent, the losses
would surge to $226 billion for 2007.2,10

There are several government agencies that play a role in health care
fraud. The Department of Justice (DOJ) and the Department of Health
and Human Services have a role in monitoring and enforcing health care
regulations.11 The FBI has functioned as the primary investigative
agency for health care fraud in both the public and private health
systems. The Financial Crimes Section of the FBI was created in the
1980s. It comprises three units, one of which is devoted to health
care fraud. A 2007 FBI report explained that health care fraud had
been identified as a priority based on information from field office
crime surveys and trend analyses and input by the President, the
Attorney General, the FBI Director, and the Criminal Investigative

Persons can be subject to both criminal and civil actions for health
care fraud.11 The Medicaid False Claims Statute criminalizes false
statements or representation in relation with any application for
claim of benefits or payment or disposal of assets under a federal
health care program that are knowingly and willfully made. The accused
must know that the statements are untrue.12 The Medicaid Anti-Kickback
Statute prohibits knowingly and willfully paying or receiving any
remuneration directly or indirectly, overtly or covertly, in cash or
in kind in exchange for or to induce referrals of program-related
business including prescribing, purchasing, or recommending any
service, treatment, or item for which payment will be made by
Medicare, Medicaid, or any other federally funded health care program.
There are exceptions in the form of safe harbors.11,13

The Health Insurance Portability and Accountability Act of 1996
(HIPAA) provided funds to attack health care fraud, expanded the
definition of a kickback so that the Anti-Kickback statute could be
applied to all federal health care programs, and expanded the
prosecution of health care fraud.14 HIPAA, under United States Code,
Title 18  1347, made health care fraud a federal crime punishable by
fines and a prison sentence of up to 5 years. When the fraud results
in serious bodily injury, the maximum sentence is a prison term of 20
years. When the violation results in a patient's death, the
perpetrator may face a life sentence. HIPAA also provided for civil

Increasingly, the FBI has been part of a coordinated effort involving
various agencies, including the U.S. Department of Health and Human
Services-Office of Inspector General (HHS-OIG), the Department of
Justice (DOJ), the Food and Drug Administration (FDA), Drug
Enforcement Agency (DEA), Defense Criminal Investigative Service,
Office of Personnel Management, Internal Revenue Service-Criminal
Investigative Division, and various state and local agencies. In
tackling health care fraud in the private sector, the FBI has also
formed alliances with the National Health Care Anti-Fraud Association,
the National Insurance Crime Bureau, the Blue Cross and Blue Shield
Association, the American Association of Retired Persons, and the
Coalition Against Insurance Fraud.2

At the headquarters level, the FBI was one of the agencies involved in
a Senior Level Working Group that included representatives from CMS,
DOJ, HHS-OIG, and other agencies and was formed to assess
vulnerabilities and make recommendations to prevent losses from health
care fraud. In addition FBI field offices contributed to health care
fraud working groups, which formed across the country and involved
local law enforcement agencies and other stakeholders.2

The FBI has developed several national initiatives including the
Internet Pharmacy Fraud Initiative, the Auto Accident Insurance Fraud
Initiative, and the Outpatient Surgery Center Initiative. There has
been evidence of organized criminal activity in the operation of a
variety of health care facilities. In addition, there have been
technology-based schemes resulting in medical data theft.2

The FBI has emphasized the investigation of medical professionals who
engage in schemes that can directly harm patients. Such schemes
include performing unnecessary surgeries, diluting medication for
profit, and inappropriate prescribing practices.2 Recently, a
California physician was accused of diluting medications such as
Epogen, interferon, and intravenous immune globulin. He pleaded guilty
in February 2009 to only four counts, with numerous additional counts
being dismissed as part of the plea bargain. He admitted to having
replaced a patient's medication with saline and vitamins and to having
fraudulently billed for medication that he did not administer to
another patient.15

The Internet Pharmacy Fraud Initiative has targeted Internet websites
that provide illegal prescription drugs and controlled substances.
Physicians who have participated in these schemes by prescribing
medications for no legitimate medical purpose have been apprehended.
Another area of active investigation involves the sale of counterfeit
and diverted pharmaceuticals on the Internet.2 Since its inception in
2005, the Auto Accident Insurance Fraud Initiative has concentrated on
organized staged accident rings that submit fraudulent claims.2 The
implementation of the Medicare Prescription Drug Program (Part D) in
2006 led to the development of a working group to promote cooperation
among agencies to prevent and detect fraud.2

In 2007, the FBI announced its concern about health care fraud
involving durable medical equipment, hospitals, physicians, home
health agencies, beneficiary-sharing, chiropractors, possible drug
diversion in pain management, physical therapists, prescription drugs,
and identity theft.2 The FBI had cooperated with investigations by the
DOJ and U.S. Attorney's Offices across the country. Through Fiscal
Year 2007, FBI investigations led to 839 indictments and 635
convictions of perpetrators of health care fraud, with many cases
still pending. There were $1.12 billion in restitutions, $4.4 million
in recoveries, $34 million in fines, and 308 seizures valued at $61.2

The Obama administration has been advocating further coordinated
efforts to promote health care fraud prevention and detection. On May
20, 2009, HHS Secretary Kathleen Sebelius and Attorney General Holder
jointly announced a new interagency effort, the Health Care Fraud
Prevention and Enforcement Action Team (HEAT), tasked with combating
Medicare fraud. They also revealed that the joint DOJ-HHS Medicare
Fraud Strike Forces that had already been employed effectively in
South Florida since 2007 and in Los Angeles since May 2008 were going
to expand their investigations into the Detroit and Houston areas.9

Secretary Sebelius warned, "Today, we are turning up the heat on
perpetrators who steal from the taxpayers and threaten the future of
Medicare and Medicaid." She noted,

Most providers are doing the right thing and providing care with
integrity. But we cannot and will not allow billions of dollars to be
stolen from Medicare and Medicaid through fraud, waste and serious
abuse of the system. It's time to bring the fight against fraud into
the 21st century and put the resources on the streets and out into the
community to protect the American taxpayers and lower the cost of
health care [Ref. 9].

As an indication of the Obama administration's commitment, the HEAT
team is to include senior officials from DOJ and HHS. There is also a
plan to invest in technology that would enhance a data-driven strategy
to spot unusual billing patterns. Preventive measures are to be
implemented, and there is to be greater interagency cooperation.9

Just a month after this announcement, FBI Director Robert Mueller
joined with Attorney General Holder and Secretary Sebelius to announce
indictments against 53 persons in Detroit and Miami accused of
conspiring to submit more than $50 million in false Medicare claims.
It was alleged that at least nine Medicare provider companies as well
as company executives, doctors, therapists, medical recruiters,
medical assistants, and Medicare consumers participated in these
schemes, which involved billing for physical therapy, occupational
therapy, and infusion therapy that had not been provided.16

President Obama's proposed Fiscal Year 2010 budget indicates a
commitment to fighting health care fraud. It provides $311 million, a
50 percent increase from 2009 funding, for integrity assurance
activities within the Medicare and Medicaid programs. The expectation
is that this additional funding would produce a saving of $2.7 billion
over five years by improving oversight and thus containing fraud in
the Medicare and Medicaid system.9

In many ways it is much easier for those in the medical profession to
imagine that well-respected, successful corporate managers could
engage in white collar crime. After all, corporate officers work in an
environment that rewards financial success with recognition,
promotions, and bonuses. In a for-profit business environment, there
can be strong organizational pressures contributing to the decision to
abandon ethics for the benefit of the individual or the corporation.

As physicians, our main focus is on providing compassionate medical
care to our patients without unethical deviation from the prime
mission. Nevertheless, health care fraud is a reality, and there is
evidence of an increase in cases in which there is direct harm to
patients, a particularly reprehensible form of health care fraud.

The next generation of physicians not only should enter the profession
armed with the requisite clinical knowledge and surgical techniques
but also should be educated more completely about the ethics-based
framework on which they build their practices. We may have to reassess
how medical school applicants are screened and what attributes are
given more weight in admission decisions. Evidence of commitment to
patient care may be more important than test scores. Given the number
of physicians engaging in fraudulent behavior, there is clearly a need
for formal training during which there is frank discussion about the
ethics governing patient care and the consequences to the individual
and profession when there is deviation.

Law enforcement is beginning to use technology to monitor
discrepancies in billing as a means of preventing and identifying
health care fraud.17 However, this deterrence should not replace an
education in ethics. Mentors of our young physicians must instill an
appreciation of ethical conduct, and they should show no tolerance of
behavior that compromises health care delivery.


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