A white paper from Thomson Reuters indicates that organized crime is entering the healthcare fraud market.
It's estimated that between $60 billion and $230 billion is stolen from the healthcare system every year through fraud, which represents 3% to 10% of total spending, according to a new report by Thomson Reuters.
• Pay and chase: According to FBI statistics, among 1,676 indictments of fraud and 736 fraud convictions, the FBI was able to recover $1.2 billion in restitution, $1 billion in fines, $96 million in seizures, $320 million in civil restitution, and $1 billion in civil settlements. The problem is expected to get worse as more Americans enter Medicaid and Medicare programs-classic targets for fraud.
• Targets for fraud: Government programs are the hardest hit by fraud, including Medicare, Medicaid, and the Children's Health Insurance Program (CHIP).
• Surprising perpetrators: While providers and hospitals make up a sizeable portion of fraud perpetrators, organized crime groups have started to get into the game. The organizations bring their criminal abilities and skills to the fraud game and if caught face prison terms among white collar criminals like Bernie Madoff. Healthcare fraud allows these organizations to launder money. It also makes more money for the organizations than their usual businesses: illegal drugs and prostitution.
• Sample of organized crime schemes: A Baton Rouge, La., fraud bust discovered $225 million paid out to seven people for mental health services falsified since 2005. A Brighton Beach, N.Y., fraud scheme cost $250 million and involved nine clinics. A fake medical device company in Southern California raked in $11 billion submitting claims for high-price durable equipment.
• More manpower: Centers for Medicare and Medicaid Services (CMS) officials and law enforcement agencies are putting more agents into areas where fraud runs rampant. These areas dot the country such as Miami-Dade County, Los Angeles, Detroit, Houston, Brooklyn, Baton Rouge, Tampa, Chicago and Dallas.
• Technology: In addition to more manpower, agencies are using a two-prong technology approach to fraud. The first prong is CMS' Fraud Prevention System. The system is an analytic program that roots out fraud in the same way that companies identify stolen credit cards. The other prong is the Automated Provider Screening (APS), which validates every new provider and hospital. APS also runs routine checks on all validated providers in the system.
-Miranda Hester
Source: Thomson Reuters White Paper From Drugs to Wheelchairs
In this episode of the "Meet the Board" podcast series, Briana Contreras, Managed Healthcare Executive editor, speaks with Ateev Mehrotra, a member of the MHE editorial advisory board and a professor of healthcare policy and medicine at Harvard Medical School. Mehtrotra is also a hospitalist at the Beth Israel Deaconess Medical Center in Boston. In the discussion, Contreras gets to know Mehrotra more on a personal level and picks his brain on some of his research interests including telehealth, alternative payment models and price transparency.
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