Corporate Compliance

Health reform could mean more fraud enforcement--and more fraud

Compliance Monitor, July 29, 2009

The Obama administration has made it clear that cracking down on healthcare fraud and abuse is a priority, and the latest version of the America's Affordable Health Choices Act of 2009 includes an additional funding increase to ensure that government money is not lining the pockets of fraudsters. 

That increase in enforcement will be essential if more people are covered under a government system, according to Robert A. Wade, Esq., partner at Baker & Daniels, LLP, in South Bend, IN.
Wade says he would expect an uptick in fraud and abuse cases if the reform passes simply because more people will be covered and more money will funnel through the system. If the federal program covers more people, more claims would fall under the False Claims Act and Stark Law.
Some opponents of a government-run healthcare system cite the high level of fraud and abuse in the Medicare and Medicaid programs as a sign that the government is incapable of running an efficient system. However, experts argue that government programs are no more susceptible to fraud and abuse than private insurers.
"If a physician or [healthcare] entity has the capacity to commit fraud, they will do it regardless of which bucket they are taking from," said Wade.
A report from the George Washington University Medical Center in Washington D.C. titled “Health Insurance Fraud: An Overview” concurs.
"What is absolutely clear from virtually every reliable source on the subject is that healthcare fraud is a systemic problem affecting public and private insurers alike, in the individual market, the employer-sponsored group market, and public programs," the report stated.
Authors of the report, Sara Rosenbaum, Nancy Lopez, and Scott Stifler, said the reason the public is more aware of Medicare and Medicaid fraud is because the government is required to tell taxpayers where their money is going. Most recently, Office of Inspector General Chief Counsel Lewis Morris told Congress that the United States lost $60 million to healthcare fraud in 2008, which was 3% of the government's budget.
Private insurance companies are not obligated to release such numbers so fraud involving those companies stays out of the headlines. The amount of money private insurers lost to fraud is reported to the board of trustees, not the public.
Fraud and abuse enforcement is much more significant on the public side as well. Just this year, President Obama allotted $311 million of the $3.4 trillion budget on healthcare fraud and abuse prevention. The Health Care Fraud Prevention and Enforcement Action Team also helped strengthen enforcement. 

"[Healthcare fraud enforcement] has been a theme we have seen in the president's budget and Medicare rule making," says Ed Dougherty, senior vice president of B&D Consulting. "I would say regardless of what happens in healthcare reform, there will be increased focus in all sites of service."

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