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February 12, 2013

Federal government recovered $3 billion in fraud judgments and settlements in FY 2012

By Sheila Lynch-Afryl, JD, MA

During fiscal year (FY) 2012, the federal government won or negotiated more than $3 billion in health care fraud judgments and settlements, and 826 defendants were convicted of health care fraud-related crimes (Health Care Fraud and Abuse Control Program Annual Report for Fiscal Year 2012, February 12, 2013). The Department of Justice (DOJ) opened 1,131 new criminal health care fraud investigations involving 2,148 potential defendants, and federal prosecutors filed criminal charges in 452 cases involving 892 defendants. In addition, the Office of Inspector General (OIG) excluded 3,131 individuals and entities.

Background. The Health Insurance Portability and Insurance Act (HIPAA) (P.L. 104-191) established the Health Care Fraud and Abuse Control (HCFAC) Program, a program to combat fraud and abuse in health care, including public and private health plans. Money paid to Medicare in restitution or in compensatory damages, as well as recoveries from health care fraud investigations, must be deposited in the Medicare Trust Funds. The Attorney General and Secretary of HHS are required to submit a joint annual report to Congress outlining amounts to and from the Trust Funds under various categories and the source of and justification for those amounts.

Monetary results. In FY 2012, as a result of the government’s efforts in winning or negotiating health care fraud judgments or settlements, the Medicare Trust Funds received transfers of approximately $2.4 billion, and another $835.7 million in Medicaid money was separately transferred to the Treasury. In addition, audits, evaluations, and other coordinated efforts prompted changes to federal health care programs that reduced vulnerability to fraud and yielded recoveries of overpaid funds.

The return on investment for the HCFAC program from 2010 to 2012 was $7.90 returned for every $1 expended, which is $2.50 higher than the average return on investment since the program began in 1997.

HEAT. In 2009, the Attorney General and Secretary of HHS announced the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a collaboration between HHS and the DOJ. HEAT initiatives from FY 2012 included a nationwide operation resulting in charges against 107 people, including doctors and nurses, for their alleged participation in Medicare fraud schemes involving approximately $452 million in false billing. In addition, the DOJ hosted health care fraud training for federal prosecutors and FBI and OIG agents.

OIG. Among the OIG’s 3,131 exclusions were those based on criminal convictions for crimes related to Medicare and Medicaid (912) or to other health care programs (287); for patient abuse or neglect (212); and as a result of licensure revocations (1,463). The OIG also conducted audits and evaluations of prices for Medicaid-reimbursed drugs and Medicaid personal care services.

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