Fraud and over billing are a huge and costly problem for Medicare, Medicaid, and other federally funded programs. The federal government has estimated that 13% of the $500 billion it pays in healthcare reimbursements are due to fraudulent bills or non-compliant billing practices. According to a recent report to Congress, improper payment in Medicare’s main, fee-for-service program totaled $13.5 billion, or about 8 percent of the $169.5 billion in fee-for-service payments processed in fiscal year 1999.
In the past three fiscal years, the Department of Health and Human Services’ Office of Inspector General (OIG) has reported overall savings of $31.0 billion as a result of their fraud and abuse programs. This included $226 million in audit disallowances, $2.1 billion in investigative receivables, and $28.7 billion in savings from implemented legislative or regulatory recommendations and actions. During this time frame, more than $1.7 billion in healthcare claims have been denied and significant financial penalties, averaging 40-60% of the claim, have been assessed on providers.
Also, during the past three fiscal years, more than 8,697 abusive or fraudulent individuals and entities were excluded from doing business with Medicare, Medicaid, and other Federal and State healthcare programs. Additionally, there were 1,085 convictions of individuals or entities that engaged in "crimes against departmental programs." The OIG is currently monitoring 440 settlement agreements with integrity provisions and corporate integrity agreements, which is expected to increase to over 500 by the end of 2000. Other pertinent facts include:
The culprits are mainly individual doctors and hospitals. Penalties for individual practices can quickly add up to hundreds of thousands of dollars, and the lines between intentional fraud and unintentional but large-scale errors have been blurred. Fines are levied frequently, and the government collects $7 to $11 for each enforcement dollar they spend. Because enforcement has an excellent return on investment, and since such huge amounts are still estimated to be lost each year, the government is pouring additional resources into the fraud and abuse program.
An effective compliance program is essential for practices of all sizes and does not have to be costly or resource-intensive. With the development of a formal program, a practice may find it easier to comply with its affirmative duty to ensure the accuracy of claims submitted for reimbursement.
Next section > Compliance Program Guidance
Read on to learn more about the medical billing industry