Fraud, Waste, Abuse:
What it Means, What are Costs,
Will it Ever End?
Linda Vincent, RN. PI.
Vincent & Associates
“Fraudster” US Health Care
Topics
• High Risk areas and ROI
• What is Fraud
• Why worry about Medical Identity Fraud
• Schemes and Abuses
• National Epidemic of Prescription Abuse
• PPACA and Fraud and Abuse
High Risk areas for Fraud
• Medical Identity Theft
• Prescription Abuse
• Data Breaches
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How/Why Fraud Affects YOU
• Annual Budgets
• Life Maximums
(until 2014)• Providers
• Premium Increases
• Repair of Health Records
• Credit history
What is Fraud
per Medicare
• Fraud-
”Intentional deception or misrepresentation
knowing it could result in unauthorized benefit(s)”
• Abuse-
”Incidents or practices, though not fraudulent are
inconsistent with accepted practices that create
unnecessary costs”
Most Common Forms of
Provider Fraud
• Billing for services not rendered (c. 25%)
• Misrepresentation of services provided (c. 35%)
• Provision of medically unnecessary services (c. 10%)
The Financial Damage
• 3% To 10% of annual U.S. Expenditure*
•
Translation
: $78 billion to $260 billion in 2010 alone
• Government recovers 20 cents of every improper dollar
spent
* SOURCES: U.S. Government Accountability Office; National Health Care Anti-Fraud Association
$154 MILLION MEDICAL INSURANCE
FRAUD SCHEME
• Doctor convicted of performing unnecessary surgeries on healthy patients • Santa Ana, CA – Doctor charged in the largest medical fraud prosecution in
the nation
– 19 co-defendant Unity Outpatient Surgery Center (Unity) scheme
convicted of performing unnecessary and dangerous surgeries on over 160 patients
– Doctor plead guilty to the 40 felony counts including:
• conspiracy to commit insurance fraud • insurance fraud
• aiding and abetting capping
– Defendants face sentence ranging from probation up to 28 years in state prison
Physician accused of billing for
people not seen or who had died
• Longtime San Antonio doctor has been indicted on charges that he committed more than $100,000 in Medicaid and Medicare fraud by billing for patients he did not provide medical service to — or for people who were dead.
• Now faces 27 counts of health care fraud, punishable by up to 10
years in prison; three counts of mail fraud, punishable by a maximum of 20 years; and one count of aggravated identity theft, punishable by a mandatory two years on top of what he could get from any of the other charges.
• From January 2006 through November 2009, Robinson billed the government for “office visits during times when patients were not present, out of town and hospitalized, and times when defendant Robinson was outside of the United States, and at times when his office was closed,” the indictment states.
• Court records allege that more than $100,000 was fraudulently billed
•
Fraudulent Billing and
“Ordered Services”
• Independent Diagnostic Testing Facilities (Labs) • Clinical Testing Laboratories
• Durable Medical Equipment • Home Health Services
• Hospice Services for “Terminally Ill”
– Medicare costs for hospice care have increased more than in any other health care sector as for-profit companies continue to gain a larger share of the end-of-life medical market, government records show.
– From 2005 through 2009, Medicare spending on hospice care rose 70% to $4.31 billion, according to Medicare records.
– A recent report by the inspector general for Health and Human Services, which oversees Medicare, found for-profit hospices were paid 29% more per beneficiary than non-profit hospices. Medicare pays for 84% of all hospice patients.
•
EQUALS
• Tests & Equipment Not Really Ordered and Likely NOT Performed • Tests For Which A Clinical Relationship Does NOT Exist
Medical Identity Fraud
• Stolen Member information
• Improper or Fictitious beneficiaries
• Stolen Physician information
• Healthcare ID cards
© Vincent & Associates. Reprints available by permission
How Information is Stolen
• Dumpster Diving
• Mail Theft – “red flagging”
• Stolen Wallets
• Telephone and E-mail Scams
• Obtaining dead people’s information
• Establishing fraudulent clinics
Other Contributing Factors
• Cuts in employer-funded health coverage
• Numbers of active workers vs number of retirees
• Higher premium share, deductibles, treatment co-pays
• High unemployment
• Growing uninsured population
• Confusion/controversy over health care reform
© Vincent & Associates. Reprints available by permission
Medical Identity Fraud –
By the Numbers
• About 5.8% of ID theft crimes are Medical ID Theft
– 1.5 million victims
• 94% of providers have HC information breeches
– Patient or health plan information – Affected over 6 million Americans
– Estimated costs to HC industry $7 billion (Ponemon Institute)
Scary statistics
Consequences
• Death
• Improper claims payments
• Life time max – loss of finite benefits
• Premium increases
• Credit issues
Latest Schemes
• Houston Physician –
Physical Therapy– $30 Million
• Atlanta Physician –
Group counseling– $2 Million
• Los Angeles Residents –
Wheelchairs, Hosp Beds– $26 Million
• Miami HIV Clinic –
MedicareData Breaches-Med ID theft
• Cost over $7 Billion annually
• Impact is $1.2 million per organization
• Average organization had 2.4 breaches in two years • Most caused by lost laptops
• Affected over 6 million patients
• Breaches affected 94% of providers, hospitals, healthplans
•
Data Breaches
• Questions for members to ask their doctors
– Do you encrypt my data - EMR
– Do you do pre-employment background checks
– Where is data stored if I am no longer your patient
– Do you outsource your transcribing or billing
Preventing Medical Identity Theft
1.
Always review EOB (explanation of benefits)
2.
Eliminate SSN from records
3.
Review and dispute claims
4.
Check credit reports
5.
Shred everything
6.
Add picture to health care cards
7.
Investigate technology of palm scanning
Epidemic of Rx Drug Abuse
Not A New Crime
•First observed in Civil War re: morphine
•1987: Establishment of National Association of Drug Diversion Investigators (NADDI)
•1990: Cincinnati P.D. establishes Drug Diversion Squad—500 Cases/Yr by 1993
•1992: GAO study cites diversion as “prevalent type of Medicaid fraud” •1992: FBI “Operation Goldpill”—3 years, 50 cities, 200 pharmacists & other perpetrators
A New Drug-Payment Equation
• Rx Costs, 1990: $40.3 Billion – Government: 18% – Private Insurance: 26% – Consumers: 56% • Rx Costs, 2005: $200.7 Billion – Consumers: 25% – Government: 28% – Private Insurance: 47%Today: “A Perfect Storm of Abuse . . .”
• 6.2% of U.S. population—15.2 million—admit abusing controlled drugs in 2005
—4.9%/11.8 million = pain relievers —1.2 million = Oxycontin
• Cocaine, hallucinogens, inhalants, heroin combined = 12.4 million
• Rx abuse second only to marijuana use
• High incidence among teens (Oxycontin/Vicodin) • 1/3 all new Rx abusers in 2005 = 12 to 17 year-olds
“The Gathering Storm”—Factors Underlying
Today’s Diversion Phenomenon
• Emergence of “Pain Management”—much needed medical discipline, but
accompanied by unfortunate by-products
• Ongoing development of powerful new pain medications —Oxycontin
—Actiq —Fentora
• Off-label prescribing
—Actiq: FDA approval—cancer
• % prescribed by oncologists: 1%
• The Hartford Top-25 work comp rank: #6
—Neurontin/gabapentin
—Archives of Internal Medicine, 5/06:
• 21% of 2001 scripts = off-label uses
• Proliferation of behavioral meds (depressants/stimulants) —2005: 96 million scripts for 6 drugs alone
Drugs in Demand
• Schedule II Retail $ Street $
– Oxycontin 40mg $5.66/tablet $20–$40/tablet – oxycodone 40mg $4.54/tablet $6–$8/tablet – morphine 100mg $4.16/tablet $60/tablet
– Actiq 400mg $26/lozenge $30–$40/lozenge – fentanyl 50mcg $24/patch $25–$40/patch – methadone $0.21/tablet $10–$20/tablet – Ritalin $1.11/tablet $8–$15/tablet – Adderal $4.23/tablet $5-$7/tablet
Schedule III
– Vicodin $1.47/tablet $6–$10/tablet – hydrocodone/APAP $0.43/tablet $6–$10/tablet
Diversion’s Dire Consequences
• 2002: Fatal pain-med poisonings surpass cocaine & heroin deaths
• 2004: At 19,838 fatalities, accidental drug overdose becomes #2 cause of
unintentional-injury death in U.S.
– Up 78% between 1999 and 2004: Sedatives, Vicodin, Oxycontin cited as principal factors
– Up more than 100% in 23 states (e.g., WV: 550%)
• 2005: 43% of drug-abuse E.R. visits—600,000—involve pharmaceuticals
• 2003: Acetaminophen poisoning becomes #1 cause of acute liver failure in U.S.
• 2005: Annual U.S. liver transplants up 20% since 2001. First-year costs:
“Triple-Threat” Payer Impact
• Cost of unnecessary, excessive or bogus prescriptions • Cost of related medical claims—legitimate or falsified
– Physician office visits & other treatments – Diagnostic tests (imaging, nerve conduction)
– Emergency room/urgent care clinic exams/treatments
– Conditions caused by Rx abuse—e.g., liver damage/failure – Treatment of affected family members
• Incalculable potential-liability cost
– Dangerous prescribers/prescription sellers – Insured’s injury or death
Fiduciary Responsibility & “The Wild Card” Potential
Payer Liability
• Payers that fail to take an active approach to doctor-shopping and other aspects of diversion face significant potential liability related to
prescription-drug addiction and overdose deaths:
“The data was right under the prescription payer’s nose; had it only taken the trouble to look at what it was paying for, it could have prevented this addiction . . . liver failure . . . overdose death . . . fatal accident”
• Precedent for “should have known” suit against pharmacy
– FL court decision affirms pharmacy’s “duty to warn”
• Credentialing & network issues also come into play
• Awareness of risk is integral aspect of some companies’ active approaches
• Passive approach insufficient/risky in face of “national epidemic” & widespread mortality
PPCAC and Fraud
• Expands HHS powers over HC Fraud
• Stark Law & Physician owned hospitals
• Mandatory Compliance
• Change to Anti-Kickback Statute
• Self Disclosure under Stark Law
• Patient Notifications
• Overpayment Return
• Payment Suspension
PPACA
• Increased Funding for Enforcement
• Expansion of RAC –
Recovery Audit Contractor• Stark Law Amendments –
MD ownership• Mandatory Overpay returns in 60 days
• CMP Changes
• False statements
• Timely Access for audits, investigations
© Vincent & Associates. Reprints available by permission
Recourse and Prosecution
• Federal False Claim Act 31USC 3729-3733
• Three times amount of each claim plus
• Up to 10 K per claim
• Not JUST paid claims but
any
submitted claim
• Each State has a False Claim statute
• Local, State, Federal, Postal, DOL
The Bottom-Line Impact
• At any level of loss, fraud does not occur in a vacuum; rather, itcontributes to:
– Increased health costs for employers
– Fewer benefits/higher co-pays & premium contributions for employees
– Reduction/elimination of retiree benefits
– 42% of employers NOT providing health insurance – 45 million Americans uninsured
– Patient exploitation & harm – Poor quality of care
– Higher property and casualty costs and premiums – Higher reinsurance claim costs
The Take Away
• Fraud will never end • Annual beneficiary audit • Claim edit suggestions • Provider profiling
• Pharmacy benefit audit
• Join fraud networks - groups • Attend fraud conferences • Join local fraud associations
• Online fraud assessment solutions
• Ask questions Be vigilant
NLA Endorsed Product for Identity Theft
Protection and Recovery
• Identity Theft Solutions provides for protection and fully
managed recovery.
• IDTS provides the resources and solutions for identity
theft education
ID Theft Solutions Process
• Educates clients on how to reduce their vulnerability by utilizing methods and resources available to Prevent, Detect, and
Recover from identity theft fraud
• Professional management of the ID theft recovery process.
1. Initial communication and triage of reported fraud by ID theft specialist
2. Assessment of reported facts by a IDTS manager
3. Assignment of a skilled investigator who will diligently work on case until successful resolution
4. Complete documentation file of all actions and correspondence provided to client
Thank You
Healthcare Fraud by Dead MD’s
• Dead Doctors Used to Scam Government Money
–
– Senate Hearing Viewable at:
– Fraudulent providers submitted claims based on “orders” from some doctors who were dead for 10 years or more
– From 2000 to 2007, Medicare paid between $60M & $93M for claims where the “ordering” or prescribing doctor had been dead for at least 12-months
A Year of Medical Identity Theft:
interactive map
The World Privacy Forum has published an interactive map that shows the geography of medical identity theft in the US. The map gives the location of each consumer report of medical identity theft, and for cities with more than one incident or report, number of
known incidents are listed.
The map reveals strong geographic centers for medical identity theft, including Florida, New York, California, and Arizona.
The map is available on the World Privacy Forum Web site at
© Vincent & Associates. Reprints available by permission
Obtaining Credit Information
• Visit: www.annualcreditreport.com
• Call: 877-322-8228
© Vincent & Associates. Reprints available by permission
Handy Web Sites
•
• www.stopmedicarefraud.gov
• www.theidentityadvcate.com
• www.ftc.gov
• www.worldprivacyforum.org
• www.Idtheftcenter.org
•
• www.theidentityadvocate.com
Individual Credit Agencies
• Equifax –
800.525.6285
– Ordering single credit report 800.685.1111
• Experian –
888.397.3742
– Also 800.311.4769
• Transunion –
800.680.7289
– Also 800.916.8800-fraud alerts
