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5/17/2010
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Healthcare Fraud Losses Narrowing

Attorney General Eric Holder says stiffer penalties and improved data systems are helping the federal government crack down on healthcare fraud cases.

As the Obama administration aggressively pursues criminals who commit medical fraud, Attorney General Eric Holder announced that in fiscal 2009, billions of dollars were returned to federal government coffers as a result of successful law enforcement efforts.

Holder, along with Department of Health and Human Services (HHS) Secretary Kathleen Sebelius, held a joint press conference in Washington, D.C., late last week to release the findings of a new healthcare fraud and abuse report. It reveals that approximately $2.5 billion was deposited to the Medicare Trust Fund, an increase of more than $500 million from the prior year's total.

The federal government also won or negotiated approximately $1.63 billion in judgments and settlements of healthcare fraud cases. Additionally, more than $441 million in federal Medicaid money was transferred separately to the U.S. Treasury -- 28% more than in FY 2008.

"These crimes harm all of us -- government agencies and programs, insurers and health care providers, and individual patients -- but we're fighting back," Holder said.

Stealing data such as names, Social Security numbers, and addresses from a patient's medical records has long been a concern, but several recent research studies show computerized theft of medical records is on the rise, with some experts saying they believe the number of medical fraud incidents will increase as the federal government's goal to provide every American with an electronic health record by 2014 is implemented along with the expectation that an additional 32 million Americans will enroll in an insurance health plan in the coming years.

Indeed, a recently published report by the Healthcare Information and Management Systems Society’s analytics unit in partnership with Kroll Fraud Solutions showed that since January 2008, more than 110 healthcare organizations have reported the loss of sensitive patient data affecting more than 5 million individuals.

More than 40% of survey respondents reported that patient data loss incidents were caused by theft of stolen laptops, computers, or media/tapes. Another 27% were the result of loss by staff or third parties; malicious insiders caused 20%; and 9% were caused by system hacks, Web exposure, and virus attacks.

Another report, published by market research firm Javelin Strategy & Research, found that fraud resulting from exposure of health data has risen from 3% in 2008 to 7% in 2009, a 112% increase.

According to Holder, the Department of Justice (DOJ) will work vigorously with law enforcement partners to ensure that the goals of the recently passed healthcare reform law aren't threatened.

"Fraudsters cannot use this historic legislation to perpetrate healthcare fraud on our senior citizens and other vulnerable Americans," Holder said. "For every dollar that we spend combating healthcare fraud, we're able to return four dollars to the U.S. Treasury and the American taxpayers."

That said, The Health Care Fraud and Abuse Control Program Annual Report for Fiscal Year 2009 shows that 583 defendants were convicted of healthcare fraud-related crimes in fiscal year 2009. The U.S. Attorney's Offices opened 1,014 new criminal healthcare fraud investigations involving 1,786 potential defendants.

Federal prosecutors had 1,621 healthcare fraud criminal investigations pending, involving 2,706 potential defendants and filed criminal charges in 81 cases involving 803 defendants. Additionally, the DOJ opened 886 new civil healthcare fraud investigations and had 1,155 civil healthcare fraud matters pending, the report said.

"These numbers tell only a part of the story" Holder said as he explained that the federal government plans to expand its anti-fraud strategies under the Patient Protection and Affordable Care Act.

The new law contains several measures to improve and enhance the administration's efforts to prevent, detect and take action against healthcare fraud.

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