Health Care Fraud and Abuse Enforcement


With the costs of Medicare and Medicaid predicted to soar to $587.9 billion in 2004, the government’s efforts to curb health care fraud have increased correspondingly. Since Congress enacted the anti-kickback statute, enforcing legislation enacted to combat health care fraud and abuse has become a multi-agency task. While the Office of the Inspector General (OIG) is charged with preventing and detecting fraud and abuse in Department of Health and Human Services (DHHS) programs, investigating and prosecuting health care fraud cases involves the combined efforts of the U.S. Department of Justice (DOJ), the Federal Bureau of Investigations (FBI) and the Centers for Medicare and Medicaid Services (CMS) as well.

The OIG was established in 1976 within the Department of Health, Education and Welfare (now DHHS) as an “independent and objective unit.” One of the OIG’s primary missions is to “prevent and detect fraud and abuse” in DHHS programs. To accomplish this, several programs have been created as mandated by legislation aimed at reducing fraud and abuse against federal health care programs.

Fraud and Abuse Control Units

As Medicaid and Medicare grew in size, so too did the potential for fraud and abuse against the programs. By 1977, the cost of Medicaid alone had climbed to $19 billion, and losses to fraud and abuse against Medicaid were estimated at $653 million.

In an effort to reduce fraudulent activity against federal health care programs, Congress enacted the Medicare/Medicaid Anti-Fraud and Abuse Amendments (Public Law [P.L.] 95-142). The primary goals of the amendments were “… to strengthen the capability of the government to detect, prosecute and punish fraudulent activities under the Medicare and Medicaid programs.” Since being enacted, the amendments have been categorized by the OIG as “one of the most significant and comprehensive steps taken by the federal government to thwart fraud and abuse in federal health care programs.”

One of the provisions of the amendments was the establishment of Medicaid fraud and abuse control units “to investigate and prosecute cases involving Medicaid provider fraud and patient abuse and neglect.” The Health Care Financing Administration (now CMS) originally oversaw the Medicaid fraud and abuse control unit program, but in 1979, federal oversight and administration was transferred to the OIG. The OIG’s Office of Investigations, Medicaid Oversight Staff (MOS) now oversees the state Medicaid fraud control units (MFCUs).

Currently, 47 states and the District of Columbia operate an MFCU. In 2002, the MFCUs recovered more than $288 million from fines, penalties and settlements.

HIPAA Anti-Fraud Programs

Another important piece of legislation that established federal anti-fraud programs is the Health Insurance Portability and Accountability Act (HIPAA; P.L. 104-191) of 1996. Some of the federal anti-fraud programs mandated under HIPAA include:

  • National Health Care Fraud and Abuse Control Program
  • Health Care Fraud and Abuse Control Account
  • Medicare Integrity Program
  • Beneficiary Incentive Programs
  • Health care Integrity and Protection Data Bank

Fraud and Abuse Control Program

The National Health Care Fraud and Abuse Control Program is operated under the joint direction of the OIG and the DOJ. The program’s goals are to:

  • Coordinate federal, state and local law enforcement efforts to control health care fraud and abuse
  • Conduct investigations, audits and evaluations relating to health care delivery and payment
  • Facilitate enforcement of health care legislation
  • Provide guidance to the health care industry regarding fraudulent practices
  • Establish a national data bank to compile final adverse actions against health care providers and entities

As a result of these activities, in 2002, the federal government recovered more than $1.6 billion in judgments, settlements and administrative impositions from health care fraud cases and proceedings. In addition, almost 3,450 individuals and health care entities were excluded from participating in federal health care programs.

Reporting Medicare and Medicaid Fraud and Abuse
  To report Medicare and Medicaid fraud and abuse, contact the HHS OIG’s Fraud Hotline at (800) 447-8477 or call any of the following regional field offices of the Office of Investigations, Office of Inspector General or the Department of Health and Human Services:
  Field Office States Served Telephone
  Boston Massachusetts, Vermont, New Hampshire, Maine, Rhode Island, Connecticut (617) 565-2664
  New York New York, New Jersey, Puerto Rico, Virgin Islands (212) 264-1691
  Philadelphia Pennsylvania, Maryland, Delaware, West Virginia, Virginia, District of Columbia (215) 861-4576
  Atlanta Georgia, Kentucky, North Carolina, South Carolina, Florida, Tennessee, Alabama (404) 562-7603
  Chicago Illinois, Minnesota, Wisconsin, Michigan, Indiana, Ohio (312) 353-2740
  Dallas Texas, New Mexico, Oklahoma, Arkansas, Louisiana, Mississippi (214) 767-8406
  Kansas City Colorado, Utah, Wyoming, Montana, North Dakota, South Dakota, Nebraska, Kansas, Missouri, Iowa (816) 426-4000
  Los Angeles Arizona, Nevada, Southern California, Hawaii (714) 246-8302
  San Francisco Northern California, Alaska, Oregon, Idaho, Washington (415) 437-7961

Fraud and Abuse Control Account

The Health Care Fraud and Abuse Control Account is an expenditure account created within the Medicare Trust Fund to help fund DHHS and DOJ anti-fraud activities. Most of the funds recovered through the National Health Care Fraud and Abuse Control Program are returned to the Medicare Trust Fund, and a portion of the funds are allocated to the Health Care Fraud and Abuse Control Account. The account receives additional federal appropriations as well.

Medicare Integrity Program

Under the Medicare Integrity Program, DHHS is authorized to contract “with entities to promote the integrity of the Medicare program” through the following:

  • Review activities of providers and entities providing services for which payment may be made
  • Audit cost reports
  • Determine whether payment should have been made and initiate recovery of payments that should not have been made
  • Educate providers, beneficiaries and other persons with respect to payment integrity and benefit quality assurance issues
  • Develop and periodically update a list of items of durable medical equipment that are subject to prior authorization

Beneficiary Incentive Programs

The Beneficiary Incentive Programs were established to enlist beneficiaries in the fight against fraud and abuse and to solicit suggestions on improving efficiency. One incentive program encourages individuals to report information to DHHS on health care professionals and entities who are suspected of engaging in fraudulent acts or omissions against the Medicare program. If at least $100 is collected as the result of the report, a portion of the amount collected may be paid to the individual who reported the information.

The second incentive program encourages individuals to submit suggestions to DHHS on methods to improve the efficiency of the Medicare program. If the suggestion is adopted and results in savings to the Medicare program, a portion of the program savings may be paid to the individual who made the suggestion.

Integrity and Protection Data Bank

The Healthcare Integrity and Protection Data Bank (HIPDB), a national health care fraud and abuse data collection program, was established in 1999. Adverse actions taken against health care providers and entities that must be reported to the HIPDB include:

  • Civil judgments against a health care provider, supplier or practitioner in federal or state court related to the delivery of a health care item or service
  • Federal or state criminal convictions related to the delivery of a health care item or service
  • Action by federal or state agencies responsible for the licensing and certification of health care providers, suppliers and licensed health care practitioners
  • Exclusion from participation in federal or state health care programs
  • Any other adjudicated actions or decisions as established by regulations
  • Any non-federal health plan that fails to report the required adverse actions is subject to a civil monetary penalty of up to $25,000 for each action not reported.

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