Moving Target: Fighting Health Care Fraud and Abuse

Each year, health care fraud bleeds billions of dollars from the health care system. Consumers and taxpayers pay the price, and they can help catch the criminals.

When a doctor gives a cancer diagnosis, it immediately and irrevocably changes that patient’s life. She may be submitted to treatments like chemotherapy or radiation, to say nothing of the mental toll the diagnosis brings.

Now imagine that doctor made it all up.

That’s exactly what Dr. Farid Fata admitted to in 2014. The Michigan hematologist-oncologist pleaded guilty to 13 counts of health care fraud, among other charges, for administering unnecessary infusions to 553 patients and billing Medicare and private insurance companies for roughly $34 million.

“Time and time again, Dr. Fata callously violated his patients’ trust as he used false cancer diagnoses and unwarranted and dangerous treatments as tools to steal millions of dollars from Medicare, even stooping to profit from the last days of some patients’ lives,” Assistant U.S. Attorney General Leslie Caldwell said in 2015, when Fata was sentenced to 45 years in prison.

All too common

Each year, criminals bilk billions from government and private health care payers. The National Health Care Anti-Fraud Association (NHCAA) estimates tens of billions of dollars are lost annually due to health care fraud — anywhere from 2 percent to 10 percent of the more than $3.3 trillion spent on health care in the U.S. every year.

If there’s money in a certain area, folks figure out how to get it in an illegal way.

Not only does health care fraud take a financial toll, it can also lead to patient harm, like the case involving Fata.

“Fraud impacts patients, not just from a financial standpoint but in a physical sense,” says Louis Saccoccio, CEO of the NHCAA. “Psychological harm is done when you receive unnecessary care or your identity is stolen to commit health care fraud.”

Fraudsters follow the money

Health care fraud and abuse cases don’t always look like Fata’s. Common schemes include billing for services that were never performed, performing procedures that were not medically necessary, or misrepresenting when a procedure was provided or the severity of the diagnosis.

Medical identity theft — when a thief uses someone else’s personal information to submit medical claims to insurers or government programs without that person’s consent — is another widespread fraud scheme.

Some people even steal the identities of physicians to fraudulently practice medicine. This happened recently in Illinois when Scott Redman stole the identity of a psychiatrist and treated more than 50 patients in Chicago — including a 9-year-old boy, whom Redman prescribed an ADHD drug called Vyvanse, a controlled substance.

The NHCAA says there are “potentially infinite” variations of fraudulent reimbursement or billing practices because they are always evolving.

“People follow the money,” Saccoccio says. “If there’s money in a certain area, folks figure out how to get it in an illegal way.”

For instance, fraudsters have wasted no time developing schemes to take advantage of the opioid epidemic.

Pill mills are one of the most common forms of opioid-related fraud. They involve clinicians and clinics prescribing or dispensing opioids inappropriately to make money from insurers. Pill mills have become such a huge issue that U.S. Attorney General Jeff Sessions announced the formation of an Opioid Fraud and Abuse Detection Unit specifically geared toward identifying doctors and pharmacies involved in such schemes.

Other opioid-related health care fraud schemes include clinics that provide urine tests for drugs, billing insurance providers for millions, or the growth of sober living homes that get kickbacks from drug treatment centers in a scheme known as “patient brokering.”

Tracking down fraudsters

Regardless of the form a fraud scheme takes, health insurers and law enforcement agencies like the FBI work tirelessly to root them out. Health insurers tend to have their own special investigation departments specifically for that purpose.

“Fraud schemes are always evolving,” says Bill Monroe, vice president of the special investigations department for the Blue Cross and Blue Shield Plans in Illinois, Montana, New Mexico, Oklahoma and Texas. A former FBI agent, Monroe has extensive background in putting health care fraudsters behind bars.

The insurer, he says, has three primary sources of information to trigger fraud investigations:

One is a reporting hotline. Employees and plan members alike can report suspected fraud or abuse directly to the insurer by calling into a hotline (1-800-543-0867), which connects to a real person at any time of day or night. Members tend to call the hotline if they see charges on their explanation of benefits for services they never received or diagnoses they don’t have, which could signal their identity was stolen. In 2016, the hotline took in more than 6,000 calls.

A second important tool insurers have in the fight against fraud and abuse is claims data. Analysts in the data intelligence unit pore over the data looking for outliers, such as physicians who are prescribing painkillers at a much higher rate than their peers. If analysts identify suspected fraud based on claims data outliers, they flag it as a lead for investigators to look into.

While insurers can use tips from their own members, employees and data analysts to find fraud, it takes information sharing among health care payers to stay ahead of the ever-adapting fraudsters. Private insurers, the government and law enforcement work in concert to identify potential fraud cases and track down the perpetrators.

Various anti-fraud organizations allow members to share the latest information on fraud schemes gaining steam. The National Anti-Fraud Advisory Board (NAAB) is specifically for Blue Cross and Blue Shield plans, while the NHCAA and the Healthcare Fraud and Prevention Partnership (HFPP) have law enforcement and health care members at a national level. Regional groups exist as well.

These organizations hold meetings to discuss face-to-face what new codes they see being abused and what they’re investigating, and the groups send out alerts when they identify new fraud schemes. The HFPP even allows members to share de-identified claims data with one another.

Fraud schemes usually go beyond one payer, and sharing data allows insurers to connect the dots and detect the larger scheme.

“When a payer looks at its own data, they would only see a small picture of a provider’s total medical practice. By combining the data, we get a much bigger picture,” Mary Beach, with the HFPP, says.

Big insurance companies are business competitors, but they know the goal of convicting people who defraud in the health care space transcends typical business practice, considering the huge financial and physical impact of health care fraud.

“There shouldn’t be competition in this area because we all benefit from getting the fraudsters out of the network,” Beach says.

And while insurers do want to recover the money stolen through health care fraud, Monroe says he keeps his focus on the members who are targeted. “It’s important to make sure the patient harm cases are addressed.”

Thanks to the collaboration of insurers and government agencies, the fake psychiatrist in Illinois is now in federal prison. Monroe’s special investigation department worked with the insurer’s credentialing department to suss out the scheme and alert the Illinois Department of Professional and Financial Regulation and federal law enforcement. Redman was convicted of fraud and sentenced to more than 13 years in federal prison.


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