Abuse and Fraud in the Health Care Sector

$7 Billion Lost Every Year Because of Fraud

Rep. Ted Archer explained a Congressional Report to the House Ways and Means Committee in March 1996. The report exposed the degree of abuse and fraud in the medical care sector, saying that about 10% of the total health care expenses are lost because of fake or abusive practices by dishonest health care companies.

During the time, medical care costs were around $70 billion each year. One abuse and fraud practice involved health care companies billing excessively for services or for services not provided. A number of health care companies conducted needless surgeries or got kickbacks from drug firms to buy medicines at a greater cost than required.

The report additionally mentioned that the loss due to abuse and fraud in the medical care sector may be much higher than estimated. It was observed that just a portion of cases was investigated because of deficient resources, that law enforcement organizations at state and federal stages failed to coordinate with each other, and that the fines for medical care abuse and fraud were insufficient deterrents.

How HIPAA Helped Deal With Abuse and Fraud

The approval of HIPAA resulted in the creation of a Health Care Fraud and Abuse Program managed by the Department of Health and Human Services and the Department of Justice. The Program had adequate funding to determine, investigate, and run after entities committing fraud or abusing the system. HIPAA was introduced in January 1997 with these goals:

  • Organize federal, state, and local law enforcement programs to deal with fraud and abuse with regard to health plans.
  • Perform investigations, reviews, evaluations, and inspections associated with the provision of and payment for medical care.
  • Help in the observance of the civil, criminal, and administrative laws appropriate for health care in the U.S.
  • Give industry support, such as advisory opinions, safe harbors, and special fraud notifications associated with fake medical care practices.
  • Set up a national data bank to get and record final adverse actions versus health care companies.

In addition, a program was established to teach the public about abuse and fraud within the health care system so as to mitigate the possibility of customers becoming unwitting victims of overpayments, fake charges, and needless surgery; and standards were established to safeguard personally identifiable information employed in scam investigations.

How Successfully were Abuse and Fraud Resolved?

Before HIPAA, the Department of Justice got the resources to look at about 21 non qui tam (non-whistle blower) cases annually with the False Claims Act. About $60 million in penalties and settlements was recovered every year. In 2021, there were 97 non qui tam cases investigated and $3.59 billion was saved just with Medicare fraud. The amount retrieved in 2021 was over $5 billion.

Although these figures suggest there’s still a high degree of fraud and abuse, the Department of Justice is convinced that growing enforcement action dissuades possibly unscrupulous actors who may try to defraud the system at the taxpayers’ expense. The Department additionally is convinced its efforts helped to keep patients from medically unnecessary and possibly dangerous actions.

What is additionally apparent in the most recent report is the growing number of qui tam cases looked at every year. Because of the whistleblower rights in HIPAA, the number of employee tip-offs investigations has grown from about 44 each year in the 10 years before HIPAA to a 10-year average of 456 up to and including 2021 – a ten-times growth in whistleblower tip-offs.

About Christine Garcia 1297 Articles
Christine Garcia is the staff writer on Calculated HIPAA. Christine has several years experience in writing about healthcare sector issues with a focus on the compliance and cybersecurity issues. Christine has developed in-depth knowledge of HIPAA regulations. You can contact Christine at [email protected]. You can follow Christine on Twitter at https://twitter.com/ChrisCalHIPAA