Laws to prevent fraud and abuse The federal government in 1863 enacted a federal law entitled the False Claims Act to impose a liability onto persons who commit fraud against government sponsored programs. The FCA is the Government’s primary tool used for combating fraud. It empowers both the Government and private citizens to institute actions to recover high cost damages and it also imposes substantial civil penalties against those who knowingly submit false claims or statements to the Government. In 1986 the law was taken to Congress and it was substantially revised.
This was to strengthen and clarify the Government’s ability to detect and prosecute civil fraud and to recoup damages suffered by the Government as a result of such fraud (Salcido, 2010). It has been reported that from January 2009 through the end of the 2013 fiscal year, the Justice Department used the False Claims Act to recover more than $12.1 billion in health care fraud cases (U.S Department of Justice). Another of the prominent federal laws to fight against health care fraud and abuse is entitled the Anti-Kickback Statue. The statue was created soon after the government established Medicare and Medicaid programs because, unethical provider practices began to develop. A prominent example of this is the unnecessary referrals of patients to a particular facility that the provider was then reimbursed for by federal health care programs, this is called a kickback. This resulted in the physicians profiting off of the government programs, something that was not supposed to happen in the scheme of things.
In 1972 when the statue was originally enacted it made the receipt of said kickbacks, bribes and rebates that were covered by the government funded programs a misdemeanor crime that was punishable by fines and imprisonment (Roll, Lovitch, Kingsbury, & Crane, 2014). The statue was then revised in 1977 and then again 1980 to strengthen it. Such things as any remunerations that was used to induce a referral was increased to a felony and the statutory penalties also increased. The revision also required that proof be shown that a defendant acted knowingly and willfully on acts that were prohibited by the statue. In 1996 when the Health Insurance Portability and Accountability act was created there were three significant changes that came to the statue.
With the revision, the statue came to apply to federal health care programs, it added a new exception relating to certain risk-sharing organizations and lastly it enhanced the communication between the Office of Inspector General and the public about how the Anti-Kickback Statue applied to certain transactions (Roll, Lovitch, Kingsbury, & Crane, 2014). The statue was then amended two more times, adding monetary penalties, lowering the burden of proof required for prosecutors to show. The Stark law which is actually 3 separate provisions. The law aims to protect against fraud and abuse by prohibiting physicians from referring their patients whose services are paid for by the government to a designated health services entity in which the physician has a financial relationship with. the financial relationship as defined by the federal government includes any direct or indirect ownership or investment interest by the referring physician or financial interest that may be held by their immediate family. This law is not considered a criminal statue, but the Office of the Inspector general can pursue a civil action lawsuit if they feel that the Stark law has been violated. Violations of the law can result in penalties of up to 15,000 dollars for each of the billed services that was based on a prohibited referral and three times the amount of the government overpayment. The Stark law is considered a strict liability statue.
This means that the specific intent to violate the law in not required and physicians who make these prohibited referrals, even accidentally or unknowingly will be subject to civil penalties. There are a few exceptions to this law which include, in-office ancillary services, such as laboratory services, another exception is the fair market compensation which states that where a compensation arrangement is in writing, specifies a timeframe and the compensation that is going to be provided, involves a commercially reasonable transaction and meets the “safe harbors” under the Anti-Kickback statue. A couple other exceptions include the indirect compensation exception and the non-monetary exception. Currently, The Federal Bureau of Investigation is the primary investigative agency when dealing with health care fraud.
They have jurisdiction over federal programs such as Medicare and Medicaid as well as private insurance companies. They constantly work with other federal, state and local agencies. They investigate not only health care fraud, but also all insurance fraud (FBI). information concerning healthcare fraud can be found in the Federal Bureau of Investigation Financial Crimes Report for any years. In 2011 an estimated 2.4 trillion dollars was spent in the United States on health care.
This number continued to outpace inflation and was expected to grow to 4.14 trillion dollars by 2016. This growth is fueled by people living longer and will result in the expansion of long and short-term care facilities, skilled nursing, home-health care, and assisted living facilities. (Jones and Jing) Many health care fraud schemes occur in large scales situations over a long period of time.
St. Barnabas Health System is the largest health care network in New Jersey. St Barnabas employs 5,000 doctors and operates 10 hospitals and a network of clinics and nursing homes. St. Barnabas is New Jersey’s largest Medicare provider and second largest employer in the state. In, 2006, Saint Barnabas agreed to pay a $265 million settlement to resolve fraud charges brought by federal prosecutors.
(Textbook) Medicare pays extra money to hospitals that care for patients known as outliers; Saint Barnabas is one of them. Outliers are patients that are seriously ill and also very expensive to care for because of their advanced needs. Medicare allows the hospitals that care for outliers to stretch the care beyond the typical parameters of the Medicare program. (Textbook)In 2003, 3 Whistleblowers tipped off federal prosecutors of a suspected overbilling issue. During the course for the investigation by federal prosecutors, investigators discovered that St Barnabas stole at least $630 million from Medicare between 1995 and 2003. They did so by significantly inflating the costs of the outlier patients when they billed Medicare.
By inflating patient costs, Saint Barnabas received more money from Medicare then some hospitals 10 times their size. (NY Times) In an out of court settlement, Saint Barnabas agreed to pay $265 million dollars to the federal government. They will pay the settlement with 6 yearly payments. In addition to the settlement, the hospital will be closely monitored for the next 6 years. (NY Times)In recent times, private insurance companies and the federal government have both been recently giving additional attention to health care fraud and new techniques of prevention have been implemented.
(Jones and Jing)