The Department of Health and Human Services
The Department of Justice
Health Care Fraud and Abuse Control Program
Annual Report For FY 1998
TABLE OF CONTENTS
- Executive Summary
- Monetary Results
- Department of Health and Human Services
- Department of Justice
- Appendix: Federal Bureau of Investigation - Mandatory Funding
- Glossary of Terms
The detection and eradication of health care fraud and abuse is a top priority
of federal law enforcement. Our efforts to combat fraud were consolidated
and strengthened considerably by the Health Insurance Portability and Accountability
Act of 1996 (HIPAA). HIPAA established a national Health Care Fraud and
Abuse Control Program (Program), under the joint direction of the Attorney
General and the Secretary of the Department of Health and Human Services
(HHS)(1), acting through the Department's
Inspector General (HHS/OIG), designed to coordinate federal, state and local
law enforcement activities with respect to health care fraud and abuse.
HIPAA made available much needed and powerful new criminal and civil enforcement
tools and financial resources that permitted the government to expand and
intensify the fight against health care fraud.
The second year of operation under the Health Care Fraud and Abuse Control
Program saw continuing returns to the Medicare Trust Fund, a rise in the
number of individuals excluded from participation in federally-funded health
care programs, and the initiation and enhancement of important efforts to
prevent health care fraud and to safeguard the quality of care
furnished to beneficiaries under those programs.
Civil and Criminal Enforcement Actions
Federal prosecutors filed 322 criminal cases in health care fraud cases
in 1998 -- a
14 percent increase over the previous year, and 326 defendants were convicted
of health care fraud-related crimes. Also in 1998, 107 civil cases were
filed, and at the end of the year 3,471 civil matters were pending.
In 1998, the Federal Government won or negotiated more than $480 million
in judgments, settlements, and administrative impositions in health care
fraud cases and proceedings. As a result of these activities, as well as
prior-year judgments, settlements, and administrative impositions, the Federal
Government in 1998 collected $296 million. It should be noted that some
of the judgments, settlements, and administrative impositions in 1998 will
result in collections in future years, just as some of the collections in
1998 are attributable to actions from prior years.
More than 92 percent ($271 million) of the funds collected and disbursed
in 1998 were returned to the Medicare Trust Fund. An additional $9 million
was recovered as the federal share of Medicaid restitution.
Exclusion from Federally Sponsored Programs
HIPAA expanded and strengthened the government's ability to prohibit companies
or individuals who have been convicted of certain health care offenses,
lost their licenses, or engaged in other professional misconduct from participating
in Medicare, Medicaid or other federally sponsored health care programs.
In 1998, HHS excluded 3,021 individuals and entities, an increase of 11
percent over 1997.
Administrative Penalties for "Patient Dumping"
The government expanded its efforts under the Patient Anti-Dumping Statute,
which requires hospitals' emergency departments to provide emergency medical
screening and stabilizing treatment to individuals needing emergency care.
Settlement agreements were entered into with 53 hospitals and physicians
-- up from a previous high of 18 settlements in 1996 -- and a record $1.8
million in civil monetary penalties was collected.
Preventing Health Care Fraud
Preventing health care fraud and abuse is a central component of the Program.
The Program's prevention efforts include the promulgation of formal advisory
opinions to industry on proposed business practices, industry-specific program
compliance guidance, special fraud alerts, corporate integrity agreements
with providers who settle allegations of fraud, beneficiary and provider
education and outreach, and substantial implemented program improvements.
ANNUAL REPORT OF
THE ATTORNEY GENERAL AND THE SECRETARY
DETAILING EXPENDITURES AND REVENUES
UNDER THE HEALTH CARE FRAUD AND ABUSE CONTROL PROGRAM
FOR FISCAL YEAR 1998
As Required by
Section 1817(k)(5) of the Social Security Act
The Social Security Act Section 1128C(a), as established by the Health
Insurance Portability and Accountability Act of 1996 (P.L. 104-191, HIPAA
or the Act), created the Health Care Fraud and Abuse Control Program (Program),
a far-reaching program to combat fraud and abuse in health care, including
both public and private health plans.
The Act requires that an amount equal to collections from health care investigations
-- including criminal fines, forfeitures, civil settlements and judgments,
and administrative penalties, but excluding restitution, compensation to
the victim agency and relators' shares -- be deposited in the Medicare(2)
Trust Fund. All funds deposited in the Trust Fund as a result of the Act
are available for the operations of the Trust Fund.
The Act appropriates monies from the Medicare Trust Fund to an expenditure
account, called the Health Care Fraud and Abuse Control Account (Account),
in amounts that the Attorney General and the Secretary jointly certify are
necessary to finance anti-fraud activities. The maximum amounts available
for expenditure are specified in the Act. Certain of these sums are to be
available only for activities of the HHS/OIG, with respect to Medicare and
Medicaid programs. In 1998, the second year of the Program, the Attorney
General and the Secretary certified
$119.6 million for appropriation to the Account. A detailed breakdown of
the allocation of these funds is set forth later in this report. These resources
supplement the direct appropriations of HHS and DOJ that are devoted to
health care fraud enforcement. (Separately, the Federal Bureau of Investigation
(FBI) received $56 million from HIPAA which is discussed in the Appendix.)
Under the joint direction of the Attorney General and the Secretary, the
Program's goals are:
(1) to coordinate federal, state and local law enforcement efforts relating
to health care fraud and abuse;
(2) to conduct investigations, audits, and evaluations relating to the
delivery of and payment for health care in the United States;
(3) to facilitate enforcement of all applicable remedies for such fraud;
(4) to provide guidance to the health care industry regarding fraudulent
(5) to establish a national data bank to receive and report final adverse
actions against health care providers.
The Act requires the Attorney General and the Secretary to submit a joint
annual report to the Congress which identifies:
(A) the amounts appropriated to the HI Trust Fund for the previous fiscal
year under various categories and the source of such amounts; and
(B) the amounts appropriated from the Trust Fund for such year for use
by the Attorney General and the Secretary and the justification for the
expenditure of such amounts.
As required by the Act, HHS and DOJ must detail in this Annual Report the
amounts deposited and appropriated to the Medicare Trust Fund, and the source
of such deposits. In 1998, as a result of the combined anti-fraud actions
of the federal and state governments and others, the Federal Government collected
$296 million in connection with health care fraud cases and matters(3).
These funds were deposited with the Department of the Treasury and Health
Care Financing Administration (HCFA), transferred to other federal agencies
administering health care programs, or paid to private persons. The following
chart provides a breakdown of the transfers/deposits:
Total Transfer/Deposits by Recipient 1998 Amount Department of the Treasury HIPAA Deposits to the Medicare Trust Fund Gifts and Bequests $3,000 Amount Equal to Criminal Fines 2,503,298 Civil Monetary Penalties 1,855,277 Amount Equal to Asset Forfeiture * 0 Amount Equal to Penalties and Multiple Damages 103,025,990 Health Care Financing Administration OIG Audit Disallowances - Recovered 27,998,956 Restitution/Compensatory Damages 144,741,634 Subtotal 280,128,155 Restitution/Compensatory Damages
to Other Federal Agencies
Department of Defense 7,488,888 Office of Personnel Management 173,866 Other 3,125,418 Department of Health and Human Services - Other
1,270,196 Subtotal 12,058,368 Relators' Payments ** Relators' Payments ** 4,344,610 TOTAL *** $296,531,133
*This includes only forfeitures under 18 United States Code (U.S.C.) 1347,
a new federal health care fraud offense that became effective on August
21, 1996. Not included are forfeitures obtained in numerous health care
fraud cases prosecuted under federal mail and wire fraud and other offenses.
**These are funds awarded to private persons who file suits on behalf of
the Federal Government under the qui tam provisions of the False
Claims Act, 31 U.S.C. sec 3730(b).
***Funds are also collected on behalf of state Medicaid programs and private
insurance companies; these funds are not represented here.
The above transfers include certain collections, or amounts equal to certain
collections, required by HIPAA to be deposited directly into the Medicare
Trust Fund. These amounts include:
(1) Gifts and bequests made unconditionally to the Trust Fund, for the
benefit of the Account or any activity financed through the Account;
(2) Criminal fines recovered in cases involving a federal health care offense,
including collections under 1347 of title 18, U.S.C. (relating to health
(3) Civil monetary penalties in cases involving a federal health care offense;
(4) Amounts resulting from the forfeiture of property by reason of a federal
health care offense, including collections under section 982(a)(6) of title
(5) Penalties and damages obtained and otherwise creditable to miscellaneous
receipts of the general fund of the Treasury obtained under sections 3729
through 3733 Title 31, United States Code (known as the False Claims Act),
in cases involving claims related to the provision of health care items
and services (other than funds awarded to a relator, for restitution or
otherwise authorized by law).
In the second year of operation, the Attorney General and the Secretary certified
$119.6 million as necessary for the Program. The following chart gives the
allocation by recipient:
1998 ALLOCATION OF HCFAC APPROPRIATION
(Dollars in thousands)
Allocation Department of Health and Human Services Office of Inspector General $85,680 Office of the General Counsel 2,200 Administration on Aging 1,300 Health Resources Services Administration 1,000 Health Care Financing Administration 950 Total 91,130 Department of Justice United States Attorneys 23,856 Civil Division 3,803 Criminal Division 561 Justice Management Division 250 Total 28,470 Total $119,600
These resources supplement the direct appropriations of HHS and DOJ that
are devoted, in part, to health care fraud enforcement. Separately, the
FBI received an additional $56 million in funding which is discussed in
the Appendix to this Report.
Overview of Accomplishments
During this year, the Federal Government won or negotiated more than $480
million in judgments, settlements, and administrative impositions in health
care fraud cases and proceedings. As a result of these activities, as well
as prior year judgments, settlements, and administrative impositions, the
Federal Government in 1998 collected $296 million in cases resulting from
health care fraud and abuse, of which $271 million was returned to the Medicare
Trust Fund, and $9 million was recovered as the federal share of Medicaid
restitution. It should be emphasized that some of the judgments, settlements,
and administrative impositions in 1998 will result in collections in future
years, just as some of the collections in 1998 are attributable to actions
from prior years.
Working together, we have brought to successful conclusion the investigation
and prosecution of numerous costly health care fraud schemes. These investigations
were not limited to providers and suppliers of health care services -- 1998
saw the conclusion of two major investigations involving allegations of
fraud on the part of the contractors who process claims on behalf of the
- Health Care Services Corporation, the Medicare carrier for Illinois
and Michigan agreed to pay the government $140 million in settlement of
a qui tam suit alleging that it shredded claims, altered documents
and otherwise manipulated data relied on by HCFA to evaluate its contract
performance. In addition to the civil settlement, the corporation agreed
to plead guilty to obstructing a federal audit, conspiracy to obstruct
a federal audit, and making false statements to HCFA which will result
in a $4 million criminal fine. In order to guard against future misconduct,
and to ensure that any potential lapses are detected early, the government
and the corporation also entered into a strict corporate integrity agreement.
We anticipate collecting these funds in the next fiscal year.
- PBSXACT, the Medicare carrier for several mid-Atlantic states, resolved
a 2-year investigation by agreeing to pay $38.5 million in settlement
of allegations that it improperly processed Medicare secondary payor claims,
neglected to recover overpayments, bypassed certain computer payment safeguards,
and failed to implement required screens for certain lab tests, all of
which resulted in false claims to the Medicare program. Again, the contractor
agreed to undertake corporate integrity obligations, including training
and external reviews of its performance.
HHS and DOJ continue to pursue a number of National and Multi-District
- Physicians at Teaching Hospitals: In the sixth resolution of
a case in the Physicians at Teaching Hospitals or "PATH" project, the
government reached settlement with a state university school of medicine
for allegedly billing the Medicare and Medicaid programs in violation
of rules governing payment for physician services rendered by residents
and interns. The University of Pittsburgh agreed to pay $17 million to
settle potential liability under the False Claims Act and Civil Monetary
Penalties Laws. The government took steps to prevent future improper claims
by negotiating a corporate integrity agreement that, in part, requires
periodic audits and reports by the university for a period of five years.
- Diagnosis Related Groups (DRG) 72 Hour Window Project: A joint
nationwide project targeting improper Medicare claims by hospitals for
outpatient services continued in 1998. Medicare reimbursement of hospitals
for inpatient services includes compensation for related outpatient services,
such as laboratory tests, provided during the three days preceding the
day of admission and during the hospital stay. In addition to recouping
charges for amounts improperly paid to hospitals, the settlements under
this project require hospitals to establish internal controls to prevent
submission of such improper Medicare claims. As of September 30, 1998,
2,483 hospitals had settled with the United States, agreeing to pay a
total of $63,849,947. The project is expected to continue into 1999.
Quality of Care
The destructive impact of fraudulent billing is not measured in dollars
only. During 1998, the Program also stepped up pursuit of investigations
and prosecutions that directly affect the quality of care provided
to Medicare, Medicaid and other beneficiaries of government funded health
care programs. During 1998, the government utilized the False Claims Act
to proceed against nursing homes that furnished substandard, even dangerous,
patient care. For example, Chester Care, a chain of three nursing homes
in suburban Philadelphia settled an action alleging grossly deficient patient
care, in one case resulting in the scalding death of a patient, in which
the homes were required to institute rigorous and extensive quality of care
compliance provisions. These standards included strict guidelines for the
care of nursing home residents with diabetes; standards that in many respects
exceed professional standards in the industry. Enforcement of the standards
is ensured by an independent monitor; for the worst of the three homes,
an outside manager was instituted to oversee all aspects of the facility
until such time as HCFA finds that the home has returned to compliance.
The government also concluded its investigation of a publicly owned nursing
home for allegations of substandard care (including excessive use of restraints,
lack of cleanliness, and a high level of injuries among patients). Again,
in settlement of the action, the facility agreed to implement specific protocols
to ensure quality of care, and to employ a monitor to ensure full implementation
and further safeguard the patients. The impetus for these and similar actions
is not only to obtain compensation for the government's losses, but also
to prevent future violations and protect patient safety.
The Program also continues to focus on prevention of health care
fraud and abuse through inclusion of rigorous corporate integrity provisions
in settlements with alleged offenders, industry-specific program compliance
guidance, formal advisory opinions, special fraud alerts, beneficiary outreach,
and exclusions from program participation.
A more detailed description of these and other accomplishments of the major
federal participants in the coordinated effort established under HIPAA follows.
While information in this report is presented in the context of a single
agency, most of these accomplishments reflect the combined efforts of HHS,
DOJ and other partners in the anti-fraud efforts. The continuing accomplishments
of the HHS and DOJ and our partners in the coordinated anti-fraud effort,
as well as prevention efforts, demonstrate that the increased funds to battle
health care fraud and abuse continue to be sound investments.
FUNDING FOR DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Inspector General
Certain of the funds appropriated under HIPAA are, by statute, set aside
for Medicare and Medicaid activities of the HHS/OIG. During the second year
of the Program, the Act provides that between $80 and $90 million be devoted
to these purposes. The Attorney General and the Secretary jointly allotted
$85.7 million to the HHS/OIG in 1998, an increase of $15.7 million over
With these increased resources, HHS/OIG conducted or participated in 1,114
successful prosecutions or settlements in 1998. For the second straight
year, there was a significant rise in the number of individuals and entities
excluded from doing business with Medicare, Medicaid and other federal and
state health care programs. A total of 3,021 individuals and entities were
so excluded, many as a result of criminal convictions for program-related
crimes (584) and criminal convictions for patient abuse or neglect (302).
Others were excluded based on licensure revocations (1,251) or other professional
misconduct. Overall, there was an 11 percent increase in exclusions (from
the 2,700 exclusions in 1997).
In addition to the OIG's role in bringing about the judgments and settlements
described in the Overview of Accomplishments, HHS acted on OIG recommendations
and disallowed $27.7 million in improperly paid health care funds in 1998.
HHS/OIG continues to work with HCFA to develop and implement recommendations
to correct systemic vulnerabilities detected during HHS/OIG evaluations
and audits. These corrective actions often result in health care funds not
expended (that is, funds put to better use as a result of implemented HHS/OIG
initiatives). In 1998, such funds not expended on improper or unnecessary
care amounted to approximately $10.8 billion -- nearly $8.3 billion in Medicare
savings, and nearly $2.6 billion in savings to the Medicaid program.
HHS/OIG moved closer to its goal of extending its investigative and audit
staffs to cover all geographical areas in the country, particularly
those that were under served during lean budget years. During 1998, overall
HHS/OIG staff levels increased from 1,126 to 1,258, and HHS/OIG opened five
new investigative offices. The staff increases also strengthened the office's
ability to conduct rapid national evaluations that provide policymakers
with factual information, analysis and recommendations for improving HHS
programs. The outcomes of these inspections lead to increased cost savings,
improved quality of care or services, improved program efficiency and the
identification of program vulnerabilities.
Focus on Prevention
Affirmative enforcement, with an eye toward prosecution or recovery of
misspent funds, has been and remains a key role of the HHS/OIG. However,
with the increased resources made available under HIPAA, the HHS/OIG has
also continued to expand activities designed not just to uncover existing
fraud and abuse, but to prevent it.
A cornerstone of HHS/OIG's prevention efforts has been the development
of compliance program guidance to encourage and assist the private health
care industry to fight fraud and abuse. The guidance, developed in consultation
with DOJ and the provider community, identifies steps that health providers
may voluntarily take to improve adherence to Medicare and Medicaid rules.
Each guidance sets forth seven elements that the HHS/OIG considers necessary
for a comprehensive compliance program and identifies risk areas for the
specific industry sector. In 1998, the OIG issued compliance program guidance
for use by hospitals and home health agencies, and issued a revised guidance
for clinical laboratories. The HHS/OIG also solicited input from the durable
medical equipment industry on issues that should be addressed in upcoming
guidance for that health care sector.
With increasing frequency, health care providers that enter agreements
with the government in settlement of potential liability for violations
of the False Claims Act also agree to adhere to a separate "corporate integrity
agreement." Under this agreement, the provider commits to establishing a
compliance program or undertaking other specified steps to ensure their
future compliance with Medicare and Medicaid rules. The duration of most
corporate integrity agreements is 3 to 5 years, during which time the provider
must submit an annual report to HHS/OIG on its compliance activities. At
the close of 1998, the OIG was monitoring approximately 350 agreements;
a total of 231 corporate integrity agreements were entered into in 1998.
Industry outreach and education is another critical component of fraud
prevention. During this past year, the HHS/OIG issued final regulations,
in consultation with DOJ, implementing a process for issuing written advisory
opinions to the public on the sanction authorities enforced by HHS/OIG,
including the anti-kickback statute and the Civil Monetary Penalties Law.
In 1998, HHS/OIG issued 15 advisory opinions on a wide range of concerns.
Moreover, HHS/OIG received 21 requests for opinions in the last quarter
of the year, almost 40 percent of the total requests for the year, reflecting
growing industry recognition of the value of the advisory opinion process.
In addition, HHS/OIG issued a special fraud alert on financial relationships
between hospices and nursing homes, as well as presented frequent speeches
to industry groups on areas of suspected fraud and abuse and measures they
can take to avoid trouble.
Enlisting beneficiaries as partners in fighting fraud assists in identifying
abuses at an early stage, and preventing ongoing or widespread abuse. An
HHS/OIG survey found that Medicare beneficiaries are well-positioned to
identify fraud, with three out of four stating that they "always" read their
Explanation of Medicare Benefit statements. The HHS/OIG continues to work
with the Administration on Aging, HCFA, and the American Association of
Retired Persons to develop an outreach campaign to educate beneficiaries
and those who work with the elderly to recognize fraud and abuse and to
report it appropriately. This campaign will be fully "launched" in 1999.
The beneficiary outreach program, in part, encourages individuals to contact
the HHS/OIG Hotline, 1-800-HHS-TIPS, which receives complaints of improprieties
in Medicare and other HHS programs. In 1998, the Hotline received over 76,000
calls (up from 58,000 in 1997), which resulted in more than 12,500 complaints.
Approximately $1.04 million in collections are associated with complaints
referred to and resolved by HCFA and its contractors.
There is a final, and critically important HHS/OIG effort to prevent fraud
and abuse. Frequently, investigations (and resulting civil settlements or
criminal prosecutions), audits and evaluations reveal vulnerabilities or
incentives for fraud in agency programs or administrative processes. As
required by the Inspector General Act, the HHS/OIG makes recommendations
to correct these vulnerabilities, and thereby promote economy and efficiency
in HHS programs and operations. Relying on the independent factual information
generated by HHS/OIG, agency managers fashion legislative proposals and
other corrective action that, when enacted or implemented, close loopholes
and avoid ineffective expenditures or improper conduct. The savings from
these joint efforts toward program improvements can be vast. Among the OIG
studies that provided evidence and ideas supporting proposals for significant
cost savings during 1998, and studies conducted in 1998 that will likely
reap such savings in the future are:
- Home Health - A combination of OIG investigations, audits, and
evaluations helped support a general reform of home health services provided
by Medicare. Legislation was recently enacted to strengthen and protect
the Medicare home health benefit, by establishing payment on a prospective
basis for each episode of care, rather than on a visit-by-visit basis.
An interim payment system will control reimbursements until the prospective
payment system is implemented. The legislation also requires agencies
to purchase surety bonds, eliminates periodic interim payments, requires
home health agency owners to submit their social security numbers and
detailed information about related businesses, authorizes HCFA to re-enroll
agencies every 3 years, and gives HCFA more power to refuse to enter into
agreements with suspect individuals or companies.
- Nursing Homes - Similarly, new legislation has reformed the
way Medicare pays for nursing home services. Again, the new policy adopts
a prospective payment system for nursing home stays covered under Medicare
Part A. Under new "consolidated billing," nursing facilities must also
submit bills for Part B-covered services to Medicare for residents who
are either Medicaid or private pay.
- Prescription Drugs - In response to HHS/OIG findings and recommendations
that showed Medicare paid more for prescription drugs than the Medicaid
program and that Medicare payments greatly exceeded suppliers' acquisition
costs, Congress reduced Medicare payment rates for drugs by 5 percent.
The new legislation also authorized HCFA to make inherent reasonableness
adjustments of up to 15 percent to all Part B services except physician
- Hospice Care - A combination of audit and evaluation reports
were the subject of numerous congressional hearings and media coverage
that resulted in heightened awareness of problems with hospice care especially
when provided in nursing homes. New legislation provides more frequent
certification of eligibility for the hospice benefit. This will help control
costs while improving the overall quality of care for Medicare patients
facing death. In addition, the OIG issued a Fraud Alert to the public
regarding problems of coordination of hospice benefits with nursing home
In addition to this work already completed, the OIG continues to develop
new proposals and new ideas to ensure the integrity of the Medicare program.
Focus on Quality of Care
Some of the HHS/OIG's most important investigations, audits and evaluations
focused on the quality of care furnished to program beneficiaries.
A number of these investigations are described in the "Overview of Accomplishments"
section of this report. Others include:
- Investigation revealed that the Northern Louisiana Rehabilitation Hospital
was billing Medicare for services that were medically unnecessary or provided
no benefit to the Medicare patient. The hospital also delayed discharging
Medicare patients in order to bill additional services to Medicare. The
hospital and its majority stock holder agreed to pay nearly $4.5 million
in settlement of these allegations of false claims to Medicare.
- In partnership with the Illinois State Medicaid agency, the HHS/OIG
investigated Home Pharmacy Service, Inc, a pharmacy that provided services
to nursing homes, for failing to return unused medications after the resident
died. Instead, the pharmacy allegedly reused the medications, thereby
both potentially endangering patients and submitting false claims to Medicaid.
The pharmacy settled these allegations for $5.3 million.
- Corporate integrity agreements can also be an important instrument
in safeguarding patient quality of care. For example, Charter Behavioral,
a psychiatric hospital, agreed to having a monitor selected by the government
to oversee the medical necessity for and duration of each admission, and
otherwise review the quality of patient care. As mentioned in the Overview
of Accomplishments, a Pennsylvania nursing home also signed a settlement
agreement that included strict guidelines for the care of nursing home
patients with diabetes.
Both HCFA and the HHS/OIG have significantly stepped up enforcement actions
under the patient anti-dumping statute. Federal law requires that an emergency
medical screening examination and stabilizing treatment be provided by the
emergency department of a Medicare participating hospital. The HHS/OIG is
currently investigating over 150 instances, in which individuals were allegedly
refused medical screening or treatment that were analyzed and referred by
HCFA. In 1998, HHS/OIG entered 53 settlement agreements with hospitals and
physicians and collected civil monetary penalties of $1.8 million. This
is a marked increase from the previous high of 18 settlements in 1996, and
reflects the commitment of both HCFA and HHS/OIG to ensure patient access
to appropriate emergency medical services.
Elder abuse in nursing homes is of growing concern. An HHS/OIG review concluded
that state safeguards do not ensure that potentially dangerous applicants
are identified and denied employment in nursing homes. States rely on a
patchwork of measures, such as criminal background checks and screens of
nurse aide registries. These safeguards vary widely among the states. Moreover,
where screens exist, they often apply only to "in-state" records that do
not include information on some individuals' criminal histories.
The Office of Investigations (OI) has held numerous conferences and training
seminars during the first two years of HIPAA. These include two durable
medical equipment conferences; eight HCFA contractor fraud unit training
seminars and one conference on fraud in home health agencies. Outreach programs
on durable medical equipment and home health agencies were given in coordination
with the HCFA contractor fraud units throughout the country to members of
the health care community. In addition, OI personnel have made presentations
to provider organizations on current issues of health care fraud and abuse.
The organizations include hospital, home health, hospice and nursing home
Other Initiatives to Combat Health Care Fraud and Abuse
The annual audit of HCFA's financial statements (mandated by the Chief
Financial Officers Act and the Government Management Reform Act) provides
an objective evaluation of the reliability of those statements and, importantly,
an evaluation of financial management processes, systems and internal controls.
The fiscal year 1997 audit, jointly funded by HHS/OIG and HCFA, noted an
improvement in federal financial accountability. HHS/OIG issued a qualified
opinion; an improvement over the disclaimer issued for the previous year.
Because of continuing problems, however, OIG was unable to issue an unqualified
(or "clean") opinion. The audit report estimated that improper Medicare
fee-for-service payments in 1997 amounted to about
$20.3 billion, or about 11 percent of the total $177.4 billion in fee-for-service
payments. Much of these improper payments were the result of insufficient
or no medical documentation of the services, lack of medical necessity,
incorrect coding, and unallowable services. The audit did not determine
what portion of these improper payments are attributable to fraud. Additionally,
OIG identified systemic internal control problems. HCFA continues to work
with the HHS/OIG in its efforts to complete corrective action.
With more than six million Medicare beneficiaries receiving health care
services through managed care plans (as of February 1998), the HHS/OIG conducted
various reviews assessing this health care delivery option. Among these,
the HHS/OIG evaluated beneficiary and provider satisfaction with HMOs and
other managed care plans, reviewed the components of the administrative
costs included in calculating the adjusted community rate and recommended
that legislation be sought that would exclude inappropriate expenses that
currently inflate that rate beyond what is Medicare's "fair share" (with
a potential cost saving of $1 billion); and made recommendations to improve
beneficiaries' access to services.
Health Care Financing Administration
The Health Care Financing Administration (HCFA) is the agency with primary
responsibility for administering the Medicare and Medicaid programs. HCFA
has a mandatory appropriation to support its Medicare Integrity Program(4),
however, appropriations for the integrity program cannot be used in support
of activities conducted directly by agency personnel.
In 1998 HCFA received $950,000 from the Account to support efforts at controlling
fraud and abuse in the Medicare program.
- Medicare Satellite Offices. $720,000 in HCFAC funds
were used to continue Satellite Office operations in Miami and to open
a new satellite office in New Orleans, Louisiana.
Satellite Offices' support newly established, cross-jurisdictional
partnerships with various entities that had previously worked in isolation
to combat fraud. Specifically, Satellite Office staff are charged with
working directly with staff of other federal agencies, various law enforcement
agencies, relevant state agencies and various private companies to function
as a "hub" coordinating and helping avoid duplication in the fraud prevention,
detection and elimination efforts of these partners.
The New Orleans Office opened mid-year and spent a considerable portion
of 1998 getting established; the Miami office continued to enjoy the
success needed to demonstrate the viability of the Satellite Office.
Since 1996, the Miami office, working collaboration with its partners
in Florida, has identified significant fraudulent and abusive claims
against the Medicare and Medicaid programs, resulting in the identification
of $75 million in overpayments. In addition, the collaborative projects
focused on identifying the root causes of fraud, waste and abuse, so
that corrective action could be taken and further occurrences prevented.
- State Survey and Certification projects. $230,000
in HCFAC funds were used to support continuation of state survey and certification
State survey agency personnel were trained on methods to identify
problem providers and used that training as part of their ongoing survey
work in laboratories and other health care facilities. HCFAC funds supported
state personnel and HCFA oversight of these activities for projects
in 25 states.
Health Resources and Services Administration
The Act mandates that the HHS/OIG and DOJ establish a national health care
fraud and abuse data collection program for the reporting and disclosure
of certain final adverse actions (excluding settlements in which no findings
of liability have been made) taken against health care providers, suppliers,
and practitioners. The Health Resources and Services Administration (HRSA)
is authorized to design, implement and operate this program, currently named
the Healthcare Integrity and Protection Data Bank (HIPDB). In 1998, HRSA
was allocated $1 million from the Account to further development of
The HIPDB initial operating capability stage was completed and tested in
March 1998. The next stage of development included the addition of
systems capability to receive adverse licensure and certification reports,
as well as reports of other adverse federal and state actions, on health
care practitioners. The HIPDB also was developed to receive reports of all
types of health care related final adverse actions against health care providers
and suppliers. The first generation of the HIPDB will be substantially complete
by May 1999. Pursuant to the Act, the HIPDB may not open for operations
until final regulations are issued by the Secretary.
The HIPDB system has undergone and successfully completed Y2K compliance
testing to ensure that dates beginning with the year 2000 will not disrupt
operations. Once the HIPDB becomes operational, the query fee payment will
be collected via an interface with Mellon Bank. This link is the only part
of this data collection program that has not yet undergone Y2K compliance
testing. Certification regarding Y2K compliance is expected from Mellon
Bank in 1999.
Progress to date includes:
- design specifications developed and approved;
- specific design reviews conducted of key hardware and software;
- physical facilities modified to accommodate the new equipment; and
- equipment ordered, received, installed and currently in use for the
development of the system.
Data acquisition activities including working with:
- DOJ to acquire all federal judgments and convictions;
- HCFA to acquire Medicare and Medicaid adverse and exclusion actions;
- Departments of Defense and Veterans Affairs to acquire disciplinary
and adverse actions; and
- Various health care related and health professional organizations, including
those representing Nursing and Chiropractic Licensing Boards.
Office of the General Counsel
The Office of the General Counsel (OGC) headquarters' divisions (the Health
Care Financing Division and the Business and Administrative Law Division)
as well as its 10 regional offices provide legal support under the HCFAC
OGC was allocated $2.2 million in HCFAC funding for 1998. These funds were
used for litigation activity, both administrative and judicial. OGC continues
to experience an increase in the number of new litigation items: a 104 percent
increase in 1997 and a 17 percent increase in 1998. The bulk of the administrative
(non-court) litigation involved: (1) civil money penalties (CMP) imposed
on Medicare nursing facilities; (2) revocations, terminations or denials
of provider status (especially home health agencies, nursing facilities,
and Community Mental Health Centers); (3) Medicare Secondary Payor (MSP)
cases; and, (4) Medicare suspensions of payments to providers and suppliers.
The bulk of the court litigation involved MSPs or bankruptcies.
- Prospective Payment System (PPS) Transfer Recovery Project: OGC's HCF
Division has been assisting OIG and DOJ in a nationwide False Claims Act
initiative. HHS/OIG has been investigating certain PPS hospitals that
improperly code patients as being discharged from the hospital when the
patients have, in fact, been transferred to another PPS hospital. Medicare
regulations allow a hospital to receive the full DRG payment for a patient
who is discharged from the hospital. Hospitals that transfer patients
to another PPS hospital, however, are entitled to receive only a per diem
payment for the actual length of stay at the first hospital. The OIG's
investigation has found that thousands of hospitals miscoded transfers
of patients as discharges, causing Medicare to pay the full DRG payment
improperly to both the transferor and transferee hospitals.
- OGC's Region I office, working with HCFA, defended HCFA against a legal
challenge brought by a large national nursing home chain. In a case involving
one of the chain's facilities in Region I, OGC's assistance resulted in
the termination of the facility's Medicare provider agreement, and the
imposition of a CMP in the amount of $637,000.
- Region III, in collaboration with the U.S. Attorney's Office in Philadelphia,
issued the first joint DOJ/HCFA Consent Order against a skilled nursing
facility in a fraud case. The facility and two related facilities agreed
to pay $500,000 in CMPs; implement staffing changes pursuant to federal
regulations; and, adopt a corporate compliance program.
- The Region V office had a record high 940 new MSP cases filed in 1998.
Contributing to this were partnership arrangements with contractors and
U.S. Attorneys in Michigan and Ohio as well as a new notice letter to
assist fiscal intermediaries in recoveries. This effort contributed to
nearly $3.6 million in Medicare recoveries through MSP litigation.
- OGC's Region VI in cooperation with HCFA, was instrumental in suspending
payments to 40 providers and suppliers on the basis of fraud and misrepresentation
with only one suspension challenged in court.
Administration on Aging
The Administration on Aging (AoA) is the only federal agency with sole
responsibility for program policies and services for older Americans. In
1998, the AoA was allocated $1.3 million under the Program. These funds
continued to train and educate both paid and volunteer staff in the aging
network, especially those associated with Older Americans Act programs and
services, such as long-term care ombudsmen, to recognize and report potential
practices and patterns of fraud and abuse in the Medicare and Medicaid programs.
Additionally, AoA and its network agencies engaged in outreach and educational
activities to assist older persons, their families and their communities
to recognize and report fraudulent and abusive situations and to prevent
or minimize victimization by such behavior.
- Increased to 18 the number of cooperative agreements to state units
on aging to support education, training and outreach efforts to help aging
network staff and volunteers to recognize and report health care fraud
and abuse. Based on a pre-test of AoA's HCFAC/ORT performance measures,
the following activities were documented:
- Cumulatively, more than four and a half million people were reached
through public service announcements, community education events,
and other activities.
- 275 formal training sessions were conducted for over 8,500 aging
network staff and volunteers who, in turn, conducted public information
forums attended by over 15,000 persons. Over 100 brochures, manuals,
and videos were developed and publicly distributed to support training
- Cumulatively, more than four and a half million people were reached
- Based on information gathered from AoA's partners and stakeholders,
the agency developed and implemented a series of new technical assistance
activities designed to more effectively carry out their mandates, including:
- Planning and convening a 3 day national technical assistance and
resource exchange conference in August 1998.
- Establishing a limited access internet "chat room," and creating
and maintaining an AoA anti-fraud web page.
- Establishing a bi-monthly "AoA Fraud Watch" newsletter designed
to exchange updates, best practices, resources, and information between
AoA's community volunteer and education projects.
- Planning and convening a 3 day national technical assistance and
- HCFAC funding also provided vital technical assistance support to AoA's
twelve Community Volunteer Projects which have been highly successful
in recruiting and training retired professionals to identify and report
waste, fraud and abuse. In its first year of operation, these Community
Volunteer Projects trained more than 3,600 retired older Americans how
to review their Explanation of Benefit Statements for potential waste,
fraud and abuse. The senior volunteers in turn held over 1,300 group and
counseling sessions attended by more than 41,000 Medicare beneficiaries
on strategies for combating, preventing, and reporting waste, fraud and
abuse in the Medicare and Medicaid programs.
FUNDING FOR DEPARTMENT OF JUSTICE
United States Attorneys
Health care fraud involves many different types of schemes that defraud
Medicare, Medicaid, the Department of Veterans Affairs, or other insurers
or providers. The fraudulent activity may include double billing schemes,
kickbacks, billing for unnecessary or unperformed tests, or may be related
to the quality of the medical care provided. United States Attorneys' offices
(USAOs) criminally and civilly prosecute health care professionals, providers,
and other specialized business entities who engage in health care fraud,
and work with the Department's Civil and Criminal Divisions, and the FBI.
USAOs continue to cooperate closely with numerous federal, state and local
law enforcement agencies who are involved in the prevention, evaluation,
detection, and investigation of health care fraud. In addition to the HHS/OIG
and HCFA, these agencies include the State Medicaid Fraud Control Units;
Inspectors General Offices of other federal agencies; the Drug Enforcement
Administration; Department of Defense, Defense Criminal Investigative Service;
and the TRICARE Support Office in the Department of Defense.
To assist in coordination and communication at national, state, and local
levels, each USAO has appointed both a criminal and civil health care fraud
coordinator. Prior to the enactment of HIPAA, USAOs dedicated substantial
resources to combating health care fraud, HIPAA allocations have supplemented
The Executive Office for the United States Attorneys' Office of Legal Education
(OLE) is tasked with the responsibility for providing health care fraud
training for USAO, and DOJ attorneys, investigators, and auditors. During
1998, OLE conducted a number of presentations and complete courses on health
care fraud, including:
Affirmative Enforcement/Health Care Fraud Investigators Session
Basic Health Care Fraud for Attorneys
Basic Affirmative Civil Enforcement - includes a health care fraud
Advanced Affirmative Civil Enforcement - which includes a health care
Advanced Health Care Fraud for Attorneys
Basics of Medicare for Attorneys and Paralegals
While the primary student body at each of these courses were DOJ employees,
personnel from HHS/OIG and other agencies were also invited to participate
as presenters and students. Additionally, USAO attorneys, investigators
and auditors participated in a number of non-OLE sponsored, multi-agency
health care fraud training courses over the last year.
Accomplishments - Criminal Prosecutions
The primary objective of criminal prosecution efforts is to ensure the
integrity of our Nation's health care programs and to punish and deter those
who, through their fraudulent activities, abuse the health care system and
Each time a criminal case is referred to a USAO from the FBI, HHS/OIG,
or other law enforcement agency, it is opened as a matter pending in the
district. A case remains a matter until an indictment or information is
filed or the case is declined for prosecution. In 1998, the USAOs had 1,866
criminal matters pending involving 2,986 defendants, a 23 percent increase
over 1997. 322 cases were filed with 439 defendants. This represents a 14
percent increase over cases filed in 1997. Health care fraud convictions
include both guilty pleas and guilty verdicts. During 1998, there were 219
criminal health care fraud convictions, involving 326 defendants.
In one case, the owner of The Human Resources Inc. Concept, pleaded guilty
to charges that he defrauded the Medicaid program of $7.3 million by billing
it for individual and group psychotherapy sessions allegedly provided to
children attending after-school and summer day camp programs. After 4 days
of trial testimony, the defendant pleaded guilty to one count each of conspiracy
and mail fraud. The defendant and others recruited inner-city school children,
who were eligible for Medicaid, to enter after-school and summer school
programs at a community center and roller skating rink. These programs were
promoted as providing academic and cultural enrichment and recreational
opportunities. The defendant directed employees to go door-to-door in poor
areas to recruit children without telling the parents that Medicaid would
be billed for individual or group psychotherapy sessions. Parents testified
that they had not enrolled their children for psychotherapy sessions, and
that their children did not need those services. Several former employees
testified that psychological counseling was not provided. On September 30,
1998 the defendant was sentenced to 3 years and 10 months in federal prison,
and ordered to pay $7.3 million in restitution.
Accomplishments - Civil Cases
Civil health care fraud efforts constitute a major focus of Affirmative
Civil Enforcement (ACE) activities. The ACE Program is a powerful legal
tool used to help ensure that federal laws are obeyed, and that violators
provide compensation to the government for losses and damages they cause
as a result of fraud, waste, and abuse. Civil health care fraud matters
ordinarily involve the United States utilizing the False Claims Act, as
well as the common law of fraud, payment by mistake, unjust enrichment and
conversion, to recover damages from those who have knowingly submitted false
or fraudulent claims. Additionally, in conjunction with a defendant committing
a criminal health care fraud offense, the United States may file a civil
proceeding using the Fraud Injunction Statute, to ensure assets traceable
to such violation are available to repay those victims the defendant has
Each time a civil matter is referred to a USAO it is opened as a matter
pending in the district. Civil health care fraud matters are referred directly
from federal or state investigative agencies, or result from filings by
private persons known as "relators," who file suits on behalf of the Federal
Government under the 1986 qui tam amendments to the False Claims
Act and may be entitled to share in the recoveries resulting from these
lawsuits. At the end of 1998, the USAOs had 3,471 civil health care fraud
A matter becomes a case when the United States files a civil complaint,
or intervenes in a qui tam complaint, in United States District
Court. A large majority of civil health care fraud cases and matters are
settled without a complaint ever being filed. In 1998, civil health care
fraud cases filed increased 20 percent over 1997, from 89 to 107.
A significant agreement in 1998 arising from a qui tam case, involved
Health Care Service Corporation (HCSC), the Medicare contractor for Illinois
and Michigan, in which the company agreed to plead guilty to eight felony
counts and agreed to pay a $4 million criminal fine and $140 million in
settlement of its liability under the federal False Claims Act. HCSC, also
known as Blue Cross and Blue Shield of Illinois, agreed to plead guilty
to six counts of making false statements to conceal evidence of its poor
performance in processing Medicare claims from HCFA, and two counts of obstructing
and conspiring to obstruct federal auditors. The civil settlement resolves
allegations that the company falsified documents and manipulated samples
used in government audits of the company's Medicare operations, failed to
process claims in accordance with guidelines established by HCFA, and failed
to handle beneficiary and physician inquiries in a timely manner. Prior
to the corporate plea, one former and one current manager at HCSC's Marion
office pleaded guilty to charges of conspiracy, wire fraud and obstruction
of a federal audit. Through their submission of false information to HCFA
concerning the performance of HCSC on its Medicare Part B contracts, HCSC
had its contracts with HCFA renewed, and received almost $1.3 million in
incentive payments from HCFA. In December 1997, HCSC agreed to withdraw
from the Medicare program and, as of September 1, 1998, was no longer a
Medicare contractor. This case combined efforts of the U.S. Attorney in
Southern Illinois, the FBI, the HHS/OIG, the U.S. Postal Inspection Service,
the Criminal Division, and the Civil Division.
Civil Division attorneys vigorously pursue civil remedies in health care
fraud matters, working closely with the USAOs, the FBI, the Inspectors General
of HHS and Defense, as well as other federal and state law enforcement agencies.
A total of 161 new health care fraud matters were initiated in 1998. In
addition to pursuing more health care fraud allegations, the Civil Division
is pursuing an increasing number of health care fraud cases in which the
apparent single damages are particularly high.
A particularly significant 1998 accomplishment was the $4.7 million settlement
with Charter Behavioral Health Systems, a psychiatric hospital chain, to
resolve claims in a qui tam lawsuit. The government alleged
that a Charter hospital improperly billed Medicare for millions of dollars
of psychiatric services rendered to individuals who could not benefit from
the services because they had debilitating organic brain disorders, such
as Alzheimer's Disease and severe dementia. These beneficiaries were routinely
admitted to the hospital by doctors allegedly seeking to increase patient
admissions in response to pressure from Charter's corporate headquarters.
As part of the agreement, the hospital will be monitored under a 5 year
corporate integrity agreement, and will not bill Medicare for any services
for a 15- month period.
In another health care qui tam case, $17.2 million was paid by
the University of Texas Health Science Center/Medical School at San Antonio
to settle allegations that inflated claims for physician services were submitted
to Medicare, Medicaid, TRICARE and the State Legalization Alien Impact Assistance
Grant program. The government alleged that the Medical Center submitted
claims for services personally provided by faculty physicians when, in fact,
the Center's records did not support the claim that the faculty member personally
provided the service.
In addition, Invacare Corporation paid $2.6 million to the Department of
Veterans Affairs to settle allegations of fraud in the sale of wheelchairs.
Invacare allegedly failed to provide accurate and complete cost data during
contract negotiations and violated the Buy America Act by supplying foreign-made
In 1998, the Civil Division received $3.8 million from the Account. Resources
were allocated primarily to fund 33 positions, including attorneys, analysts,
auditors, paralegals, secretaries and a litigation support specialist. Because
coordination across many organizations and locations is crucial to enforcement
efforts, one attorney served as the Civil Division's health care fraud coordinator.
This attorney provided guidance and information, developed training, and
coordinated policy development and information exchange with other DOJ components,
HHS/OIG, HCFA and other Government agencies and the private sector.
Although very limited 1998 resources were available for Automated Litigation
Support (ALS), auditors and consultants from the Account, the Civil Division
was able to apply other appropriated funds for these critical services.
During 1998, much needed ALS was provided to 17 cases while auditor/consultant
support was provided to 15 cases. Four of the supported cases have settled,
yielding nearly $14 million. Expected recoveries in the remaining cases
range from several million to hundreds of millions of dollars.
The Fraud Section of the Criminal Division develops and implements white
collar crime policy and provides support to the Criminal Division, the Department
and other federal agencies on white collar crime issues. The Fraud Section
supports the USAOs with legal and investigative guidance and, in certain
instances, provides trial attorneys to prosecute criminal fraud cases. For
several years, a major focus of Fraud Section personnel and resources has
been to investigate and prosecute fraud involving federal health care programs.
The Fraud Section has provided guidance to FBI agents, AUSAs and Criminal
Division attorneys on criminal, civil and administrative tools to combat
health care fraud, and worked on an inter-agency level through:
- updates on criminal, civil, administrative and regulatory efforts to
combat health care fraud.
- updates on significant appellate decisions concerning health care fraud
- participation in the negotiated rulemaking committee which sought to
develop standards for the shared risk exception to liability under the
anti-kickback statute. The committee met several times and developed a
committee report which is presently being worked by HHS into its final
- development of guidance on suspension of Medicare payments to ensure
program integrity. The memorandum provides information to Department attorneys
and AUSAs concerning the standards and process for suspension of Medicare
payments. It also encourages the attorneys to engage in effective and
timely communication with representatives of HCFA to discuss all significant
issues which may impact the government's decision whether to employ the
suspension remedy in a particular instance.
- development of a Statement of Principles for the Sharing of Health Care
Fraud Information Between the DOJ and Private Health Plans. This is a
general statement of principles governing the Department's exchange of
health care fraud information with private health insurance plans as required
by the HCFAC Program Guidelines issued by the Attorney General and the
- providing frequent advice and written materials to AUSAs, and investigative
agents, on confidentiality and disclosure issues regarding medical records
which arise in the course of investigations and legal proceedings.
- reviewing and commenting on numerous requests for advisory opinions
submitted by health care providers to the HHS/OIG and consulting with
the HHS/OIG on draft advisory opinions per the requirements of HIPAA.
Justice Management Division
The Justice Management Division, Debt Collection Management Staff continues
to perform various administrative and coordination duties. The duties of
this office include: budget formulation, oversight and coordinating with
the Office of Management and Budget and HCFA; development and data collection
for the internal program evaluation; coordinating with HHS/OIG and the Department
of the Treasury on the tracking of collections; coordinating with the GAO
on required audits; and preparation and coordination of the annual report.
Federal Bureau of Investigation
"There are hereby appropriated from the
general fund of the United States Treasury and hereby appropriated to the
Account for transfer to the Federal Bureau of Investigation to carry out
the purposes described in subparagraph (C), to be available without further
appropriation-- (I) for fiscal year 1998, $56,000,000".
Successful health care fraud enforcement cannot be achieved by any one
agency alone. Investigations must be a cooperative effort if they are to
be successful in combating the increasing problems of health care fraud.
The FBI is involved in this cooperative effort. The FBI works many health
care fraud cases on a joint basis with other federal agencies, including
the HHS/OIG. These two federal agencies collaborate through attendance at
health care fraud working groups, attend each others training conferences,
and have a liaison program between the two organizations. In addition, the
Health Care Fraud task forces represent the coordinated efforts of the FBI,
state and local law enforcement, investigative agencies such as Inspectors
General, and private industry. The FBI and HHS/OIG share a common commitment
to ending fragmented health care fraud enforcement.
In addition to providing new statutory tools to combat health care fraud,
HIPAA specified mandatory funding to the FBI for health care fraud enforcement.
In 1998, $56 million was provided by HIPAA for 569 positions (340 agents).
The FBI used this funding, in large part, to fund an additional 44 agents
and 28 support positions for health care fraud and to create several new
dedicated Health Care Fraud Squads. This increase in personnel resources
along with the direct FBI funding increased the number of FBI agents addressing
health care fraud in the fourth quarter of 1998 to approximately 460 agents
as compared to 112 in 1992.
As the FBI has increased the number of agents assigned to health care fraud
investigations, the caseload has increased dramatically from 591 cases in
1992, to 2,700 cases through 1998. The FBI caseload is divided between those
health plans receiving government funds and those that are privately funded.
Criminal health care fraud convictions resulting from FBI investigations
have risen from 116 in 1992, to 352 through the third quarter in 1998.
Health care fraud investigations are among those investigations having
the highest priority within the FBI. The investigations are generally complex
and require specific knowledge, skills and abilities to successfully investigate.
Often sophisticated, innovative and creative ideas are needed to combat
and eventually prosecute the perpetrators of these crimes. As the complexity
and long-term nature of health care fraud investigations increase, the FBI
anticipates that the number of FBI investigations and convictions will begin
to level off.
A considerable portion of the increased funding was utilized to support
major health care fraud investigations. In addition, operational support
has been provided for FBI national initiatives focusing on pharmaceutical
diversion, chiropractic fraud, and medical clinics. Further, the Health
Care Fraud Unit, FBI Headquarters, supported individual field offices with
equipment and supplies to assist in numerous individual investigations.
In January 1998, four former executives of Damon Clinical Laboratory were
indicted on federal criminal charges of conspiracy to defraud the Medicare
Program of more than $25 million. These charges are in addition to the Damon
Corporate plea in October 1996 when the company pled guilty to conspiracy
to defraud Medicare in connection with conduct alleged against these executives,
and paid $119 million to the United States. It is alleged that the individuals
conspired to manipulate the way physicians order blood tests.
The funding made available through HIPAA also made possible 4 Regional
Training Conferences for FBI agents assigned to health care fraud investigations.
These 1 week training sessions sponsored by HCFA provided in depth training
on the Medicare Program to almost 250 agents. Other training made possible
by HIPPA included: a session for the FBI's Financial Analysts; and a joint
FBI, Defense Criminal Investigative Service, HHS/OIG Managers Conference.
Further, funding from HIPAA was utilized in Pharmaceutical Division and
Cost Report Training sessions to more than 100 FBI agents.
Account - The Health Care Fraud and Abuse Control Account
ACE - Affirmative Civil Enforcement
ALS - Automated Litigation Support
AoA - Administration on Aging
AUSA - Assistant United States Attorney
DOJ - The Department of Justice
DRG - Diagnosis Related Group
FBI - Federal Bureau of Investigation
GAO - General Accounting Office
HCFA - Health Care Financing Administration
HHS - The Department of Health and Human Services
HIPAA, or the Act - The Health Insurance Portability and Accountability
Act of 1996, P.L. 104-191
HIPDB - Healthcare Integrity and Protection Data Bank
HRSA - Health Resources and Services Administration
MSP - Medicare Secondary Payer
OGC - The Department of Health and Human Services, Office of the General
OI - The Department of Health and Human Services, Office of Inspector General,
Office of Investigations
OIG - The Department of Health and Human Services, Office of Inspector
OLE - Office of Legal Education, located within the Executive Office for
the United States Attorneys
PPS - Prospective Payment System
Program - The Health Care Fraud and Abuse Control Program
Secretary - The Secretary of the Department of Health and Human Services
USAO - United States Attorney's Office
U.S.C. - United States Code
1. Hereafter, referred to as the Secretary.
2. Also known as the Hospital Insurance (HI) Trust Fund.
All further references to the Medicare Trust Fund refer to the HI Trust
3. In 1998, DOJ collected, or continued to hold in suspense,
an additional $96,480,614 in health care fraud cases and matters that was
not disbursed to the affected agencies and/or the Account in 1998 due to:
(i) on-going litigation regarding relator shares in qui tam cases
that will affect the amount retained by the Federal Government; and (ii)
receipt of funds late in the year that were then processed in 1999.
4. The Medicare Integrity Program is run through Medicare
contractors and is intended to protect the trust fund from abusive or fraudulent
- Health Care Services Corporation, the Medicare carrier for Illinois