The Staggering Costs of Healthcare Fraud
For every $100 we spend on healthcare in the United States, as much as $10 is lost completely. It doesn’t go toward a sick grandmother who depends on Medicare. It doesn’t go toward the poverty-stricken family in need of funds to pay for a sick family member. It doesn’t even go to the less emotionally appealing aspects of our healthcare system, like document processing or claims management. That $10 is simply gone.
Where does this 10 percent go? It is lost to fraud, abuse or waste in our healthcare system. The Federal Bureau of Investigation says that tens of billions of dollars are lost to fraud every single year, while other estimates are even larger. The fact that estimates vary on how much is taken from our system speaks volumes about the challenges in front of us. Authorities aren’t even sure how much we lose to fraud. That we are in the dark about the scope of fraud should be almost as alarming as the incredible price paid by each of us.
Fraud in our healthcare system is a major cause for concern for taxpayers, patients, lawmakers and healthcare providers. These losses impact the quality of care we receive and deprive Americans of money, benefits and medical care that we depend on in a very fundamental way.
How Does Healthcare Fraud Happen?
One common misconception about healthcare fraud is that it occurs among recipients of healthcare benefits. People might picture someone using false information to apply for benefits or receiving medications under false pretenses, thereby gaming the system and padding their own pockets. While fraud perpetrated by individuals does occur, it is not an accurate depiction of the real problem.
Most fraud in our healthcare system is committed by providers – medical facilities, doctors or other healthcare professionals. Fraud occurs in many ways. Here are some of the most common.
- Billing for unnecessary services or products, or for services or products not rendered
- Upcoding, or billing more for services than were provided
- Filing duplicate claims
- Unbundling, or billing bundled services separately
- Kickbacks to providers or medical centers that make referrals
- Modifying medical records
- Misdiagnosis or false procedures to maximize profit
- Staffing of unlicensed individuals.
In addition to this systemic type of fraud, providers or non-providers also commit fraud through identity theft or stolen payments to Medicare beneficiaries.
Medicare – A Big Target for Fraudsters
Medicare alone loses roughly $60 billion a year due to fraud and abuse, one-tenth of the program’s budget. Most of this fraud consists of overcharging by providers. There are several reasons that Medicare and Medicare recipients are such a big target for fraudsters. The program provides hundreds of billions of dollars to cover healthcare costs. It is huge and filled with complexities that make it ripe for practices like overbilling.
A Reliance on Government Contracts
Just like it does in many sectors, the government relies heavily on private contractors to provide healthcare to its citizens. They also rely on those who work for contractors to help them catch fraud, abuse and waste when it occurs. The lack of communication between different contractors, coupled with the very fact that so many institutions are essentially responsible for policing themselves, paves the way for even more fraud in our system.
What is Being Done to Combat Healthcare Fraud?
Just to combat fraud against healthcare in the United States, the government allocates nearly $600 million a year. It is proving to be a tall task for investigators and overseers alike. For example, the Centers for Medicare and Medicaid Services manually reviews only three million of the 1.2 billion claims it receives every year, according to the New York Times.
Some of the most important work being done to point out fraud in the healthcare system is credited to those who report fraud they have witnessed to the authorities. These individuals are called whistleblowers, and they play an integral role in helping the government recover vast sums of money lost to fraud and abuse.
How Whistleblowers Play a Key Role in Reducing Fraud
Whistleblowers provide information to the agencies who investigate claims of fraud. They are typically people who can offer unique insights to investigators that point to specific instances of fraud. Thus, whistleblowers are often employees or insiders of the organization that they report. In many instances, whistleblowers have tried to point to wrongdoing within their organization, only to be ignored or reprimanded for their actions.
Whistleblowers are given the opportunity to take action through the False Claims Act.
The FCA enables a private citizen to bring a lawsuit on behalf of the government, and it has proven to be an important tool for recovering money lost to fraud. The Justice Department reported that in 2015, for example, the False Claims Act helped in the recovery of nearly $2 billion. Since 2009, the government has recovered over $16 billion through the assistance of whistleblowers and the False Claims Act.
The Benefits for Whistleblowers
In exchange for information that leads to a recovery, whistleblowers are offered 15 to 30 percent of the recovered amount. This serves as an incentive for potential whistleblowers to come forward with important information about fraud against taxpayers. The reward offered by the False Claims Act is one of the reasons it has been successful in recovering billions of dollars lost to fraud. By offering individuals a portion of the reward, the government can demonstrate that they are serious about combating healthcare fraud and that they will protect those who come forward.
Whistleblowers are offered protection by the authorities should their employer retaliate against them through intimidation, demotion or firing. Whistleblower protection is a key feature of the relationship between the government and whistleblowers.
Fraud occurs at all levels of our healthcare system, and it costs us dearly. It decreases the quality of healthcare and steals taxpayer money. There are no indications that our healthcare system is going to shrink any time soon, nor will it become less complex. That’s why whistleblowers are more important than ever. They will be a key part in making our system more efficient, less costly and better for all Americans.
If you have seen fraud in our healthcare system and want to speak out about what you’ve witnessed, contact Bert Louthian to learn more about building a case that will earn the attention of investigators. The process of being a whistleblower is not always simple, so the assistance of an experienced whistleblower attorney will help a concerned citizen improve their chances of being heard by the authorities. Contact Bert Louthian today to learn more.