Combating Health Care Fraud and Abuse - Health Cost Containment
Updated June 2013
The following NCSL Issue brief was distributed to state legislators and legislative staff across the country and is available for download here. Material below provides updates to 2014.
Combating Health Care Fraud and Abuse - PDF File
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Cost Containment Strategy and Logic
Health care fraud and abuse control programs are designed to prevent, identify and prosecute unlawful billings by health care providers, patients and insurers. Health care fraud is intentional deception-—a misrepresentation or failure to disclose pertinent information. A false claim involves an intentional false representation that causes the government to pay more than is allowable. Abuse involves substandard, negligent or medically unnecessary practices that increase the cost of health care. Abusive practices often indicate fraud.
Fraud and abuse, widespread in both the public and private health care sectors, account for 3 percent to 10 percent of Medicaid payments nationwide. Among 28 federal programs examined by the U.S. General Accountability Office in 2007, Medicaid had the highest number of improper payments.
Summary of Health Cost Containment and Efficiency Strategies - Brief #11- Combating Health Care Fraud and Abuse
|State/Private Sector Examples
|| Strategy Description
||Target of Cost Containment
||Evidence of Effect on Costs
|Ohio, Texas, New York and California
Medicaid RAC program, 9/11
|Evidence shows concerted state anti-fraud and abuse efforts save states millions—and in some cases billions—of dollars each year, and states potentially could double or even triple current collections.
||Medicaid expenditures for fraudulent claims cost states billions of dollars each year.
||It appears the more anti-fraud tools a state has at its disposal, the greater likelihood of fewer unwarranted payments and larger recoveries.
Key Additional Resources
Recent Articles and Opinions
- J.&J. Fined $1.2 Billion in Drug Case - An Arkansas court ordered the near-record payment after a jury found that the pharmaceutical manufacturer companies had" minimized or concealed the dangers associated with an antipsychotic drug." - New York Times, April 12, 2012.
- Transforming Health Care Through Technology - Information technology and telecommunications are transforming health care, by helping to improve care and prevent possible fraud. " Health Care Fraud Is Costly. Health care fraud costs insurers anywhere between $70 billion and $234 billion each year, harming both patients and taxpayers. In October 2010, the National Health Care Anti-Fraud Association (NHCAFA) stated that one of the most important principles to fight health insurance fraud was to consolidate data and create real-time analysis of insurance claims. These tools allow health insurers to devote resources to apply fraud prevention before paying claims, rather than the current-and-costly “pay and chase” model most use to combat health care fraud. States also can use predictive modeling and analytics to prevent costly fraud, waste and abuse." More NCSL LegisBref, published September 2011.
- Health Reform Law Has Far-Reaching Impact on Compliance World - Reprinted from REPORT ON MEDICARE COMPLIANCE (c), 12/8/10. "The new law “makes significant amendments to existing criminal, civil and administrative anti-fraud statutes, most of which went into effect March 23, 2010,” said Dallas attorney Frank Sheeder, with Jones Day. For example, providers must disclose and return overpayments within 60 days of identification. “The statute specifically provides that once an overpayment is identified, providers must report and repay the overpayments within 60 days or they can be subject to liability under the False Claims Act,” Sheeder said Nov. 8 at a health reform conference sponsored by the Health Care Compliance Assn."
About this NCSL project
NCSL’s Health Cost Containment and Efficiency Series describes more than a dozen alternative policy approaches, with an emphasis on documented and fiscally calculated results. The project is housed at the NCSL Health Program in Denver, Colorado. It is is led by Richard Cauchi (Program Director) and Martha King (Group Director) with Barbara Yondorf as lead researcher.
NCSL gratefully acknowledges the financial support for this publication series from The Colorado Health Foundation and Rose Community Foundation of Denver, Colorado.