Fraud is Killing U.S. Healthcare– How We can Help– (Analysis)

Yep, you read it right: we spend nearly a fifth of the total output of the U.S. economy on public and private expenses related to healthcare.

And we spend way more than our peers– about $12,555 per person per year, according to a report by the Peter G. Peterson Foundation. In second place is Switzerland, which spends only about 64% of that, around $8,049, for healthcare per citizen.

And with hospitals shuttering across the U.S., the $12,555 figure doesn’t even seem like enough to keep the healthcare system running smoothly. Soaring healthcare costs affect wealthy, middle-class, and poor Americans alike, inciting fears of cutbacks and rationing across income segments.

How can we reduce costs without compromising healthcare services? One non-medical-related item gobbles up to 10% of the total healthcare tab. Eliminating it could lower healthcare costs significantly, freeing up taxpayer dollars and increasing the availability of services.

The culprit is healthcare fraud.

The Toll of Fraud

How much does fraud contribute to the United States healthcare system annually?

No one has a clear answer since not all fraud is detected, so we must rely on estimates. For Medicare and Medicaid, those costs may have exceeded $100 billion in 2023, according to a recent estimate by the U.S. Government Accountability Office (GAO).

And the $100 billion figure– already astronomical– doesn’t take into account other government healthcare costs, including care provided to active duty military and veterans, nor does it include the amount insurance companies lose to fraud, costs that are passed on to the public via higher premiums and copays.

Healthcare fraud directed at private insurance might add another $200 billion or more to healthcare fraud totals, according to some estimates.

That means our total estimated bill for all healthcare fraud might be more than $300 billion.
Imagining this figure as a public debt divided by all of us, it represents an annual burden of more than $900 levied on every man, woman, and child in the United States.

Healthcare fraud takes more than a financial toll. It fuels addictions to opioids and other prescription drugs. It also means fewer medical services available to those who most need them.

Some patients might also receive inappropriate and even harmful prescriptions because of medical fraud. These mis-prescriptions compromise their health, which may cause serious complications or death.

What Healthcare Fraud Looks Like

Healthcare fraud is committed by entities ranging from individuals to extensive criminal networks spanning multiple states.

Common types of medical fraud include fraud committed by medical providers, fraud committed by patients or other individuals, and fraud involving prescription medication, according to the FBI’s Health Care Fraud information page.

Provider Fraud

Medical providers who commit medical fraud engage in practices like double billing, phantom billing, unbundling, and upcoding, according to the FBI.

Double billing occurs when a provider intentionally bills Medicare or an insurance provider twice for the same service. When a provider bills for services not received, they engage in phantom billing. Unbundling occurs when providers bill separately for services that should be included under one charge, and upcoding is when a provider bills for a more expensive service than the patient needs.

If caught, medical providers risk losing their licenses as well as lengthy criminal and civil penalties.

Fraud Committed by Criminal Networks

Fraudsters may steal or con patient information in order to scam insurers for services that are never rendered, according to the FBI. They may, for instance, contact unsuspecting Medicare recipients, convincing them to provide their personal information and plan numbers. These criminals then use that information to bill for treatments never received.

Medical providers can be unwitting pawns in these cons. Sometimes, providers ferret out potential fraud when presented with unexpected medical requests.

Our office staff and physicians in our practice do have to be careful about some medical supply requests that come into us for Medicare patients,

said Dr. Adam Buechel, an Ohio physician, in an interview with The Daily Muck.

I have received requests in the past for medical devices, such as back braces, that are requesting my signature on an order. If I’m not familiar with why I may be receiving the request, we would always check with the patient. There have been times when the patient is also unaware of this request being sent to me. I believe these are efforts by outside companies to commit fraud and bill for equipment or services not rendered,

Dr. Buechel said.

Frauds Involving Prescription Medication

Individuals may commit prescription fraud by selling medicine legitimately prescribed by a provider. Some even forge prescriptions to get medicine to sell.

Others engage in doctor shopping, which means visiting multiple providers to gain access to prescription meds that they then may sell.

And a few providers even prescribe dangerous amounts of prescription medication– such as opioids– to fatten their own bank accounts, like Dr. Jay Sadrinia of Villa Hills, Kentucky. On May 10, a federal jury sentenced him to 20 years in prison for illegally prescribing opioids to patients who he knew had substance abuse disorder, according to a Department of Justice press release.

One of his patients even died from overdosing on morphine prescribed by Dr. Sadrinia. The sad case highlights that healthcare fraud often has consequences even more dire than financial.

What the Government Should Do

What can be done about all this medical fraud? Are we doomed to continue to suffer injuries and deaths due to fraudulent prescriptions and exorbitant financial costs from fake claims?

Fortunately, many government agencies are working to deter healthcare fraudsters and recover financial losses.

A combination of continuing these efforts along with Congressional and judicial action could further decrease losses from healthcare fraud, potentially even virtually eliminating them.

Law Enforcement Efforts

Current law enforcement efforts and civil actions not only help interdict and deter would-be fraudsters, but they also help recoup healthcare funds that have been misused.

In its last Semi-Annual Report to Congress, the Department of Health and Human Services (HHS) stated that it expected to recover almost $3.5 billion lost to healthcare fraud based on its 2023 investigations. That’s only about 3% of projected Medicare fraud losses, but it’s significant.

The Daily Muck spoke with Senior Assistant Attorney General (AAG) Thomas Worboys to find out how law enforcement and prosecutors are going after Medicare and Medicaid fraudsters in one New England state. AAG Worboys serves as Director of the Medicaid Fraud Control Unit in the New Hampshire Department of Justice.

The cooperation among federal and state agencies to combat healthcare fraud is extensive. My work involves Medicaid fraud, which is a joint federal and state program that gives health coverage to people with limited income and resources, whereas Medicare is, generally speaking, federal health insurance for anyone age 65 and older,

AAG Worboys told The Daily Muck.

New Hampshire has a Medicaid Fraud Control Unit (MFCU) – one of 53 located across the United States, Worboys explained. The federal government funds and the Department of Health and Human Services (HHS) Office of the Inspector General (OIG) oversees the MFCUs.

The support we’ve received from OIG over the years has been fantastic, and efforts from the MFCUs last year collectively resulted in $1.2 billion in criminal and civil recoveries,

Worboys said.

You can read The Daily Muck’s entire interview with AAG Worboys here. (hyperlink to interview article on “here.”)

Law enforcement is doing a great job prosecuting criminals and recovering healthcare fraud losses. Hopefully, these efforts will continue and even grow where feasible.

Judicial Efforts

But law enforcement agencies and prosecutors can only go so far. The judicial system has failed to adhere to sentencing guidelines, and maybe even the guidelines themselves may be too lenient. As a typical “white-collar” crime, convicted healthcare fraud offenders often get less time than they would for other serious offenses.

The average sentence imposed for healthcare fraud offenses was 30 months in 2022, but the average sentence guideline was 53 months, according to a fact sheet by the United States Sentencing Commission (USSC).

It’s important to note that, on average, the penal consequences of healthcare fraud are only 56% of what the guidelines say they should be.

Compared to the damage they do, fraudsters often get off easily, even when stealing millions from the healthcare system. In November, a federal court convicted three men in connection to a $54 million bribery/kickback scheme targeting Tricare, which provides medical services to military members and their families. The ringleader received four years and three months, while his co-conspirators all received one or two years.

Lingerie sentences might act as a greater deterrent to white-collar crimes, such as fraud.. At a minimum, The Daily Muck believes courts need to impose sentences closer to USSC standards. For people without a moral compass, the threat of prison might be the only thing preventing them from committing fraud.

Congressional Action

The U.S. Government Accountability Office, the agency responsible for providing information to Congress, federal agencies, and others in an effort to save U.S. taxpayer dollars, has made over a hundred recommendations to the Center for Medicare and Medicaid Services (CMS), another government agency.

For the most part, CMS has followed those recommendations or is in the process of implementing them. These process improvements and fraud detection advances have saved billions. But other GAO recommendations require changes in Congressional legislation.

Recommendations that could further help protect the healthcare system include adding prepayment reviews and enhanced provider screening, according to the GAO’s report, dated April 16.

Shoring up the U.S. healthcare system against fraud might be as simple as following the GAO’s recommendations for fixing the problems. To do this, Congress needs to pass measures like H.R. 1735, the Medicare and Medicaid Fraud Act of 2023, a bill that would amend titles XI and XVIII of the Social Security Act to strengthen healthcare waste, fraud, and abuse provisions.

This bill, as many others like it, is currently languishing in Committee and has yet to be introduced to the full House of Representatives.

What Individuals Can Do

As for preventing healthcare fraud, the buck doesn’t stop with government and law enforcement agencies. Private individuals can do plenty to help prevent healthcare fraud, which affects everyone.

Individuals, particularly seniors, should be aware that telemarketers may solicit them for information, including their Medicare plan number, which can be used by criminals to bill the government and private insurance companies for unnecessary tests and medical procedures.

That happened when Dr. Sophie Toya signed thousands of prescriptions for orthotic devices for Medicare patients. A federal jury found her guilty of illegally billing Medicare $6.3 million on behalf of patients who didn’t need the devices– some of whom she never even talked to, according to a May 10 press release by the Department of Justice.

This is an example of what the FBI calls “bogus marketing.” Unscrupulous fraudsters use this tactic to use an individual’s healthcare identification to bill for healthcare services that were either never provided or were not needed.

The FBI warns that people should be skeptical of efforts by telemarketers to sign them up for “free” services, noting that this might be an indication that a service could be fraudulently billed to the government on the patient’s behalf.

Patients should also be vigilant when using Medicare and Medicaid services with their ordinary providers. A fact sheet by the Centers for Medicare and Medicaid Services (CMS) recommends that patients focus on what CMS calls the “4 Rs” of preventing healthcare fraud, which include:

• Keep a Record of appointments and services
• Review services listed on statements for accuracy
• Report suspected fraud
• Remember to protect personal information, including Medicare problems

New Hampshire AAG Worboys also provided the following advice to consumers to help prevent Medicare fraud:

• Do not answer calls from numbers you do not recognize.
• If you receive a voicemail from someone claiming to be a representative of Medicare, do not return the call using the number provided. Call 1-800-MEDICARE (1-800-633-4227) for all Medicare-related inquiries.
• Treat your Medicare card like a credit card and only give your Medicare number to your health care providers, your health insurance company, and people you trust that work with Medicare, such as your State Health Insurance Assistance Program; and
• Never provide personal identifying information such as account numbers, Social Security numbers, mother’s maiden names, passwords, or any other self-identifying information in response to a call you are not expecting.

Read our other stories about healthcare fraud here, here, and here.