Health care fraud gets more scrutiny


For more than a year now, there's been widespread discussion about reforming America's $900-billion-a-year health care system.

Most of the talk has centered on two areas: how to get more people covered and how to control costs.

What has gotten lost in the public discussion about health care reform is health care fraud.

The numbers are staggering: Medical fraud and abuse accounts for an estimated $100 billion annually.

Put another way: More than 10 cents out of every dollar spent on health care goes for fraud or abuse.

State and federal officials say that with health care reform on the horizon, there is a need to step up the fight against fraud.

"In the past, we haven't done as much as we could have," U.S. Attorney Lynne A. Battaglia says. "We will be doing more because of the administration's health care reform. It's created an awareness we didn't have before about the potential for fraud and abuse."

Much of the fraud occurs in government-sponsored programs, such as Medicaid and Medicare, that provide health insurance to people who would otherwise go without health care. In Baltimore, one-fourth of the population relies on the Medicaid program for their basic health needs. In Maryland, over $2.3 billion was spent last year on behalf of 553,000 people in the Medicare program.

"Given these figures, it is not surprising that our health care delivery system has proven ripe for fraudulent activity," said Daniel Anderson, chief of the state attorney general's Medicaid Fraud Control Unit, in a recent speech.

Citing estimates that fraud and abuse account for 10 to 15 percent of all health care expenditures, Mr. Anderson said, "these losses threaten the continued ability of the government to provide a comparable level of care in the future. Accordingly, the detection and elimination of this fraud is now a top national law enforcement priority."

In recent years, Mr. Anderson said, health care fraud schemes have become increasingly innovative. Years ago, the most common frauds typically involved individual doctors billing for services that weren't rendered. Now, the schemes are far more elaborate.

In the largest health care fraud case in U.S. history, National Health Laboratories Inc. of San Diego, Calif., agreed to repay $110 million for false claims it had submitted to Medicaid and Medicare. The company had induced doctors to order lab tests which were medically unnecessary by assuring the doctors the tests would be free or of nominal charge. In fact, the company was billing government insurers for the tests without the referring physician's knowledge.

In Maryland, the state Medicaid Fraud Control Unit has been particularly aggressive in cracking down on fraud. It has prosecuted physicians who demanded sexual favors from their patients in exchange for prescription drugs, pharmacists who paid runners to go into the community to obtain Medicaid numbers so that false invoices could be submitted for drugs never dispensed, a funeral director who billed the estates of Medicaid patients for funerals he did not perform, and a hospital administrator who accepted a television and videocassette recorder in return for ordering $18,000 worth of unneeded drain cleaner.

"Every dollar stolen could be rendering care," Mr. Anderson says. "It's stealing from poor, sick people."

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