Health Care Fraud has infiltrated virtually every aspect of the health care delivery system. Health care fraud includes any scheme involving the health care industry that is designed for illegal financial gain. These schemes may include billing for services not rendered, inflating the cost of the service provided, the deliberate performance of medically unnecessary services, and the payment of "kickbacks," i.e. illegal payments designed to guarantee awarding of a contract or the exclusive right to provide a service. These fraudulent schemes affect all areas of health care services from medical equipment supply companies, psychiatric and acute care hospitals and nursing homes, pharmacies, laboratories, workers' compensation, and claims for automobile accident injuries. Also included are home health care and medical transportation, as well as claims by doctors, dentists and other medical providers. This type of fraud has progressively become more complex and often involves corporations as well as individual providers.

According to reports by the Centers for Medicare and Medicaid Services, health care spending in the United States reached $1.6 trillion in 2002, up from $1.4 trillion in 2001 and $1.3 trillion in 2000. In 2002, the average health care expenditures per person were $5,440, also an increase over previous spending. These statistics show that health care spending continues to grow at an accelerated rate, as it has for the past six years. With estimates of the amount of fraud in the industry at between 7% and 10% of all health care billings, the economic loss potential due to health care fraud is immense. For example, according to a February 2002 audit report of the Medicare program's fee-for-service claim payments, issued by the Office of Inspector General of the U.S. Department of Health and Human Services, "improper Medicare benefit payments made during FY 2001 totaled $12.1 billion, or about 6.3 percent of the $191.8 billion . . . These improper payments, as in past years, could range from reimbursement for services provided but inadequately documented to inadvertent mistakes to outright fraud and abuse."

The health care industry in the Hampton Roads area of Virginia is a large one, with four health care companies ranking among the area's top 25 employers.¹ Current health care statistics compiled by the Centers for Medicare and Medicaid Services indicate that in Fiscal Year (FY) 2002, Medicare expenditures in Virginia exceeded $3.8 billion with an estimated 928,000 Medicare beneficiaries. According to statistics from the Virginia Department of Medical Assistance Services, total Medicaid expenditures in Virginia for FY 2003 were estimated at $3.4 billion, with the number of individuals eligible for service exceeding 700,000. In addition, with a large military presence in the Hampton Roads areas, there is a significant number of TRICARE beneficiaries, another government funded health care program. Although the majority of health care providers operate legally, with this level of activity and expenditures, fraud is nearly certain to exist.

Traditionally the FBI has investigated health care fraud as fraud against the government with approximately 55% of all medical expenditures paid under government sponsored programs, including Medicare and Medicaid. In early 1992, the FBI began to strongly emphasize health care fraud investigations because of the significant rise in the cost of health care provided through government programs and in view of the perceived increase of fraud in these programs. During this period the FBI also began to investigate fraud against non-governmental health care plans, i.e. those provided by private insurers. From 1992 to 1999, the FBI increased the number of health care fraud investigations conducted from 592 to over 3000. During the same period, the commitment of Special Agents to investigate these matters increased from 112 to nearly 500.

In 1996, Congress enacted and President Clinton signed the Health Insurance Portability and Accountability Act which enhanced criminal statutes and penalties as well as civil penalties targeting fraud within the health care industry. The Department of Justice and FBI have made combating health care fraud one of their top priorities. The FBI has received enhanced funding to provide for additional Agents each year through 2003 to address Health Care Fraud.

Private citizens and employees of a health care provider company can detect fraudulent activities using these guidelines:

• Patients should always review their medical bills to ensure that the services for which they are billed were actually performed by the indicated provider.
• Employees of health care companies should be alert for billings for services not provided or provided under a different code.
• Keep track of every bill received or paid by your insurance provider to check that you are not billed more than once for the same service.
• Don't be afraid to question your health care provider as to the necessity of each procedure which is being ordered for you or for each patient.
• Ensure that any medical supplies you are utilizing are nearly depleted prior to replacement to prevent unnecessary stockpiling of supplies.
• Do not accept a discount of medical payments or the waiver of your co-payment unless you are assured that the discounted amount is reflected on the billing for your health care provider.
• Don't be afraid to question the billings and/or services of any health care provider.
  

A publication entitled Pay it Right: Protecting Medicare from Fraud, put out by the Centers for Medicare and Medicaid, an agency of the U.S. Department of Health and Human Services, provides useful information to Medicare consumers about detecting and reporting fraud. It is available on the web at http://www.medicare.gov/Publications/Pubs/pdf/10111.pdf

If you feel that you or your insurance company has been victimized by fraudulent activities, contact your insurance company or your local FBI office immediately. Employees of health care companies who suspect fraud should also contact the appropriate insurer or the FBI. Medicare fraud may be reported to the U.S. Department of Health and Human Services, Office of Inspector General, by using the hotline at 1-800-HHS-TIPS (1-800-447-8477) or by e-mail to HHSTips@oig.hhs.gov.

¹ Virginia Employment Commission - Labor Market Information - Top 50 Employers from Hampton Roads for the First Quarter of 2003.