GAO: Majority of fraud cases include multiple schemes

Fraudulent billing was the most common avenue for fraud, use of smart cards would have minimal impact
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Two-thirds of fraud cases in 2010 involved more than one scheme, including fraudulent billing, falsified patient records and kickbacks, according to a new report released by the Government Accountability Office (GAO).

Of the 739 fraud cases the GAO reviewed, 61 percent included two to four schemes, and 7 percent included five or more. Fraudulent billing was the most common scheme with 43 percent involving billing for services that were never provided and 25 percent included billing for services that were not medically necessary.

One-quarter of cases also were associated with falsified records. Kickbacks and fraudulently obtaining controlled substances were each present in 21 percent of cases. Providers were complicit in 62 percent of the cases reviewed by the GAO.

The frequency at which fraudsters were conducting multiple schemes at the same time was surprising, said Kathleen King, director of healthcare at the GAO, in an accompanying podcast.

"For example, you could have a fraudulent billing scheme in which you bill for services that were not provided, and at the same time, you also bill for a higher level of service than the services you provided, which is called upcoding," she said.

The report also addressed smart cards, equipped with a small electronic chip that includes beneficiary information, that some states have used to curb Medicaid fraud. Echoing a previous report detailing the limited impact of smart cards, the GAO determined that the cards would have wholly impacted just 2 percent of fraud cases, and 20 percent of cases would have been partially impacted by the use of a smart card. In the majority of cases, smart cards would have no impact in preventing fraudulent payments.

The findings support the belief that preventing fraud requires efforts from the Centers for Medicare and Medicaid Services to enroll legitimate providers and beneficiaries, coupled with investigative efforts from agencies like the Office of Inspector General and the Department of Justice.  

"I don't think there is any one single answer that would stop all of the fraud in healthcare," King said. "I think any solutions to addressing health care fraud have to be multi-pronged."

Legal experts have said fraud detection is improving, which has led to spikes in fraud recoveries often driven by whistleblower claims. The GAO has previously noted that the majority government overpayments are tied to Medicare and Medicaid, and recommended CMS improve its use of automated edits and monitoring post-payment claims reviews.

To learn more:
- here's the GAO report
- listen to the GAO podcast

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