Health Care Fraud: Information-Sharing Proposals to Improve Enforcement
Efforts (Chapter Report, 05/01/96, GAO/GGD-96-101).
Pursuant to a congressional request, GAO discussed: (1) the extent of
federal and state immunity laws protecting persons who report health
care fraud; and (2) evidence for and against establishing a centralized
health care fraud database.
GAO found that: (1) there are no federal immunity protections for
persons who report alleged health care fraud to law enforcement
agencies; (2) the only federal provision that could protect such persons
applies to persons reporting Medicare and Medicaid fraud; (3) private
insurers and health care claims processors are also not provided any
federal immunity protection if they report suspected fraud; (4) many
states have enacted immunity protection, but the amount of protection
varies by state; (5) Congress is considering legislation that would
protect persons providing health care fraud information to the
Departments of Health and Human Services or Justice; (6) most federal
and state officials support the proposed immunity provisions and
safeguards to protect against persons who make unsubstantiated
allegations in bad faith; (7) many federal officials believe that the
legislation should be expanded to provide immunity to persons sharing
fraud-related information with any state or federal enforcement entity
and insurers sharing information with other insurers; (8) the proposed
legislation would create a central database to track criminal activity
in the health care system; (9) the database would provide information on
criminal convictions, civil judgements, and negative licensing actions
and be accessible to federal and state agencies and health insurers; and
(10) most law enforcement officials support the database's establishment
and believe that enforcement benefits would accrue, but many are
concerned about the potential for unauthorized disclosure of information
and high development and operating costs.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: GGD-96-101
TITLE: Health Care Fraud: Information-Sharing Proposals to Improve
Enforcement Efforts
DATE: 05/01/96
SUBJECT: Fraud
Program abuses
Law enforcement
Health insurance cost control
Data bases
Proposed legislation
Whistleblowers
Information disclosure
Computerized information systems
Computer security
IDENTIFIER: Medicare Program
Medicaid Program
National Health Care Anti-Fraud Association Indexing
Network System
HHS National Practitioner Data Bank
Federal Employees Health Benefits Program
Civilian Health and Medical Program of the Uniformed
Services
CHAMPUS
Blue Cross-Blue Shield Benefits Insurance Plan
Treasury Financial Crimes Enforcement Network
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Cover
================================================================ COVER
Report to the Ranking Minority Member, Subcommittee on National
Security, International Affairs and Criminal Justice, House Committee
on Government Reform and Oversight
May 1996
HEALTH CARE FRAUD -
INFORMATION-SHARING PROPOSALS TO
IMPROVE ENFORCEMENT EFFORTS
GAO/GGD-96-101
Health Care Fraud
(182003)
Abbreviations
=============================================================== ABBREV
DOJ - Department of Justice
FBI - Federal Bureau of Investigation
FinCEN - Financial Crimes Enforcement Network
HHS - Department of Health and Human Services
NHCAA - National Health Care Anti-Fraud Association
Letter
=============================================================== LETTER
B-259795
May 1, 1996
The Honorable Karen L. Thurman
Ranking Minority Member
Subcommittee on National Security,
International Affairs and Criminal Justice
Committee on Government Reform and Oversight
House of Representatives
Dear Ms. Thurman:
In response to the former Chairman's request and subsequent
agreements with you, this report focuses on information-sharing
issues that may affect health care anti-fraud enforcement efforts.
Specifically, the report discusses (1) the extent of federal and
state immunity laws protecting persons who report health care
fraud-related information and (2) the evidence that exists for and
against establishing a centralized health care fraud database to
enhance information sharing and support enforcement efforts.
We are sending copies of this report to the Attorney General,
appropriate congressional committees, and other interested parties.
Copies will also be made available to others upon request.
The major contributors to this report are listed in appendix VII. If
you or your staff have any questions about this report, please
contact me on (202) 512-8777.
Sincerely yours,
Norman J. Rabkin
Director, Administration
of Justice Issues
EXECUTIVE SUMMARY
============================================================ Chapter 0
PURPOSE
---------------------------------------------------------- Chapter 0:1
Health care fraud burdens the nation with enormous financial costs,
while threatening the quality of health care. Estimates of annual
losses due to health care fraud range from 3 to 10 percent of all
health care expenditures--between $30 billion and $100 billion based
on estimated 1995 expenditures of over $1 trillion. In late 1993,
the Attorney General designated health care fraud as the Department
of Justice's number two enforcement priority, second only to violent
crime initiatives.
In response to a request from the former Chairman and subsequent
agreements with the current Ranking Minority Member, House
Subcommittee on National Security, International Affairs and Criminal
Justice, Committee on Government Reform and Oversight, GAO's report
focuses on information-sharing issues that may affect health care
anti-fraud enforcement efforts. Specifically, this report discusses
(1) the extent of federal and state immunity laws protecting persons
who report health care fraud-related information and (2) the
advantages and disadvantages of establishing a centralized health
care fraud database to enhance information sharing and support
enforcement efforts.
BACKGROUND
---------------------------------------------------------- Chapter 0:2
The size and complexity of the health care industry present
considerable challenges for government and industry fraud
investigators. Federal enforcement agencies responsible for
investigating health care fraud include the Federal Bureau of
Investigation (FBI); the U.S. Postal Inspection Service; and various
Offices of Inspector General, such as that within the Department of
Health and Human Services (HHS). Moreover, most states have
established insurance fraud bureaus or units that investigate health
care fraud. Also, many private insurance carriers have established
special units to investigate fraud within their health plans. In
addition, a group of private sector health insurers and public sector
enforcement agencies has established the National Health Care
Anti-Fraud Association (NHCAA), which represents a cooperative effort
to address health care fraud.
Over the years, the administration and Congress have considered
proposals to enhance information sharing among the federal, state,
and private entities involved in health care anti-fraud enforcement.
In considering such proposals, decisionmakers have been confronted
with the inherent conflicts between the dual public policy goals of
(1) supporting the role of private entities in the investigation and
prosecution of fraud and (2) protecting innocent people and
organizations against unsubstantiated allegations made in bad faith
or with malice. On the one hand, some proposals have called for
federal immunity legislation to provide protection--from defamation
of character and other civil lawsuits--for persons (including private
insurance company employees) who report suspected fraud. The purpose
of such immunity law would be to encourage the reporting of suspected
fraud to law enforcement agencies.
On the other hand, concerns have been raised about the need to
incorporate safeguards to provide individuals with protection against
bad faith allegations. Safeguards that have been considered include
requirements governing the specificity and credibility of reported
information and provisions giving individuals legal recourse against
bad faith allegations that could seriously damage an individual's
life and livelihood if publicly disclosed.
Other proposals have called for establishment of a national,
centralized database of health care fraud-related information. The
purpose of such a database would be to coordinate federal, state, and
local anti-fraud enforcement efforts by providing a national data
collection program for information about persons or entities involved
in health care fraud.
To obtain perspectives on these issues, GAO contacted key government
and private organizations.\1 GAO also surveyed all 50 state insurance
commissioners.
--------------------
\1 GAO visited 12 offices of federal agencies (U.S. Attorney, FBI,
and Postal Inspection Service offices); 6 offices of state agencies
(insurance departments, fraud bureaus, and attorney general offices);
and 13 private insurance companies. Except for 2 insurers located in
Connecticut and 3 in Illinois, all of the 31 offices visited were
located in 4 judgmentally selected states--Florida, Maryland,
Massachusetts, and Texas. GAO also contacted the American Medical
Association, the Health Insurance Association of America, the
National Insurance Crime Bureau, and the National Health Care
Anti-Fraud Association.
RESULTS IN BRIEF
---------------------------------------------------------- Chapter 0:3
GAO identified no immunity provision on the federal level designed to
protect persons who report suspected health care fraud to law
enforcement agencies. One existing federal immunity provision would
protect persons reporting health care fraud-related information, but
it applies only to persons who report information about the Medicare
and Medicaid programs to peer review contractors operating under
those programs. Private insurers and other health care claims
processors are provided no federal immunity protection for reporting
health care fraud-related information concerning other public or
private health plans. While most states have enacted immunity laws
protecting insurers, these laws vary in terms of the protection
provided. Legislation (S. 1088, 104th Cong.) awaiting congressional
consideration at the time of GAO's review would expand existing
federal immunity law to protect persons providing information about
fraud in any health plan (public or private) to either HHS or
Justice.
Almost all of the federal and state officials--as well as
representatives of insurance companies and health care providers--
interviewed by GAO supported the concept of an expanded federal
immunity law, including appropriate safeguards to protect against
unsubstantiated allegations made in bad faith. The responses to
GAO's survey of state insurance commissioners indicated broad support
for both state and federal immunity laws. Many of the field
officials GAO interviewed said that a federal immunity law, to be
most useful, should be broader than the provisions included in S.
1088 by providing immunity protection to (1) persons sharing
fraud-related information with any applicable federal or state
enforcement entity and (2) insurers sharing such information with
other insurers. Some of these officials noted that the latter
approach involves greater risks because of the possibility that
insurers could use the information inappropriately to discriminate
against health care providers.
There is no centralized national database to track criminal activity
in the health care system that would assist federal, state, and
industry anti-fraud enforcement efforts. Recent congressional and
administration proposals would have established health care fraud
databases containing information about health care system
participants (such as license revocations and criminal convictions)
and ongoing health care fraud investigations, but none of these were
implemented. S. 1088 proposes to establish a centralized health
care fraud database of final adverse actions--including criminal
convictions, civil judgments, and negative licensing or certification
actions--accessible by federal and state government agencies and
health insurers.
Most of the law enforcement and industry officials GAO interviewed
saw benefits in and supported the establishment of a database of
final adverse actions; however, many of the others did not consider
the potential benefits essential to enforcement efforts. Many of the
officials also suggested that enforcement benefits probably would
accrue from centralized databases that contain information about (1)
ongoing health care fraud investigations and/or (2) suspected fraud
reported by persons to enforcement or regulatory agencies. However,
officials were concerned that such databases pose risks in terms of
unauthorized disclosure and use of the information. In addition to
these issues, there are also uncertainties about the costs of
developing and operating a centralized database.
PRINCIPAL FINDINGS
---------------------------------------------------------- Chapter 0:4
EXISTING FEDERAL AND STATE
IMMUNITY LAWS ARE LIMITED
-------------------------------------------------------- Chapter 0:4.1
GAO identified no immunity provision on the federal level designed to
protect persons who report health care fraud-related information to
law enforcement agencies. One provision of the Social Security Act
(codified at 42 U.S.C. 1320c-6(a)) would protect persons reporting
fraud-related information about Medicare and Medicaid to HHS peer
review contractors. However, this immunity provision is limited in
terms of the protection it provides. For instance, the immunity law
does not protect persons who report Medicare and Medicaid fraud
directly to federal law enforcement authorities, such as the FBI or
Postal Inspection Service. Further, it does not protect persons who
report suspected fraud involving other public or private sector
health plans.
State immunity laws also provide protection to persons reporting
suspected health care fraud, but not all states have enacted such
laws and the protection provided varies. Responses to GAO's July
1995 survey of state insurance commissioners revealed that 38 of the
50 states had enacted immunity laws protecting the sharing of health
care fraud-related information. Twenty-four of the states
specifically protect persons reporting fraud to state and federal
agencies, but 10 states protect only persons reporting to state
agencies. Eight states indicated that they provide immunity
protection for insurers sharing information with other insurers. In
each of the 38 states, the immunity provision is contingent on the
absence of malice or bad faith on the part of the person reporting
fraud.
EXPANDED FEDERAL IMMUNITY
LAW WITH PROPER SAFEGUARDS
IS BROADLY SUPPORTED
-------------------------------------------------------- Chapter 0:4.2
A recent congressional immunity proposal, included in S. 1088, would
expand existing federal immunity protection by protecting persons who
report any public or private health care fraud-related information to
either HHS or Justice. However, this proposed immunity does not
address the reporting of fraud-related information to other
government investigative and prosecutive entities involved in
anti-fraud enforcement--including federal agencies such as the Postal
Inspection Service and state agencies such as the offices of
attorneys general. It also does not address information sharing
between insurance company investigative units, a protection that has
been adopted in eight states.
Almost all of the officials GAO interviewed at 31 field locations in
6 states supported the concept of a broad federal immunity law with
proper safeguards to protect against inappropriate use. These
officials generally stated that such an immunity law would provide a
consistent level of protection in all the states and might encourage
more insurers to report suspected fraud to enforcement agencies.
GAO's survey of state insurance commissioners also indicated broad
support for an expanded federal immunity law, with the expectation
that such a law would be effective in facilitating information
sharing between insurers and enforcement/regulatory authorities.
About half of the officials GAO interviewed favored expanding the
current legislative proposal to protect (1) persons reporting
fraud-related information to enforcement entities other than HHS and
Justice and (2) insurers sharing fraud-related information with other
insurers.
There was some negative reaction to the concept of an expanded
federal immunity law. For example, one official believed state
legislatures were adequately addressing this issue while another
believed some insurers would, as a business decision, still avoid
reporting suspected fraud. Cited as a potential drawback to
providing immunity to insurers that share information with other
insurers was the possibility that they could use the information
inappropriately, such as to deny claims or disallow employment
opportunities for physicians or other health care providers.
CENTRALIZED DATABASE MAY BE
BENEFICIAL BUT NOT WITHOUT
RISK
-------------------------------------------------------- Chapter 0:4.3
There is no comprehensive source of health care fraud information
that investigators can access to assist in their anti-fraud
enforcement efforts. For example, the FBI's National Crime
Information Center contains useful information about criminal
histories, but it is accessible only by authorized enforcement
agencies. Information maintained by the National Association of
Insurance Commissioners is publicly available but deals only with
insurance companies and agents, not health practitioners. NHCAA's
Provider Indexing Network System contains information about
enforcement actions taken against health providers, as well as
ongoing health care fraud investigations. However, it is directly
accessible only by NHCAA members and does not contain comprehensive
nationwide information. To improve access to information about
health care fraud, S. 1088 proposes to establish a national database
of final adverse actions--i.e., criminal convictions, civil
judgments, and negative licensing or certification actions--taken
against health care providers, suppliers, and practitioners. The
database would be accessible by law enforcement and regulatory
agencies and insurers.
Officials at 17 of the 31 field offices GAO visited indicated that
they favored the establishment of a centralized health care fraud
database of final adverse actions. These officials cited the benefit
of having access to background information about providers and
practitioners in a single location, which would make the early stages
of an investigation more efficient. Moreover, GAO's survey of
insurance commissioners found that almost all of the respondents who
investigated health care fraud during 1994 favored a database of
final adverse actions. While supporting the concept of a final
adverse actions database, however, many of the other officials GAO
interviewed believed it would not be an essential element of an
effective anti-fraud enforcement effort but might provide some
investigative benefits. In addition, almost all of these officials
expressed concerns about maintaining security over the information in
the database, as well as the possibility that the information in the
database would be misused.
As an alternative to final adverse actions, many officials GAO
interviewed suggested that information about ongoing health care
fraud investigations and reports of suspected fraud would be useful
to include in a centralized database. Officials at 13 of the 31
offices supported a database with ongoing investigative information,
saying, for example, it could help eliminate investigative
duplication by identifying multiple agencies investigating the same
subject. Officials at eight offices supported a database containing
reports of suspected fraud, with one official saying that a suspected
fraud database would allow government investigators to better
identify fraudulent schemes involving multiple insurers. The
officials noted that these alternatives would pose more risks than a
database of final adverse actions (which consists of publicly
available information), due to the sensitivity of the information and
the resulting need for security to prevent inappropriate disclosure
and possible misuse.
In addition to the risks posed by inappropriate disclosure or misuse
of information in the database, the establishment of a centralized
database also involves uncertainties about development and operating
costs that have not been addressed. GAO identified a large,
federally funded, adverse actions database--the National Practitioner
Data Bank--which, although it does not deal specifically with health
care fraud and is not used by law enforcement agencies, might serve
to illustrate the cost of a health care fraud database. Containing
over 97,000 records and receiving over 1 million inquiries annually,
the Data Bank has cost about $24 million to establish and operate
over the past 7 years.
RECOMMENDATIONS
---------------------------------------------------------- Chapter 0:5
GAO is making no recommendations in this report.
COMMENTS
---------------------------------------------------------- Chapter 0:6
GAO solicited comments on a draft of this report from the Department
of Justice, NHCAA, and the American Medical Association. Justice
provided technical and clarifying comments, which GAO incorporated
where appropriate. NHCAA and the American Medical Association
provided written comments, which are presented and evaluated in
chapters 2 and 3. NHCAA said that it strongly supports the adoption
of an effective federal immunity statute and believes that such a
statute is needed to adequately protect private payers that
participate in multistate fraud investigations. Also, NHCAA
commented that a centralized database, if properly created with
complete information and appropriate access for public and private
payers, could be an excellent supplemental tool for fighting health
care fraud. The American Medical Association said that it supports
granting immunity to those reporting incidents of health care fraud,
provided adequate safeguards are established so that the nature of
the conduct reported is specific, physician's medical decisions are
not grounds for accusations of fraud, and there is legal recourse for
"bad faith" reporting. On the other hand, the Association also said
that a centralized database may not be the best use of limited
enforcement resources and that there are many problems inherent in
establishing and maintaining such a database.
INTRODUCTION
============================================================ Chapter 1
The size of the health care sector and sheer volume of money involved
make it an attractive target for fraud. Expected to total over $1
trillion in fiscal year 1995, health care spending will consume
almost 15 percent of the gross national product, an increase from
just over 12 percent in 1990. The amount of fraud within the health
care system is, by its nature, impossible to accurately determine.
We have previously reported\1 that 10 percent of all health care
expenditures may be lost to fraud and abuse.\2 Similarly, industry
estimates have placed the annual losses due solely to fraud at
somewhere between 3 and 10 percent of all health care expenditures
(between $30 billion and $100 billion based on estimated fiscal 1995
expenditures).\3 By whatever estimate, this represents a significant
monetary drain on our health care system.
Health care fraud can take many forms, reach all facets of the
industry, and be perpetrated by persons both within and outside the
health care industry. A recent report by the Federal Bureau of
Investigation (FBI), for example, notes that vulnerabilities to fraud
exist throughout the entire health care system, and patterns of fraud
are so pervasive that systemic criminal activity is accepted as a
"way of doing business" in many segments of the health care
industry.\4 A 1995 Department of Justice (DOJ) report on health care
fraud\5 states that fraud is being perpetrated not only by individual
physicians, but also by public corporations, medical equipment
dealers, laboratories, hospitals, nursing homes, and individuals who
provide no health care at all but prey upon the system with
fraudulent scams. As the DOJ report goes on to note, everyone pays
the price for health care fraud, as reflected by higher insurance
premiums, increased costs for medical services and equipment, and
greater expenditures for Medicare and other public health care
programs.
Successful health care fraud prosecutions illustrate the types of
fraudulent activities taking place. Ranging from simple schemes to
complex conspiracies, some frauds have even put lives at risk. As
described in the 1995 DOJ report, examples of fraudulent activities
that have been federally prosecuted include the following:
-- An optometrist defrauded Medicare and private insurance
companies of over $1.5 million simply by billing for services
that were unnecessary or not rendered.
-- A husband and wife set up a fraudulent network of offshore
corporations and entities, which they used to defraud a private
insurance company as well as employer insurance networks in
several states. This scheme left policyholders with
approximately $6 million in unpaid medical and reinsurance
claims.
-- A medical supplier fraudulently submitted false statements to
the Food and Drug Administration about the efficacy of heart
catheters. Three persons died, and 22 others required emergency
heart bypass surgery when these devices were distributed to
hospitals and physicians.
We have previously reported that several serious fraud problems are
facing public and private payers.\6 First, large financial losses to
the health care system can occur as a result of even a single scheme.
Second, fraudulent providers can bill insurers with relative ease.
Third, efforts to prosecute and recover losses from those involved in
the schemes are costly; even convictions often do not result in the
recovery of losses. Finally, fraudulent schemes can be quickly
replicated throughout the health care system. Moreover, as discussed
below, a multiplicity of health care payers--each with its own
operating policies and subject to various enforcement
agencies--further complicates health care fraud enforcement efforts.
--------------------
\1 Health Insurance: Vulnerable Payers Lose Billions to Fraud and
Abuse (GAO/HRD-92-69, May 7, 1992).
\2 Both fraud and abuse result in inappropriate expenditures. Fraud
generally involves a willful or knowing act, while abuse involves
actions that are inconsistent with acceptable business and medical
practices.
\3 Testimony of William J. Mahon, Executive Director, National
Health Care Anti-Fraud Association, before the House Subcommittee on
Crime and Criminal Justice, Committee on the Judiciary, July 19,
1994.
\4 Health Care Fraud: Medical Fraud and Legislative Remedies,
Federal Bureau of Investigation. December 1994.
\5 Department of Justice Health Care Fraud Report, Fiscal Year 1994.
March 2, 1995.
\6 Health Insurance: Legal and Resource Constraints Complicate
Efforts to Curb Fraud and Abuse (GAO/T-HRD-93-3, Feb. 4, 1993); and
Health Insurance: Vulnerable Payers Lose Billions to Fraud and Abuse
(GAO/HRD-92-69, May 7, 1992).
SIZE AND COMPLEXITY OF HEALTH
CARE SYSTEM COMPLICATES
ENFORCEMENT EFFORTS
---------------------------------------------------------- Chapter 1:1
Of the estimated $884 billion spent on health care in 1993, about 44
percent was paid with public sector dollars, and 56 percent was paid
with private sector dollars. Federal health insurance programs--such
as Medicare, Medicaid, the Veterans Health Administration, the
Federal Employees' Health Benefit Program, and the Civilian Health
and Medical Program of the Uniformed Services--collectively accounted
for almost three-quarters of all public health care expenditures.
Private health insurance--which includes the various Blue Cross/Blue
Shield plans, a host of other private health insurance companies, and
many employers who self-insure--accounted for about 60 percent of all
private sector expenditures.\7
Public and private payers in the current health care system number
over 1,000. Generally, each payer has its own system of processing
health care claims and reimbursing providers. Payers may have
different rules, reimbursement policies, claim forms, multiple
identification numbers, coding systems, and billing procedures. When
combined with the sheer size of the health care industry--an
estimated 4 billion health claims are processed annually--this
complex system of payers presents considerable challenges for those
organizations responsible for detecting and pursuing health care
fraud.
Within this complex system, various federal enforcement agencies have
responsibility for investigating health care fraud. For example, the
Department of Health and Human Services (HHS) Office of Inspector
General has primary responsibility for the Medicare and Medicaid
programs, the Department of Veterans Affairs Office of Inspector
General has primary responsibility for the Veterans Health
Administration, the Department of Defense Criminal Investigative
Service has primary responsibility for the Civilian Health and
Medical Program of the Uniformed Services, and the Office of
Personnel Management Office of Inspector General has primary
responsibility for the Federal Employees' Health Benefits Program.
The FBI and the U.S. Postal Inspection Service, under existing
federal criminal statutes, have broader authority to investigate
fraud in any public or private program.\8 Other agencies that are
involved in health care fraud enforcement include the Drug
Enforcement Administration, Internal Revenue Service, and Department
of Labor.
In addition to federal enforcement agencies, states also have health
care fraud enforcement responsibility. Regarding Medicaid, for
example, while HHS is responsible for oversight of the program, the
agency has largely delegated primary investigative enforcement
responsibility to state Medicaid Fraud Control Units,\9 which are
predominately funded through federal grants. Regarding private
insurance, some states have established insurance fraud bureaus that
investigate health care fraud; in other states, the department of
insurance has a fraud unit that investigates fraud. While these
state agencies can often pursue administrative and civil penalties
for health care fraud, most criminal enforcement authority is in the
hands of local prosecutors and attorneys general.
The private sector is also active in health care fraud enforcement.
Private insurers have established active anti-fraud programs and
special investigative units that work with a wide range of public law
enforcement agencies to investigate fraud. These units may report
fraud cases to federal or state agencies with health care fraud
enforcement responsibility. In addition, a group of private sector
health insurers and public sector law enforcement agencies has
established the National Health Care Anti-Fraud Association (NHCAA),
which represents a cooperative effort to prevent health care fraud
and improve capabilities to detect, investigate, and prosecute such
fraud.\10 The NHCAA conducts anti-fraud education seminars, provides
a forum for members to share information on fraudulent schemes, and
assists law enforcement in the investigation and prosecution of
health care fraud.
As shown in figure 1.1, while public sector health care fraud is
primarily the responsibility of federal enforcement and program
agencies, private sector fraud can be pursued by both state and
federal enforcement agencies. In some states, private insurers are
required by law to report suspected fraud to state enforcement
agencies, while reports to federal enforcement agencies are optional
at the discretion of the insurer. In addition to the reporting of
suspected fraud from insurers to federal and state authorities,
fraud-related information can also be shared between federal and
state authorities. In commenting on a draft of this report, DOJ
officials told us that the Department has placed increasing emphasis
on working with the Medicaid Fraud Control Units and NHCAA.
Figure 1.1: Illustration of
the Complex Health Care Fraud
Enforcement Environment
(See figure in printed
edition.)
\a In addition to criminal prosecutions (which may involve public or
private insurer fraud), the Justice Department also pursues civil
enforcement actions, particularly where federal health insurance
programs have been defrauded.
Source: Developed by GAO on
the basis of contacts with
applicable organizations (see
app. I).
(See figure in printed
edition.)
--------------------
\7 The remaining private sector expenditures were out-of-pocket
consumer expenditures (32 percent), including deductibles and
co-insurance required by public and private insurers; and nonconsumer
expenditures (8 percent), such as research and construction.
\8 Excepting Medicare and Medicaid, there is no specific federal
health care fraud criminal or civil statute. Therefore, criminal
fraud affecting other public or private health programs is typically
investigated under general federal criminal statutes. Since most
fraudulent schemes involve use of the mail, the mail fraud statute
(18 U.S.C. 1341) is the most commonly used federal criminal
authority. In the civil area, most health care fraud cases are
brought as violations of the False Claims Act, 31 U.S.C. Sec. 3729,
et seq.
\9 The Omnibus Budget Reconciliation Act of 1993 required all states
to establish a Medicaid Fraud Control Unit by January 1995, unless a
state can show that a fraud unit would not be cost effective because
there is minimal Medicaid fraud in the state. As of January 1996, 47
states had active Medicaid Fraud Control Units.
\10 Founded in 1985, NHCAA's membership includes 70 private sector
corporate members, as well as public sector participants from the
Offices of Inspector General at the U.S. Departments of Defense,
HHS, Labor, and Veterans Affairs and at the Office of Personnel
Management; the Health Care Financing Administration; the criminal
investigation division of the U.S. Postal Inspection Service; and
the National Association of Medicaid Fraud Control Units. NHCAA also
maintains formal "law enforcement liaison" relationships with DOJ,
FBI, the Federal Trade Commission's Bureau of Consumer Affairs, and
the Internal Revenue Service's Criminal Investigation Division.
NHCAA also numbers more than 800 individual members from the ranks of
these private and public sector organizations and from other health
insurance companies, self-insured corporations, and federal and state
agencies. In 1993, NHCAA member insurers represented an estimated
$110 billion in direct health benefits paid.
INFORMATION SHARING IS CRITICAL
TO EFFECTIVE ENFORCEMENT
EFFORTS
---------------------------------------------------------- Chapter 1:2
Federal law enforcement officials have characterized health care
fraud investigations as some of the most complex of all white- collar
crime cases. Over the years, however, the scope and complexity of
health care fraud has changed. In 1994, for example, HHS reported
that:
"In the 1970s, we found that we were largely dealing with
individual providers who were involved in relatively
uncomplicated schemes, such as filing false claims which
resulted in a few thousand dollars of damage to the Medicare
program. Today, it is more common to see cases involving groups
of people who defraud the Government. Some of the schemes are
relatively complex, often involving the use of sophisticated
computer techniques, complicated business arrangements, and
multiple locations across state lines. These crimes can cause
losses in the tens of millions of dollars to Medicare and
Medicaid, as well as to other public and private health
insurance programs."\11
Along with the increasing complexity of health care fraud, law
enforcement and regulatory agencies and insurers have recognized the
importance of coordinating their enforcement efforts and exploring
methods for sharing health care fraud information. A health care
reform bill introduced before the U.S. Senate in November of 1993
identified a "national need" to coordinate health care fraud-related
information and went on to state that control of fraud and abuse in
health care services warrants greater efforts of coordination than
those that can be undertaken by individual states or the various
federal, state, and local law enforcement programs.\12
A coordinated enforcement effort has to involve not only public law
enforcement agencies, but also the private sector. Given their
position of having daily interaction with health providers, private
insurers often possess more information about a provider's activities
than state and federal agencies. This position, coupled with their
own incentive to reduce costs, has made insurers another source of
information for government investigators and prosecutors.
Because many insurers have established special investigative units
that pursue fraud, these private sector resources can be used to
leverage existing public sector investigative resources. The
insurance industry has developed sophisticated methods for detecting
fraud, and development of contacts with the industry can provide a
valuable source of fraud case referrals to the federal government.
For example, the FBI recently reported that on the basis of fraud
referrals by several private insurance company investigative units,
government investigators were able to identify a medical billing
company that defrauded $1.5 million from insurance companies across
the country.\13 Moreover, because fraudulent schemes often target
public and private programs simultaneously, an active anti-fraud
enforcement effort involving private insurers may lead to the
discovery of additional fraud involving public sector health
programs.
In recent years, there have been various proposals designed to
enhance information sharing among federal, state, and private
entities involved in health care fraud enforcement. Some proposals,
for example, have called for federal immunity legislation to provide
protection for persons who report suspected fraud. The purpose of
such immunity laws is to encourage insurers and private individuals
to report suspected fraud to law enforcement agencies by protecting
the individuals from subsequent civil actions. Other proposals have
called for establishment of a national, centralized database of
health care fraud-related information. The purpose of a centralized
database would be to provide public and private sector fraud
investigators with easy access to information about health care fraud
activity nationwide and to enhance coordination of investigative
efforts among insurers and law enforcement agencies.\14
--------------------
\11 Testimony of Michael Mangano, Principal Deputy Inspector General,
HHS, before the Senate Committee on the Judiciary, May 25, 1994.
\12 S. 1770, "Health Equity and Access Reform Today Act of 1993,"
Title IV, Section 4121; introduced by Senator John Chafee on November
22, 1993.
\13 Testimony of Thomas T. Kubic, Chief, Financial Crimes Section,
Criminal Investigative Division, FBI, before the House Subcommittee
on Crime and Criminal Justice, Committee on the Judiciary, July 19,
1994.
\14 For more detail on the immunity and centralized database issues,
see chapters 2 and 3, respectively.
OBJECTIVES, SCOPE, AND
METHODOLOGY
---------------------------------------------------------- Chapter 1:3
In an October 6, 1993, letter, the former Chairman of the House
Subcommittee on Information, Justice, Transportation, and
Agriculture, Committee on Government Operations,\15 asked us to
broadly examine
health care fraud enforcement issues. On the basis of this request
and subsequent discussions with the new Subcommittee's Ranking
Minority Member, we agreed to focus our work on questions about
information-sharing issues that may affect health care fraud
enforcement efforts, specifically:
-- What is the extent of federal and state immunity laws protecting
persons who report health care fraud-related information (see
ch. 2)?
-- What evidence exists for and against establishing a centralized
health care fraud database to enhance information sharing and
support enforcement efforts (see ch. 3)?
--------------------
\15 During the 104th Congress, this Subcommittee was abolished.
Jurisdiction for this request passed to the Ranking Minority Member
of the newly established Subcommittee on National Security,
International Affairs and Criminal Justice, Committee on Government
Reform and Oversight.
LITERATURE REVIEW
-------------------------------------------------------- Chapter 1:3.1
To address these two questions, we first reviewed relevant literature
to obtain a broad understanding of the importance of information
sharing in anti-fraud enforcement efforts. This literature included
reports issued by government and private sector organizations--such
as DOJ, HHS, and NHCAA--that are responsible for managing and/or
overseeing health care anti-fraud activities. We also reviewed the
provisions of relevant proposals presented in recent years by
administration and congressional sponsors that would enhance
information sharing among the various federal, state, and private
entities responsible for health care fraud enforcement. These
included a 1992 proposal by the Bush administration, as well as
proposals introduced in House and Senate bills during 1993 and 1995,
respectively.
NATIONAL PERSPECTIVES
-------------------------------------------------------- Chapter 1:3.2
To obtain a broad understanding of both the immunity and the
centralized database issues, we contacted key governmental and
private organizations that could provide nationwide perspectives.
Federal government contacts included officials at DOJ, FBI, the U.S.
Postal Inspection Service, and the Executive Office for U.S.
Attorneys, as well as Office of Inspector General officials at the
principal agencies responsible for managing major federal health care
programs--HHS, the Office of Personnel Management, and the Department
of Defense. Private sector contacts--representing industry,
professional, and special interest organizations--included the
American Medical Association, the Health Insurance Association of
America, the National Insurance Crime Bureau, and NHCAA.\16 In
meetings with knowledgeable officials at several of these
governmental and private organizations, we also obtained perspectives
on S. 1088 (the Health Care Fraud and Abuse Prevention Act of
1995),\17 which contains immunity and centralized database provisions
and was pending further congressional consideration at the time of
our review.
--------------------
\16 The American Medical Association represents physicians,
residents, and medical students; the Health Insurance Association of
America represents companies that write and sell health insurance.
Both Associations provide member services, as well as monitor
legislation and regulations affecting their membership. The National
Insurance Crime Bureau is discussed in more detail in appendix IV.
\17 This bill was originally introduced in January 1995 as S. 245
and was superseded by S. 1088 in July 1995. Both bills contained
essentially identical immunity and centralized database provisions.
STATE SELECTION AND VISITS
-------------------------------------------------------- Chapter 1:3.3
To obtain additional perspectives on the immunity and centralized
database issues, we contacted relevant public and private sector
officials in four states--Florida, Maryland, Massachusetts, and Texas
(see app. I). In judgmentally choosing these four states, we
considered various factors, including (1) the status or scope of the
state's immunity law, (2) the extent of anti-fraud activities
undertaken by applicable enforcement agencies, and (3) selection
suggestions made to us by law enforcement officials and insurance
industry organizations. To the extent practical with just four
states, we wanted the selections to reflect a range of immunity
and/or anti-fraud enforcement environments. For example, at the time
we made the selections:
-- Maryland had no state immunity law protecting persons who
reported suspected health care fraud, while Massachusetts'
immunity law protected only reports made to the state fraud
bureau. Florida and Texas both had broader immunity laws that
protected disclosures made to both federal and state
agencies.\18
-- Florida and Texas both had state fraud units within the
Department of Insurance; Maryland and Massachusetts had
independent or stand-alone fraud bureaus.\19 Further, an FBI
official told us that FBI field offices in these four states
were among the most active in private sector health care fraud
investigations.
In visiting each state, we met with officials from various federal
and state prosecutive, investigative, and regulatory agencies--U.S.
Attorneys offices, FBI and U.S. Postal Inspection Service field
offices, state departments of insurance and fraud bureaus, and state
attorneys general. We also met with general counsel and special
investigative unit officials at selected private insurance companies
in these four states. As appendix I shows, our total number of
contacts in these 4 states included 12 federal offices, 6 state
offices, and 8 private insurance companies. To obtain additional
insurance company perspectives, we also visited five national
insurers at their headquarters located in Connecticut and Illinois,
respectively. Thus, in total, we visited 13 private insurance
companies.\20
At each organization visited, we interviewed those officials
responsible for anti-fraud enforcement efforts. Regarding the
immunity issue, we obtained information and views about (1) how
fraud-related information is being shared between investigative and
prosecutive entities, (2) what impact immunity laws (or the absence
of such laws) have had on the willingness of individuals to report
suspected fraud, and (3) whether a federal immunity law is needed to
enhance information sharing. Regarding the centralized database
issue, we obtained information about (1) how computerized databases
are being used in investigating fraud; (2) whether a national,
centralized database is needed to enhance enforcement efforts; and
(3) what factors should be considered in establishing such a
database. Our direct observations about health care fraud
enforcement issues are limited to the locations visited and may not
reflect circumstances or conditions in other locations.
--------------------
\18 During 1995, both Florida and Texas expanded their immunity laws
to protect the sharing of fraud-related information between insurance
companies, and Maryland enacted a state immunity law. Our field work
focused on conditions before these laws took effect.
\19 During 1995, Maryland's fraud bureau was placed under the
authority of the state insurance department.
\20 We judgmentally selected and visited insurance companies
suggested to us by various industry or regulatory organizations,
including NHCAA, the Health Insurance Association of America, and the
National Association of Insurance Commissioners. The selections were
based, in part, upon the availability and/or willingness of company
officials to meet with us.
SURVEY OF STATE INSURANCE
COMMISSIONERS
-------------------------------------------------------- Chapter 1:3.4
To obtain information on the immunity and centralized database issues
from state officials responsible for insurance regulation, we mailed
a questionnaire to all 50 state insurance commissioners (or to an
equivalent state insurance regulatory official). We developed and
pretested the questionnaire with input from officials with the
National Association of Insurance Commissioners and an official with
the survey population. We mailed the questionnaire in July 1995, and
we received responses from all 50 states between July and November
1995. A copy of the questionnaire, with a tabulation of responses to
each applicable question, is presented in appendix III.
Although we surveyed and received responses from the population of
state insurance commissioners, the practical difficulties of
conducting any survey may, nonetheless, introduce unintended
nonsampling errors. For example, variations in the wording of
questions or the sources of information available to the respondents
can introduce variability into the survey results. However, as noted
above, in order to minimize these errors, we pretested our survey.
Also, all survey data were verified during data entry and all
computer analyses were reviewed by a second independent analyst.
We did our work from September 1994 through December 1995 in
accordance with generally accepted government auditing standards.
NHCAA and the American Medical Association provided written comments
on a draft of this report. These comments are included in appendixes
V and VI and are summarized and evaluated at the end of chapters 2
and 3. DOJ provided technical and clarifying comments, which we
incorporated where appropriate in this report.
CONCEPT OF EXPANDED FEDERAL
IMMUNITY LAW WITH APPROPRIATE
SAFEGUARDS IS BROADLY SUPPORTED
============================================================ Chapter 2
The purpose of immunity statutes is to encourage insurers and private
individuals to report suspected fraud by protecting them from civil
claims subsequently arising from insurance fraud investigations. We
identified no federal law that protects persons providing health care
fraud-related information to law enforcement agencies. However,
there are some related immunity provisions on the federal level.
Regarding Medicare and Medicaid, for example, current federal
statutory law providing immunity from liability is limited to persons
reporting information to peer review contractors about Medicare and
Medicaid health care services. This immunity protection is further
limited in that it does not apply to persons reporting fraud-related
information to federal authorities, such as HHS, the FBI, and the
U.S. Postal Inspection Service. It also does not apply to persons
who report suspected health care fraud involving private sector
insurance, even if the suspected fraud is reported to a federal
agency. While most states have enacted immunity laws that protect
persons who report suspected health care fraud more broadly than
current federal law, the laws vary considerably. For example, some
state laws protect sharing of suspected fraud information with any
federal or state law enforcement authority, whereas some states
protect information sharing only with certain state authorities.
In recent years, various health care anti-fraud proposals (some
included in health care reform bills) have been introduced by the
administration and Congress to, among other matters, provide a
broader federal immunity statute. The health care reform bills were
not enacted, however, and at the time of our review, one health care
anti-fraud bill (S. 1088)--which was awaiting congressional
consideration--would provide immunity protection more broadly than
current federal law. The health insurance and medical industry
associations we contacted supported the concept of a federal immunity
law. Additionally, nearly two-thirds of the federal and state
government fraud investigators and prosecutors and 12 of 13 insurance
company representatives we interviewed supported a federal immunity
law. In fact, many of the individuals we spoke with thought that
federal immunity protection should be broader than the immunity
proposed under S. 1088.
IMMUNITY PROTECTS PERSONS WHO
REPORT SUSPECTED FRAUD
---------------------------------------------------------- Chapter 2:1
Broadly viewed, public policy supports both encouraging private
entities to participate in the investigation and prosecution of fraud
and providing protection to innocent people against unsubstantiated
allegations made in bad faith or with malice. That is, given the
public interest in crime prevention, reasonable private participation
in the investigation and prosecution of crime is a desirable
objective. Immunity statutes are one way of encouraging this
objective. On the other hand, concerns have been raised about the
need to incorporate safeguards to provide individuals with protection
against bad faith allegations. Safeguards that have been considered
include requirements governing the specificity and credibility of
reported information and provisions giving individuals legal recourse
against bad faith allegations that could seriously damage an
individual's life and livelihood if publicly disclosed.
Immunity statutes represent part of the general public policy to
encourage private involvement in the prosecution of crime by
protecting persons against civil claims subsequently arising from
insurance fraud investigations. For instance, the reporting of an
individual suspected of fraud may result in the named, suspected
party filing a civil suit against the reporter claiming defamation of
character.\1 Immunity statutes typically include limiting language,
such as "in the absence of malice or bad faith," which allows an
individual claiming defamation the opportunity to show that the
reporting party intended to harm the individual. However, where
there is an applicable immunity statute and the individual claiming
defamation is not able to show malice or bad faith, the reporting
party is provided protection from these types of lawsuits.
It is important to note that a number of civil claims can be raised
against insurers stemming from fraud investigations and, in most
cases, there is no way to prevent an aggrieved party from filing a
civil lawsuit against an individual who reports suspected fraud. An
immunity statute does, however, make it more difficult for a claimant
to prevail. For example, in a 1992 civil action in Ohio,\2 an
individual brought action for damages against a health insurer for
reporting suspected fraud to the state insurance department. The
focus of the case was whether the plaintiff could recover from the
insurer for defamation. The federal district court held that the
insurer faced no civil liability for reporting suspected fraud
because Ohio law provides immunity to persons who furnish
information--in good faith and without malice or fraud--to the Ohio
Department of Insurance.\3 Since the court found nothing in the
record suggesting bad faith, the insurer prevailed in its motion for
summary judgment.
--------------------
\1 "Defamation" is defined as an intentionally false communication,
either written or spoken, that injures someone's reputation or good
name.
\2 Mann v. American Packaging Corporation, 809 F. Supp. 32 (S.D.
Ohio 1992).
\3 Ohio Revised Code section 3999.31(B) provides immunity, in the
absence of fraud or bad faith, for any person providing information
concerning insurance fraud to the state's Division of Insurance Fraud
or Department of Insurance.
CURRENT FEDERAL IMMUNITY LAW IS
LIMITED IN ITS SCOPE
---------------------------------------------------------- Chapter 2:2
We found no immunity provision on the federal level designed to
protect persons who report suspected health care fraud to law
enforcement agencies. However, with respect to the Medicare and
Medicaid programs, section 1157 of the Social Security Act, as
amended (codified at 42 U.S.C. 1320c-6(a)), would provide immunity,
under certain circumstances, to persons who report health care
fraud-related information. This law specifically states the
following:
"Notwithstanding any other provision of law, no person providing
information to any [peer review] organization having a contract
with the Secretary [of HHS] under this part shall be held, by
reason of having provided such information, to have violated any
criminal law, or to be civilly liable under any law of the
United States or of any State (or political subdivision thereof)
unless--(1) such information is unrelated to the performance of
the contract of such organization; or (2) such information is
false and the person providing it knew, or had reason to
believe, that such information was false."
Our review did not identify any similar federal statutory immunity
provisions applicable to other government health care programs, such
as the Federal Employees' Health Benefits Program (managed by the
Office of Personnel Management) and the Civilian Health and Medical
Program of the Uniformed Services.\4
As indicated, the Medicare/Medicaid statute specifically protects
only information disclosures made to a peer review organization under
contract with the Secretary of HHS. Under federal law, the Secretary
enters into contracts with peer review organizations for the purpose
of promoting the effective, efficient, and economical delivery of
quality health care services under Medicare. Composed primarily of
health care practitioners from within a geographical area, these
organizations perform quality assurance and utilization reviews of
health care providers seeking reimbursement for their Medicare
services. If a peer review organization determines that a
practitioner or provider has persisted in violating his obligation to
provide services that (1) are medically necessary, (2) meet
professionally recognized standards of care, and (3) are
cost-effective, the reviewer may recommend that the practitioner or
provider be excluded from the Medicare program. In addition, states
can also choose to use peer review organizations to review care
received by Medicaid patients.
Even in reference to the HHS-managed Medicare and Medicaid programs,
this federal statutory immunity provision is limited. For instance,
the immunity protection does not cover reporting directly to any
federal law enforcement authority. Thus, an individual who reports
suspected Medicare fraud directly to the HHS Office of Inspector
General--or to other federal authorities, such as the FBI and the
U.S. Postal Inspection Service--would not be provided immunity
protection under 42 U.S.C. 1320c-6(a). DOJ, however, would
ordinarily defend Medicare contractors or their employees who are
sued in connection with Medicare anti-fraud efforts. In a July 1995
letter to Medicare contractors, DOJ and the Health Care Financing
Administration noted:
"We believe that Medicare contractors who are carrying out
official functions related to administration of the Medicare
program, particularly those who are engaged in efforts to
detect, prevent, or prosecute program fraud and abuse, should be
entitled to protections similar to those enjoyed by Federal
employees engaged in those activities. For that reason, the
Department of Health and Human Services will ordinarily request,
and the Department of Justice will ordinarily agree, that the
Department of Justice will defend, at its own expense, any
Medicare contractor or employee of a contractor, who is sued in
connection with activities undertaken within the scope of the
Medicare contract."
Further, the federal statutory immunity provision does not protect
persons who report suspected fraud involving private sector insurance
plans, even if the suspected fraud is reported to a federal agency
such as the FBI or the U.S. Postal Inspection Service. Existing
state immunity laws would provide some statutory immunity protection
under these circumstances.
--------------------
\4 In commenting on a draft of this report, DOJ officials noted that
the whistleblower provisions of 31 U.S.C. Sec. 3730(h), while
limited in scope, may provide a defense in certain civil suits.
STATE LAWS REFLECT A RANGE OF
IMMUNITY PROVISIONS RELATED TO
INSURANCE FRAUD
---------------------------------------------------------- Chapter 2:3
Many states have enacted immunity laws to protect individuals who
report suspected insurance fraud--including health care fraud. The
responses to our survey of the 50 state insurance commissioners
indicate that state immunity laws vary considerably in terms of
protection provided to private insurers who disclose fraud-related
information.\5 As appendix II shows, at the time of our survey, 38
states had enacted immunity laws protecting the sharing of health
care fraud-related information, while 12 states had no immunity laws
applicable to health care fraud. In the 38 states with immunity
laws, typically only specific reporting channels are covered. For
example, 24 states provide immunity to insurers for sharing
fraud-related information with state and federal law enforcement
authorities, as well as with the state insurance commissioner.
However, 10 states provide immunity for sharing fraud-related
information only with the state insurance commissioner. Eight states
provide immunity to insurers for sharing fraud-related information
with other insurers. All 38 states with immunity laws place certain
qualifications on the provision of immunity. In each of these
states, for instance, the immunity is contingent on the absence of
"bad faith" or "malice." However, the meaning of these qualifications
and the ultimate protection provided under the law are subject to
interpretation by individual court systems.
Much like existing federal immunity law, state immunity laws are also
limited in the level of protection they provide. Due to variances in
state laws, the immunity protection provided can be different from
state to state. These differences can present concerns for private
insurers that operate nationally, especially if a suspected
fraudulent scheme involves more than one state. An insurer
investigating a multistate fraud scheme, for example, may have
concerns about which state's immunity law applies to the sharing of
case information. Also, as discussed above, 12 states have no
immunity laws applicable to health care fraud. Anyone reporting
suspected private insurer fraud in these states has no specific
statutory protection from subsequent civil lawsuits.
--------------------
\5 See appendix II for a comparison of state immunity statutes and
appendix III for a copy of the survey questionnaire.
RECENT PROPOSALS WOULD ENHANCE
IMMUNITY PROTECTION PROVIDED BY
FEDERAL LAW
---------------------------------------------------------- Chapter 2:4
In recent years, federal proposals have been introduced that would
broaden existing immunity protection. Ranging from a 1993 executive
branch task force proposal to a 1995 anti-fraud bill currently
awaiting consideration by Congress, these proposals would provide
some federal immunity protection to persons who report suspected
health care fraud--regardless of whether the fraud involves public or
private payers within the health care system.
In 1993, to enhance health care fraud enforcement efforts, a Bush
administration task force\6 recommended, among other things,
providing immunity for reporting information to a national database,
which the task force also recommended be created.\7 Immunity from
both federal and state claims would have been provided to database
participants reporting fraud-related information to (or obtaining
such information from) this database in good faith. Also, the
proposed immunity provision contained a requirement that any
complainant alleging malice or bad faith must plead with specificity
the facts that constitute malice or bad faith in order to invoke an
exception to immunity. The recommendations of the task force were
not adopted, although, as noted below, the immunity proposal was
reintroduced in subsequent congressional legislation.
During 1993 and 1994, some form of federal immunity provision was
included in various health reform bills introduced in Congress. In
November 1993, for example, the Clinton administration introduced
H.R. 3600 (the "Health Security Act"), which would have established
federal immunity for reporting suspected health care fraud to HHS and
DOJ. Because the proposed Health Security Act would have created a
national framework for the delivery of health care, this immunity
provision would have applied to the reporting of any suspected health
care fraud throughout the health care system. By late summer 1994,
the original Clinton reform bill had been essentially dropped by both
the House and the Senate. Neither the Health Security Act nor any of
the other health reform bills were enacted.
In July 1995, Senator William Cohen introduced S. 1088 (the "Health
Care Fraud and Abuse Prevention Act of 1995"), which contains various
provisions designed to enhance anti-fraud enforcement efforts. One
of the bill's provisions would extend the protection provided in 42
U.S.C. 1320c-6(a) to include persons providing information about any
public or private health plan to either HHS or DOJ.\8 This expansion
would address some of the limitations of current federal law. For
example, a person reporting suspected Medicare fraud to HHS and a
person reporting private insurance fraud to DOJ would be protected
under this bill. Further, the bill's immunity provision would
provide some statutory protection in the 12 states that have no
immunity law and also may provide, in those states with immunity
laws, an additional channel for reporting suspected fraud.
Although S. 1088 would provide immunity protection more broadly than
current law, the provision does not address the role of all entities
involved in anti-fraud enforcement. For example, under S. 1088,
immunity protection would not be provided to persons who report fraud
information to law enforcement entities other than DOJ and HHS. The
proposal does not address the role of other federal agencies (such as
the U.S. Postal Inspection Service) and state agencies (such as
Attorneys General and state fraud bureaus) that also conduct health
care fraud investigations. Also, the proposal does not address
sharing from one insurer to another, a provision already included in
some state immunity laws. One recent federal anti-fraud proposal
does address insurer-to-insurer information sharing. H.R. 2408,
introduced September 27, 1995, would extend the provisions of 42
U.S.C. 1320c-6(a) to provide immunity for, among other things,
"health plans sharing information in good faith and without malice
with any other health plan with respect to matters relating to health
care fraud detection, investigation and prosecution."
--------------------
\6 The Bush Administration Task Force to Combat Health Care Fraud and
Abuse consisted of personnel from DOJ, HHS, and the Office of
Management and Budget.
\7 The proposed database, as discussed further in chapter 3, was to
contain information relating to ongoing health care fraud
investigations.
\8 This immunity provision was originally introduced by Senator Cohen
in S. 245 (the "Health Care Fraud Prevention Act of 1995") and was
later incorporated into S. 1088.
INDUSTRY AND LAW ENFORCEMENT
OFFICIALS GENERALLY FAVOR BROAD
FEDERAL IMMUNITY LEGISLATION
WITH APPROPRIATE SAFEGUARDS
---------------------------------------------------------- Chapter 2:5
Industry organizations, such as NHCAA and the Health Insurance
Association of America, have stated that due to the potential for
civil lawsuits, private insurers are concerned about sharing
fraud-related information with law enforcement agencies. These
industry organizations contend that a federal immunity law would
facilitate the flow of information between insurers and law
enforcement agencies and enhance investigation and prosecution of
health care fraud cases. This contention includes a general
recognition of the need for appropriate safeguards against bad faith
allegations. Medical associations also told us they generally
support immunity protection for individuals who report suspected
fraud. Most of the investigative and prosecutive officials we
interviewed--which included investigators and prosecutors at federal
and state agencies and special investigative unit personnel at
various insurance companies--also told us that a federal immunity law
would enhance health care anti-fraud enforcement efforts.
NATIONAL HEALTH CARE
ANTI-FRAUD ASSOCIATION
-------------------------------------------------------- Chapter 2:5.1
In August 1993, the NHCAA Board of Governors adopted a policy option
calling for preemptive federal legislation to provide uniform
immunity protection across all states:
"The need for a concerted anti-fraud effort involving the
sharing of information among private payers and with law
enforcement is being widely acknowledged. However, while many
states provide some immunity protection for those engaging in
good faith fraud investigations, this protection varies
tremendously by state; many states have no immunity statute. .
. . This piecemeal state legislation simply does not protect
insurers and other payers in many states or in multi-state
investigations.
"Therefore Congress should consider enacting an immunity statute
that would immunize payers' good-faith efforts to fight fraud
and provide immunity from state tort liability. Such a statute
would preempt the inconsistent, vague and often ill-considered
state law jeopardy faced by insurers and other payers . . .
and would create a standardized and effective tool to encourage
fraud fighting.
"Like many state statutes, this immunity protection would not be
absolute, and reasonably would be limited to those
investigations conducted with good faith or the absence of
malice. However, to make this protection effective, Congress
should consider the addition of a provision, modeled on Rule
9(b) of the Federal Rules of Civil Procedure, that requires a
person to plead with specificity the facts that constitute
malice or bad faith in order to invoke this exception to
immunity."\9
In 1993 testimony before Congress, the NHCAA Executive Director
stated that before forwarding a case for investigation and
prosecution, insurers always have to consider the probability of
lawsuits for defamation, slander, and malicious prosecution, and that
these lawsuits, even if they are completely without merit, are at
best very costly to the insurer.\10 During our review, the NHCAA
Executive Director told us that encouraging insurers to report fraud
is important because the extent of health care fraud is increasing.
He noted that, historically, insurers would simply write off fraud
and pass the losses on to policyholders because fraud was not deemed
to be that significant a problem. He added that some insurers saw no
alternative to such write-offs because health care fraud was not
considered to be a priority of law enforcement. However, the
Executive Director said that insurers now have increased their
anti-fraud efforts because they recognize that health care fraud is
widespread and because law enforcement (federal and state) has taken
a significant interest in investigating and prosecuting such fraud.
Accordingly, NHCAA still supports federal immunity legislation.
--------------------
\9 NHCAA Board of Governors, "Maximizing Private-Public Cooperation
in Fighting Health Care Fraud--Principles and Policy Options to
Strengthen the Private Sector's Anti-Fraud Capability" (Washington,
D.C.: August 1993).
\10 Health Care Fraud: Hearings Before the Subcommittee on Crime and
Criminal Justice of the House Committee on the Judiciary, 103d Cong.,
1st Sess. (February 4 and May 27, 1993).
HEALTH INSURANCE ASSOCIATION
OF AMERICA
-------------------------------------------------------- Chapter 2:5.2
In 1993, the Health Insurance Association of America conducted a
survey to determine the extent to which its member companies engaged
in health care anti-fraud activities. The survey asked for the
number and types of cases the companies investigated each year from
1990 through 1992. During each year of the survey period, member
companies referred only 9 to 11 percent of their cases to law
enforcement agencies.\11 In 1992, for example, the companies
investigated a total of 26,755 health insurance fraud cases but
referred only 2,645 cases (or about 10 percent) to law enforcement
agencies. According to an Association official, this relatively low
referral percentage is due, in part, to insurers' concerns about
potential civil liability.\12 This official further commented that
the survey results indicate that federal legislation (preempting a
"hodgepodge" of inadequate state statutes) is needed to provide
immunity for insurers and others who provide fraud-related
information to law enforcement authorities.
--------------------
\11 Eighty-six companies responded to the survey. Of these, 79 are
commercial insurers representing 65 percent of the commercial market;
the other 7 are Blue Cross/Blue Shield plans representing 14 percent
of the Blue Cross/Blue Shield market.
\12 Reasons other than concerns about civil liability may have also
been contributors to the relatively low referral percentage. From
our field work, for example, we learned that insurance companies may
focus on internally recovering overpayments versus pursuing fraud
prosecution.
MEDICAL ASSOCIATIONS
-------------------------------------------------------- Chapter 2:5.3
An attorney in the American Medical Association's Health Law Division
told us that although the Association has not formally commented on
the immunity provisions contained in the various health care
anti-fraud and abuse bills introduced in Congress, the Association
generally supports immunity for reporting suspected health care fraud
because it recognizes the benefits to anti-fraud enforcement efforts.
Therefore, the Association supports immunity for insurers that report
suspected fraud to law enforcement entities, as well as for insurers
sharing fraud-related information with each other. The attorney
said, however, that since medical information is sensitive and
private in nature, any legislation that grants immunity for
insurer-to-insurer information sharing should include controls to
ensure that the information is not used inappropriately. He
explained that the legislation could include, for example, a
requirement that shared information must have a certain level of
specificity or credibility--such as confirmed (rather than
unsubstantiated) fraud allegations.
Representatives from several other medical associations, including
the American Hospital Association, the American Health Care
Association, and the National Association for Home Care, also
indicated that their groups supported immunity protection. These
representatives told us that their respective associations had not
formally commented on the immunity provisions in any of the health
care anti-fraud bills introduced in Congress, but they generally
support the concept of immunity to protect individuals who report
suspected fraud, as long as the immunity is qualified. That is, an
immunity provision should include qualifications, such as absence of
bad faith or malice, so that an individual who is actually harmed by
a report of suspected fraud has a basis for filing a lawsuit.
OUR INTERVIEWS WITH FRAUD
INVESTIGATORS AND
PROSECUTORS
-------------------------------------------------------- Chapter 2:5.4
As noted in chapter 1, to better understand whether broad federal
immunity is needed, we interviewed individuals responsible for
investigating and prosecuting health care fraud cases--officials at
12 federal and 6 state investigative and prosecutive offices and
investigators and general counsel at 13 insurance companies (see app.
I).
VIEWS OF FEDERAL
GOVERNMENT OFFICIALS
------------------------------------------------------ Chapter 2:5.4.1
At 8 of the 12 federal investigative and prosecutive offices we
visited, officials told us they believed a federal immunity law is
needed to enhance anti-fraud enforcement efforts. The officials
generally commented that a federal law may increase insurers'
willingness to report fraud. In one location we visited, an FBI
supervisory agent told us that none of his office's active health
care fraud investigations were initiated on the basis of reports from
private insurers. The supervisory agent said that on the basis of
informal discussions between insurers and FBI agents, insurers
indicated they considered reporting health care fraud to his office
but have not due, in part, to concerns about possible exposure to
civil liability. The supervisory agent also commented that federal
immunity legislation may encourage insurers to report suspected
health care fraud. As support for this opinion, he cited his
experience in investigating bank fraud cases and explained that leads
or referrals from banks increased after federal immunity legislation
was strengthened.\13 Federal officials at several of the field
offices we visited also said that a federal law would be beneficial
because it would provide a standard level of protection in all
states. A U.S. Postal Inspection Service investigator told us that
a federal immunity law would make it easier to investigate multistate
fraud schemes because there would be no concerns about which state
immunity statutes applied in specific cases.
Assistant U.S. Attorneys at one office we visited told us that the
effects of a federal law would be difficult to predict. These
attorneys also noted, however, that their district does not receive
many health care fraud case referrals from private insurers,
partially due to the insurers' concerns about being sued civilly for
sharing health care fraud-related information with federal
prosecutors. They further commented that since most fraud schemes
affect both private and public health care plans, the government
would benefit from increased private insurer fraud reports because
more public program fraud could be identified.
Federal officials at four field offices told us a federal immunity
law would not enhance anti-fraud enforcement efforts in their
respective jurisdictions because a high level of information sharing
was already occurring. They added, however, that other jurisdictions
might benefit from a federal law, and they cited increased
information sharing as a possible benefit. In one of the states we
visited, an FBI supervisory agent told us that the need for a federal
immunity law possibly was being overstated by insurance company
executives. The supervisory agent noted that at the field level,
fraud-related information was being reported by insurers' special
investigative units to FBI agents--either informally on the basis of
established working relationships or formally in response to
government-issued subpoenas.
Regarding the immunity provision in S. 1088, federal officials at
four of the field offices we visited told us that the scope of the
provision should be expanded beyond HHS and DOJ. The officials
commented that immunity should be provided for reporting to other
federal entities with health care fraud enforcement responsibilities,
such as the U.S. Postal Inspection Service and the Internal Revenue
Service, as well as with state law enforcement authorities or state
insurance departments.
Also, federal officials at four of the field offices said that S.
1088 should be expanded to provide immunity for insurers sharing
fraud-related information with other insurers. The officials said
this type of information sharing would be beneficial because insurers
would be able to work together and identify the extent to which a
fraud scheme is affecting more than one insurance company. One FBI
supervisory agent we spoke with commented that the FBI would benefit
from insurers sharing information with each other because his office
would receive from the insurers more fully developed cases that are
more likely to be accepted. Further, an Assistant U.S. Attorney
told us that fraud perpetrators would be more reluctant to routinely
defraud multiple insurers if they knew insurers routinely shared
fraud-related information. Several of the officials also told us,
however, that a possible disadvantage to allowing insurer-to-insurer
disclosures is the potential for insurers to use the information for
other than legitimate anti-fraud purposes. An insurer might, for
example, disallow a health care provider from providing services
under its health plan because of reports of suspected fraud by
another insurer, even though the allegations have not been
substantiated.
--------------------
\13 The Annunzio-Wylie Anti-Money Laundering Act of 1992 (Title XV of
P.L. 102-550) granted broad immunity--from civil liability under any
federal or state law or regulation--to financial institutions and
their employees for reporting suspicious bank transactions.
VIEWS OF STATE GOVERNMENT
OFFICIALS
------------------------------------------------------ Chapter 2:5.4.2
The responses to our survey of the 50 state insurance commissioners
(see app. III) indicated broad support for both state and federal
immunity laws. For those 38 states that provided immunity at the
time of the survey, 35 responded to our question about the positive
effects from their respective states' immunity laws.\14 Twenty-four
of the 35 respondents believed their states' laws had positive
effects on anti-fraud enforcement efforts. Almost all of these
respondents (21) indicated the state immunity law increased reporting
of suspected fraud. Two-thirds (16) indicated the immunity law
increased information sharing, and over half (14) answered that the
number of fraud cases investigated increased. Of the 35 respondents
answering our question about the negative effects from their states'
immunity laws,\15 32 indicated there were no negative effects
stemming from such legislation. The other respondents cited
excessive sharing of questionable intelligence and increased
workloads as possible negative effects.
Our survey also asked for opinions about the effectiveness of a
federal immunity law in facilitating the sharing of fraud-related
information between (1) private health insurers and federal/state law
enforcement authorities, (2) private health insurers and
federal/state regulatory authorities, and (3) two or more private
health insurers.\16 Of the respondents who answered these questions,
33 (of 39) indicated that a federal law would be very or somewhat
effective in facilitating fraud-related information sharing between
private health insurers and federal/state law enforcement
authorities, and 32 (of 38) answered that it would be very or
somewhat effective in facilitating information sharing between
private health insurers and federal/state regulatory authorities.
Twenty-seven (of 36) respondents answered that a federal law would be
very or somewhat effective in facilitating fraud-related information
sharing between two or more private health insurers.
At three of the six state investigative and prosecutive offices we
visited, officials told us they believe a federal immunity law is
needed to enhance anti-fraud enforcement efforts. The officials
cited several potential positive effects of such a law, including
increased information sharing among insurers and law enforcement
agencies. Also, the officials said that a federal law would provide
a minimum level of immunity protection to private insurers located or
otherwise doing business in states without immunity statutes. An
official from one state fraud bureau told us that a federal law might
encourage insurers to become more actively involved in identifying
and reporting fraud at its earliest stages, thereby improving the
likelihood of effective case development.
On the other hand, state officials at the offices that did not see a
need for a federal immunity law cited various reasons for their
viewpoints, such as:
-- A federal law is not needed because many health care fraud cases
are handled at the state level.
-- Regulation of the insurance industry historically has been a
state responsibility, and a federal law would be seen as
encroaching on that responsibility.
-- A federal law would not have much effect because insurers have
business-related reasons for not reporting fraud-related
information.
Regarding the latter opinion, a state fraud bureau official told us
that insurers' willingness to report suspected fraud generally
depended more upon corporate policy than upon the existence or scope
of immunity statutes. This official noted that some companies
aggressively pursue fraud and seek prosecutions, while other
companies prefer to settle matters internally.
Regarding the federal immunity provision in S. 1088, state officials
at five offices told us that the proposal should be more
comprehensive. They generally said that the bill overlooks the
important role the states play in health care fraud detection and
prosecution and should be expanded to provide immunity for reporting
information to nonfederal government entities. One state Department
of Insurance official told us that the bill may result in insurers
sharing health care fraud-related information with only the federal
government. He believes this would reduce information sharing
between private insurers and the states. Also, because the federal
government would not have the resources to investigate all case
referrals, many of the health care fraud cases that normally could be
addressed at the state level would go unaddressed at the federal
level.
State officials at two offices told us that a federal immunity law
should provide immunity for insurer-to-insurer sharing of
fraud-related information. As a supporting example for this opinion,
one official said that passage of a state statute allowing automobile
insurance companies' special investigative units to exchange
information about suspected fraudulent claims helped to decrease
automobile insurance fraud in that state. Further, this official
commented that since passage of the state statute, automobile
insurance companies' special investigative units have been able to
coordinate and report to law enforcement agencies more fully
developed cases that are more likely to be accepted for prosecution.
As with the federal investigators and prosecutors, however, a few of
the state officials also told us that a possible disadvantage of
allowing insurer-to-insurer disclosures is the potential for insurers
to use the information for other than legitimate anti-fraud purposes.
--------------------
\14 See appendix III, question number 13.
\15 See appendix III, question number 14.
\16 See appendix III, question number 17.
VIEWS OF PRIVATE
INSURANCE COMPANY
OFFICIALS
------------------------------------------------------ Chapter 2:5.4.3
At 12 of the 13 insurance companies we visited, representatives told
us a federal immunity law would help anti-fraud enforcement efforts.
They generally said that a federal law would be beneficial because it
would provide immunity protection uniformly applicable in every
state. The Director of Investigations at one insurance company told
us that fraud schemes tend to cut across state lines, typically
affect more that one payer, and usually involve both public and
private insurance programs. He added that a federal law would
provide consistent protection during multistate or national fraud
investigations, something that is not provided under the various
state laws. Further, representatives of another insurance company
said that a federal law would likely solve the problem of deciding
which state's immunity laws take precedence in multistate
investigations.
Representatives of several insurance companies also told us a federal
law might result in more health care fraud case referrals to law
enforcement agencies. They generally said the weight a federal law
carries may encourage some insurers, who might not otherwise come
forward under a state law, to report health care fraud cases to law
enforcement agencies. Representatives from one national insurance
company told us that they are aware of instances of fraud being
committed against their company, but due to such factors as the lack
of state immunity laws or poorly written state immunity laws, the
company may internally address this fraud rather than refer it to law
enforcement agencies. An attorney from another insurance company
told us that a federal law could even help reduce the costs of
defending against reactionary civil lawsuits because such legislation
may provide a basis for summary judgments.
One insurance company investigator told us a federal law is not
needed because insurance regulation is a state responsibility, and
states are addressing this issue by passing legislation to provide
immunity. He further commented that some insurers, as a business
decision, will be reluctant to get involved in reporting fraud no
matter what immunity protection, federal or state, is provided. The
investigator added, however, that a federal law would still be
beneficial to national insurers because it would provide some
consistency in immunity protection, which is not now the situation
under the various state laws.
Regarding the federal immunity provision in S. 1088, representatives
of seven insurance companies told us that the immunity provision
should be expanded to cover reporting to entities other than just HHS
and DOJ. They said that immunity should be provided for sharing
fraud-related information with other federal, as well as state,
government entities that investigate or prosecute health care fraud.
One company's investigator said that S. 1088 might be problematic
because the FBI does not have enough resources to address the
additional referrals the agency would likely receive. A Director of
Investigations at another insurance company told us the bill
overlooks the large number of cases that are prosecuted at the state
level of government because they do not involve large enough dollar
losses to be of interest to the federal government.
Representatives of nine insurance companies told us a federal law
should provide immunity for insurer-to-insurer sharing of
fraud-related information. These individuals generally said that
allowing insurer-to-insurer information sharing would enable the
companies to develop more significant cases--that is, cases involving
larger dollar amounts and/or fraud schemes of wider scope--for
referral to law enforcement agencies. Representatives from one
insurance company told us that the quality of evidence will improve,
resulting in more criminal prosecutions for health care fraud
offenses. These representatives explained that by working
cooperatively together, insurers will be able to show that multiple
insurers were defrauded under the same scheme, and this will make it
easier to prove the criminal element of intent (i.e., the suspects
knowingly defrauded the insurers). To demonstrate the drawbacks of
insurance companies not sharing fraud-related information with each
other, the representatives noted the California "rolling labs"
case.\17 They told us that the rolling labs fraud scheme was able to
continue for years without being detected and reported to law
enforcement agencies because the insurers were reluctant to work
together to identify and determine the full scope of the fraud
scheme. The representatives further commented that the rolling labs
case is what prompted the state of California to enact strong
immunity laws.\18
Similar to the concerns voiced by some of the federal and state
investigators and prosecutors we interviewed, a few of the insurance
company representatives told us that a possible disadvantage to
allowing insurer-to-insurer disclosures is the potential for the
information to be used for purposes other than fraud detection and
prevention. One insurance company investigator said that to ensure
against unfair or conspiratorial practices by insurers, a federal law
allowing insurer-to-insurer sharing of fraud-related information
should include parameters covering what information can be shared
(e.g., only information that clearly shows fraud occurred) and
specifically who in the insurance companies can have access to the
information (e.g., only special investigative units).
--------------------
\17 During a 10-year period beginning in 1981, a company operating
mobile medical laboratories ("rolling labs") was able to perpetrate a
billion-dollar fraudulent billing scheme that affected 1,400
insurance plans.
\18 As shown in appendix II, California law provides immunity for
insurer-to-insurer information disclosures.
CONCLUSIONS
---------------------------------------------------------- Chapter 2:6
Immunity laws are designed to encourage insurers and other
individuals to report suspected fraud by providing them protection
against subsequent civil lawsuits related to such information
sharing. Currently, there is no federal immunity protection for
persons who report fraud-related information to law enforcement
agencies. Statutory protection is provided for reports made about
Medicare and Medicaid health care services to peer review
organizations. However, insurers--the primary processors of health
care claims--are not provided federal immunity protection for sharing
fraud-related information concerning other public and private health
plans. While most states have enacted immunity laws that provide
some immunity protection to insurers, these laws vary from state to
state.
The law enforcement, regulatory, and industry officials we queried
expressed widespread support for the concept of a broad federal
immunity law that includes adequate safeguards against bad faith
allegations. As benefits of a federal law, these officials cited
increased information sharing by insurers and uniformity of coverage
in every state. Many of the officials, however, told us that to be
most useful, a federal immunity law should provide broader protection
than the immunity proposed under pending congressional bill S. 1088.
The officials favored immunity for insurers, not just for sharing
fraud-related information with DOJ and HHS, but for sharing such
information with any federal or state entity with health care fraud
enforcement responsibilities. They also favored expanding the
immunity provision to protect insurers for sharing information with
other insurers. One potential drawback to the latter approach is the
possibility that insurers would inappropriately use information
obtained from other insurers. While this is a potential risk of
allowing insurer-to-insurer information sharing, the risks may be
decreased through precise statutory language that specifies the
reasons and procedures by which insurers may share fraud-related
information with other insurers.
COMMENTS AND OUR EVALUATION
---------------------------------------------------------- Chapter 2:7
DOJ provided technical and clarifying comments, which we incorporated
where appropriate.
In its written comments on the draft report, NHCAA wholeheartedly
endorsed the need for a federal immunity statute and commented that
such a statute could play a significant role in expanding the private
sector's ability to initiate investigations and cooperate with law
enforcement. To be fully effective, NHCAA suggested that the federal
statute should
-- provide immunity protection with respect to all health care
anti-fraud investigative activities;
-- extend to all law enforcement officers, not just those connected
to the administration of the health care system;
-- apply to exchanges of information between private sector fraud
investigators, i.e., information sharing between or among
insurers;
-- require that any allegation of sharing false information be
"pled with particularity," a term of art under the Federal Rules
of Civil Procedures; and
-- allow the recovery of attorney fees to a payer that is sued and
subsequently found to be entitled to immunity.
In its written comments on the draft report, the American Medical
Association generally supported immunity for reporting fraudulent
practices because it assists law enforcement efforts to bring
perpetrators to justice. The Association added that any legislation
granting immunity for insurers and any other entities to share
information regarding suspected fraudulent behavior should include
the following safeguards to ensure that such information is not used
inappropriately:
-- The shared information must be related to specific conduct, and
the conduct must be outside the realm of legitimate
disagreements on what care is medically necessary.
-- There must be some substantiation of the information, so that
its credibility is not in question.
-- There must be an opportunity for one who is harmed by "bad
faith" sharing of information to seek legal recourse.
CENTRALIZED HEALTH CARE FRAUD
DATABASE MAY BE BENEFICIAL BUT
SOME QUESTIONS REMAIN
============================================================ Chapter 3
Currently, there is no centralized national database in law
enforcement to track patterns of criminal activity in the health care
system. As a result, investigators and prosecutors use a variety of
federal, state, and private industry databases to investigate health
care fraud. To enhance access to health care fraud-related
information and to help coordinate enforcement efforts, the proposed
Health Care Fraud and Abuse Prevention Act of 1995 (S. 1088) calls
for establishing a national, centralized database of health care
fraud information. The proposed database would contain information
about final adverse actions--such as license revocations,
administrative sanctions, civil judgments, and criminal
convictions--involving health care system participants. Such a
database could be widely accessible, and it would assist
investigators in developing background profiles on providers and
other individuals under investigation.
Many law enforcement and industry officials told us they support the
establishment of a database of final adverse actions, but it is not
essential to their enforcement efforts. Although this type of
database could be widely accessible to federal, state, and private
investigators, the benefits of such a database may not justify the
largely unknown costs involved to operate it. These officials
suggested two alternative databases--one including ongoing
investigative information and another including suspected fraud
referrals--that might provide more investigative benefits than a
database of final adverse actions. But, in addition to unknown
costs, such databases would be much riskier in terms of the need to
protect against unauthorized disclosure and use of the information.
DATABASES AND OTHER INFORMATION
RESOURCES USEFUL TO HEALTH CARE
FRAUD INVESTIGATORS
---------------------------------------------------------- Chapter 3:1
Currently, there is no centralized national database in law
enforcement to track patterns of criminal activity in the health care
system. In an effort to obtain information on potential suspects and
fraudulent schemes, health care fraud investigators can query various
federal, state, and industry databases and other information
resources (see app. IV). Data obtained from these systems can
provide investigators with information needed to develop a
comprehensive background profile on health care fraud suspects. Such
data can also be useful to prosecutors in their efforts to obtain
harsher sentences for recidivists. Although the databases and other
information resources identified in appendix IV can be useful to
investigators, each has certain limitations or disadvantages, as
discussed below.
FEDERAL RESOURCES
-------------------------------------------------------- Chapter 3:1.1
Although the FBI's National Crime Information Center is the nation's
most extensive criminal justice information system, the Center's
criminal history records are accessible only by authorized federal,
state, and local criminal justice agencies. Private sector entities,
such as insurance company investigative units, do not have direct
access to these records. In addition, the records are not easily
identifiable as relating to health care fraud. For example, because
there is no federal health care fraud statute, federal criminal
convictions for health care fraud could have been obtained under any
of several general statutes involving mail fraud, false statements,
or conspiracy. Finally, the Center does not have records of
noncriminal actions--such as federal and state civil judgments--taken
against health care providers.
The HHS sanctions information, although nationwide in scope, covers
only program exclusions taken against health care providers and
practitioners for two public programs, Medicare and Medicaid.
Although HHS recently began making its sanctions information more
widely available, HHS does not identify individuals and entities
sanctioned by Social Security or tax identification number.
According to one insurance company official we interviewed, these
identifiers are needed in order to make the sanctions data more
useful for investigative purposes. This investigator explained that
his company first had to crossmatch the names from the HHS sanctions
report against another computer software program that contained names
and Social Security/tax identification numbers; once that was done,
the data were then downloaded into the company's computer system for
future use.
Another federally sponsored information resource, the National
Practitioner Data Bank, contains information on some, but not all,
adverse actions taken against licensed health care practitioners.
For example, it does not contain information about criminal
convictions or civil judgments involving health care fraud. In
addition, neither law enforcement agencies nor insurance company
investigative units currently have access to the information in the
Data Bank.
While concentrating on investigations that are national or
international in scope, the Financial Crimes Enforcement Network
(FinCEN) uses the majority of its resources to assist law enforcement
agencies in their investigations of financial aspects of the illegal
narcotics trade. However, for other financial crimes (such as health
care fraud) that may involve money laundering, investigators can use
FinCEN for intelligence and analytical support to help identify and
trace assets for seizure and forfeiture purposes.
STATE RESOURCES
-------------------------------------------------------- Chapter 3:1.2
The National Association of Insurance Commissioners databases
maintain nationwide information on regulatory and disciplinary
actions taken against insurance agents and companies. This
information is similar to that in the National Practitioner Data
Bank, but it focuses on insurers and their agents rather than on
health care providers. The Association's information on regulatory
and disciplinary actions is publicly accessible and focuses on all
lines of insurance, including health. However, the information on
adverse actions taken--for example, an insurance agent's license
revocation--is not necessarily related to fraudulent activity.
INDUSTRY RESOURCES
-------------------------------------------------------- Chapter 3:1.3
NHCAA's Provider Indexing Network System is available to member
companies and participating law enforcement agencies, all of whom
agree to abide by established procedures governing when and what type
of information can be submitted, how data are to be updated, and what
limited uses can be made of System data. On-line access to this
database is limited to NHCAA member insurance companies and law
enforcement members, such as HHS' Office of Inspector General and the
U.S. Postal Inspection Service. Nonmember law enforcement agencies
can query the database through written request to NHCAA.
Another limitation is that the System is not comprehensive,
containing only about 1,984 entries as of March 1996. Many private
insurers are not members of the Association. Further, even NHCAA
members are not required to report fraud-related information to the
Association's database. Generally, in and of itself, information in
the database is not "evidence" of any kind of fraudulent activity;
rather, the information represents merely a means of focusing--in
each member organization's independent discretion-- limited
investigative resources.
Every private payer that participates in the System agrees to
indemnify the other participants if liability results from misuse of
database information. However, one NHCAA member company's officials
told us that their company does not provide information to the
database due to concerns about how other members might access and use
the information.
Another industry information resource potentially useful to health
care investigators is the National Insurance Crime Bureau. Although
the Bureau was established to coordinate the insurance industry's
efforts to address fraudulent claims involving automobile and other
property/casualty insurance, its information systems may contain
information relevant to certain health care fraud cases. For
example, schemes involving staged automobile accidents or fraudulent
workers compensation claims may entail fraudulent medical claims,
sometimes involving corrupt health care providers in the scheme as
well. Thus, while not all-inclusive, the Bureau's information
systems may contain some information about individuals involved in
suspected health care fraud.
RECENT PROPOSALS WOULD CREATE A
NATIONAL DATABASE OF HEALTH
CARE FRAUD-RELATED INFORMATION
---------------------------------------------------------- Chapter 3:2
To address the issue of access to health care fraud-related
information, recent proposals (see table 3.1) have supported the
establishment of a centralized repository for health care fraud
information.
Table 3.1
Recent Proposals to Create a National
Database of Health Care Fraud-Related
Information
Bush
Administration's S.1088: Health Care
Health Care Fraud H.R.3600: Health Fraud and Abuse
Proposal elements Task Force Security Act Prevention Act
and status (1993)\a (1993) (1995)
------------------ ------------------ ------------------ --------------------
Type of Two databases: Data necessary to Final adverse
information to be (1) final adverse determine actions
included in actions and compliance with
database (2)active fraud health care fraud
investigations statutes\b
Management of Final adverse National Health HHS
database actions: HHS Board
Active fraud
investigations:
HHS or DOJ
Access to Final adverse Not specified Federal and state
information in the actions: Law government agencies
database enforcement and health plans
agencies,
insurers, and
private
individuals
Active fraud
investigations:
Law enforcement
and state
licensing
agencies, and
insurers with
accredited anti-
fraud units
Status of proposal Not implemented Not enacted Incorporated into
1996 Senate Budget
Reconciliation Act
(pending as of
December 1995)
--------------------------------------------------------------------------------
\a The Bush Task Force recommended two national databases with
different parameters.
\b As discussed in the text, this database would contain more than
simply information about fraud.
Source: GAO analysis of health care fraud proposals.
In January 1993, a Bush administration task force on health care
fraud and abuse recommended the establishment of two national
databases--one for the reporting of final adverse actions and one for
active fraud investigations.\1 Access to the final adverse actions
database would include not only law enforcement agencies, but also
insurers and private individuals; access to the active investigations
database would be restricted to law enforcement agencies, state
licensing agencies, and insurance company investigative units.
Regarding the final adverse actions database, the task force
suggested--as an alternative to establishing a new
database--expanding the National Practitioner Data Bank to require
reporting of all final adverse actions involving practitioners and to
include similar information about health care entities other than
practitioners. Regarding the active investigations database, the
task force also recommended that participants be provided with good
faith immunity for reporting to and obtaining information from the
database as an incentive to encourage participation. Neither of the
task force's database recommendations was implemented; however, the
concept of a centralized health care fraud database has continued to
be included in subsequent proposed federal legislation.
In November 1993, for example, the Clinton administration's proposed
Health Security Act (H.R. 3600) advocated establishing a health
information database containing, among other things, "information
necessary to determine compliance with fraud statutes." However,
because this act would have substantially reformed the nation's
entire health care system, the proposed database was expected to
contain much more than just information related to fraud. For
instance, the database would have included information about clinical
encounters and other health services provided, administrative and
financial transactions of participants, utilization management by
health plans or providers, and other nonenforcement-related
activities and services. By late summer 1994, the original Clinton
health reform bill had been essentially dropped by both the House and
the Senate. Although proposals to establish a centralized health
care fraud database appeared in several other health reform bills
introduced during 1993 and 1994, none of these proposals were
enacted.
In July 1995, Senator William Cohen introduced S. 1088, which
includes a proposal to establish a centralized repository for the
reporting of final adverse actions against health care providers,
suppliers, or practitioners.\2 As defined in this bill, the term
"final adverse action" includes (1) civil judgments against a health
care provider in federal or state court related to the delivery of a
health care item or service; (2) federal or state criminal
convictions related to the delivery of a health care item or service;
(3) actions by federal or state agencies responsible for the
licensing and certification of health care providers, suppliers, and
licensed health care practitioners; (4) exclusions from participation
in federal or state health care programs; and (5) any other
adjudicated actions or decisions that the HHS Secretary establishes
by regulation. In October 1995, this legislative proposal was
incorporated into the Senate's proposed 1996 Budget Reconciliation
Act, which was still pending at the time of our review.
While advocating the establishment of a centralized health care fraud
database, none of the proposals noted above clearly identified the
database's expected operating parameters--such as how many data
records would be maintained, how many information queries were
expected, and how much the system might cost to develop and
operate.\3 Current systems that might be useful in evaluating the
recent health care fraud database proposals are the National
Practitioner Data Bank, a system containing data on certain final
adverse actions; and the Provider Indexing Network System, a system
containing data on active investigations.
As a large, national repository containing certain information on
adverse actions taken against health care practitioners, the National
Practitioner Data Bank illustrates how a centralized health care
fraud database might be expected to operate. As of December 1994,
the Data Bank contained over 97,000 records. The Data Bank has
received over 4.5 million inquiries since it became operational in
1990, with the number of annual inquiries increasing from about
800,000 in 1991 to just over 1.5 million in 1994. The original
5-year contract (awarded in December 1988) to develop and operate the
Data Bank was expected to cost $15.8 million. According to HHS
officials, this contract was subsequently extended through June 1995,
and the estimated cost was expected to be $24 million. Total costs
to operate the Data Bank--including contract and HHS administrative
costs--averaged almost $5.8 million annually for the period 1991
through 1994. The next operating contract--for the so-called second
generation Data Bank--is expected to be less costly, about $12
million over 6 years. By law, Data Bank inquiry processing costs can
be recovered through user fees, which currently range from $4.00 to
$10.00 per inquiry.
Although much smaller in scope and concept than the National
Practitioner Data Bank, the NHCAA's Provider Indexing Network System
is a centralized repository of investigative information dealing
specifically and solely with health care fraud. Because it is a
personal computer-based system, the costs to develop and operate the
system--about $30,000 to develop and about $35,000 (fiscal year 1995
costs) to operate--are much less than those incurred by the mainframe
computer-based National Practitioner Data Bank. However, the
relatively low costs are also reflected in the size of the database,
which included only 1,984 entries as of March 1996. Although the
size of the Provider Indexing Network System might limit its
usefulness as a national information resource, it does demonstrate a
less expensive alternative approach to health care fraud information
sharing.
--------------------
\1 Final adverse actions include criminal convictions, civil money
penalties, exclusions from federal health programs, and final actions
taken by private insurers related to fraud and abuse. Active
investigations include any ongoing investigations of potentially
fraudulent activities.
\2 This proposal was originally introduced by Senator Cohen in
January 1995 as part of S. 245 and was later incorporated into S.
1088.
\3 For instance, according to Congressional Budget Office staff,
there has been no formal cost estimate ("scoring") of S. 1088, which
included a provision (Section 301) calling for establishment of a
"Health Care Fraud and Abuse Data Collection Program." However, in
response to our inquiry, the staff told us that--based upon
information obtained from the Health Resources and Services
Administration and from experience with the National Practitioner
Data Bank--implementation of Section 301 would cost $2 million in
unrecovered start-up costs in the first year. The staff explained
that this estimate is based upon the assumption that Section 301
implementation would be tied into the existing National Practitioner
Data Bank, rather than establishing a new and separate centralized
system.
LAW ENFORCEMENT AND INDUSTRY
HAVE MIXED VIEWS ON THE
BENEFITS OF A CENTRALIZED
HEALTH CARE FRAUD DATABASE
---------------------------------------------------------- Chapter 3:3
As noted in chapter 1, to better understand the advantages and
disadvantages of a centralized health care fraud database, in 4
states we interviewed individuals responsible for investigating and
prosecuting health care fraud cases at 12 offices of federal
agencies, 6 offices of state agencies, and 8 insurance companies; and
in 2 other states, we interviewed investigators and general counsel
at 5 national insurance companies (see app. I).
LIMITING A CENTRALIZED
DATABASE TO ONLY FINAL
ADVERSE ACTIONS
-------------------------------------------------------- Chapter 3:3.1
As shown in table 3.1, recent legislative proposals have supported
the establishment of a centralized health care fraud database of
final adverse actions. The 1993 Bush Administration Health Care
Fraud Task Force and the proposed 1995 Health Care Fraud and Abuse
Prevention Act both specifically supported the establishment of a
centralized repository for the reporting of final adverse actions
against practitioners, providers, and other health care entities.\4
In general, final adverse actions have been adjudicated in some
federal or state public forum (for example, before courts or health
care licensing and certification agencies) and are considered to be
generally available to the public.
--------------------
\4 As noted previously, although the Clinton administration proposal
advocated establishment of a national health information database, it
did not specify the inclusion of final adverse actions in the
database.
VIEWS OF FEDERAL
GOVERNMENT OFFICIALS
------------------------------------------------------ Chapter 3:3.1.1
Officials at 5 of the 12 federal investigative and prosecutive
offices we visited told us they believe a centralized database of
final adverse actions would be useful to health care fraud
enforcement efforts. At three of these offices, officials told us
that the database would make it easier for health care fraud
investigators to do the background work necessary to establish a
suspect's past history of fraudulent activity. A U.S. Postal
Inspection Service investigator noted that even though this
information is already publicly available, having it all located in
one repository would make the investigative process more timely.
Officials at four of these offices indicated that knowing whether a
suspect has been found to have committed past fraudulent acts would
make it easier for prosecutors to demonstrate the individual's intent
to defraud. One Assistant U.S. Attorney noted that having easy
access to past histories of fraudulent activity not only helps to
prove an individual's intent to defraud, but also can be used to
demonstrate prior relevant conduct that would support an increased
criminal sentence.
At 6 of the 12 offices we visited, officials noted that although
establishment of such a database is not critical to enforcement
efforts, there could still be some benefits. These officials
generally noted that the information was already publicly available
from other sources and other information was more useful.
Officials at one office we visited told us they did not believe it
necessary to establish a final adverse actions database. According
to an Assistant U.S. Attorney, the information that would be in the
database is already publicly available from other sources and, given
the current government budget environment, he questioned the
feasibility of funding a database that would provide only marginal
enforcement utility.
Most of the officials we spoke with expressed some concerns about the
establishment of a final adverse actions database. Most notably, at
eight offices, officials indicated that the potential would exist for
the information to be misused--for example, by insurance companies to
deny a provider's insurance claims or by the government in targeting
persons for investigation. One FBI supervisory agent told us that to
ensure the security of the database and prevent misuse, access should
be restricted to law enforcement agencies only. At six offices,
officials stated that providers and the public would likely object to
the establishment of such a database as an unwarranted intrusion by
the federal government into the privacy of citizens' lives. One
Assistant U.S. Attorney noted that having the federal government
operate the database might also result in the database becoming too
bureaucratic and entangled with rules and regulations about access,
thereby making the database less efficient to operate.
VIEWS OF STATE GOVERNMENT
OFFICIALS
------------------------------------------------------ Chapter 3:3.1.2
The responses to our survey of the 50 state insurance commissioners
indicated broad support for a centralized health care fraud database.
Of the 29 respondents who said their offices investigated health care
fraud during 1994, 26 believed a centralized health care fraud
database would facilitate enforcement efforts.\5 Twenty-three of the
respondents indicated that a database would expedite the enforcement
process, with about half indicating that it would either strengthen
prosecution efforts or lead to harsher penalties. The respondents
were split on who should operate the database, with about 10 favoring
the federal government, 8 favoring state government, and 7 favoring
the private sector.\6 Twenty-seven of the respondents indicated that
final adverse actions should be included in the database.\7 Eighteen
of the respondents also believed there might be some negative effects
of a centralized health care fraud database, most notably the lack of
security and confidentiality of the information (12) and the
possibility that the database would contain inaccurate information
(13).\8
At three of the six state investigative and prosecutive offices we
visited, officials we interviewed told us they believe a centralized
health care fraud database of final adverse actions would be useful
in facilitating health care fraud enforcement efforts. At the other
three offices, officials noted that such a database is not essential
but could be another tool to assist health care fraud investigators.
However, all officials saw certain advantages to a centralized
database. The state officials noted, for example, that a centralized
database would (1) provide investigators with easy access to
information about individuals being investigated, thus making routine
background investigative work more efficient; and (2) help
investigators to better identify fraudulent schemes and potential
suspects. One state fraud bureau official told us that because of
the mobility of fraud perpetrators, a national database would help
investigators to identify individuals within their jurisdictions who
have been previously involved in fraudulent schemes in other
locations.
At the five offices that identified possible negative effects of a
final adverse actions database, officials said they were concerned
that the information might be misused. One Insurance Department
official stated that insurers might use the information,
independently or in concert with other insurers, to unfairly restrict
the ability of certain providers to participate in their health
plans.
--------------------
\5 See appendix III, question number 21.
\6 See appendix III, question number 23.
\7 See appendix III, question number 24.
\8 See appendix III, question number 22.
VIEWS OF PRIVATE
INSURANCE COMPANY
OFFICIALS
------------------------------------------------------ Chapter 3:3.1.3
At 9 of the 13 insurance companies we visited, representatives told
us a centralized health care fraud database of final adverse actions
would facilitate health care fraud enforcement efforts. At three of
the companies, representatives thought the database might be
beneficial, but they did not consider it an essential resource.\9
Most of the officials told us that a centralized repository of final
adverse actions would make the investigative process more efficient
by providing a single location for background information about
health care providers who previously have been involved in fraudulent
activity. One insurance company investigator noted that such a
database could help insurers to easily identify providers with a
previous record of fraud, which would allow insurers to more closely
monitor future claims submitted by these providers. Another
investigator mentioned that a centralized database would help
insurers to better screen providers who have applied to join their
health care network. The officials who believed a final adverse
actions database was not essential generally said that the
information would be useful for confirming suspicions or getting
cases accepted for prosecution, but not for identifying and
initiating investigations.
The most commonly voiced concern about establishing a final adverse
actions database was potential misuse of the information. Officials
at five insurance companies mentioned this as a potential problem.
One insurance company official stated that creation of such a
database might, from the providers' perspective, lead to the
inappropriate identification and targeting of innocent individuals by
investigators. One other official noted the possibility that
inaccurate information could be included in the database and could
have adverse consequences if inadvertently disclosed.
--------------------
\9 One of the insurance companies did not comment on the database
issue.
INCLUDING ONGOING CASE
INFORMATION IN A CENTRALIZED
DATABASE
-------------------------------------------------------- Chapter 3:3.2
Only one of the recent database proposals--the 1993 Bush
administration's proposal--would include active investigative
information as part of a centralized health care fraud database. As
described in the recommendations of the task force, this database
would have been accessible to law enforcement entities, state
licensing agencies, and accredited insurer special investigative
units. The task force specifically defined active investigations as
any ongoing investigation of potentially fraudulent activity.
Ongoing investigative information is naturally more sensitive than
information about final adverse actions, since at this stage of an
investigation there has not yet been a public adjudication of the
matter.
VIEWS OF FEDERAL
GOVERNMENT OFFICIALS
------------------------------------------------------ Chapter 3:3.2.1
At 6 of the 12 investigative and prosecutive agencies we visited,
officials told us a database of ongoing, or active, investigative
information would be useful to health care fraud enforcement efforts.
Officials at two of the six offices noted that the database would
provide a means to identify multiple agencies investigating the same
subject, thus helping to eliminate investigative duplication and
allowing investigators to combine efforts.
More often, however, the officials cited concerns about an ongoing
investigative database. At five of the six offices, officials cited
the sensitivity of the information as a significant concern that
would result in restricted access to the database. In general, the
officials noted that for security reasons, such a database would
probably have to be restricted to law enforcement agencies only. For
example, according to one Assistant U.S. Attorney, sensitive
investigative information (unlike final adverse actions) is, by its
nature, less certain, sometimes inaccurate, and may never end up
being adjudicated in a public forum. This official added that if
such information is inadvertently or deliberately disclosed, it could
seriously damage an individual's life and livelihood.\10
Equally significant, Assistant U.S. Attorneys at two offices we
visited noted that where investigative information was gathered
through the federal grand jury process, it would be illegal to
disclose that information to anyone not designated by the court.
Similarly, all of the FBI officials we spoke with noted that the FBI
would be very reluctant to contribute active investigative
information to the database, unless the FBI controlled use of and
access to the database.\11
--------------------
\10 In commenting on a draft of this report, DOJ officials said that
concerns about the misuse of data should include concerns about the
integrity of the data being compromised, unless strict limitations
are imposed regarding who can input and update the data.
\11 Restricting an ongoing investigative database to law enforcement
agencies, however, is no guarantee of security. In the past, we have
reported on misuse and inappropriate disclosures of sensitive
information from the FBI's National Crime Information Center
(National Crime Information Center: Legislation Needed to Deter
Misuse of Criminal Justice Information (GAO/T-GGD-93-41, July 28,
1993), a data system in which access and use are restricted solely to
authorized criminal justice agencies for criminal justice purposes.
VIEWS OF STATE GOVERNMENT
OFFICIALS
------------------------------------------------------ Chapter 3:3.2.2
The responses to our survey of the 50 state insurance commissioners
indicated support for including ongoing investigative information in
a centralized health care fraud database. Of the 29 respondents who
said they investigated health care fraud during 1994, 22 believed a
database of ongoing investigative information would facilitate
enforcement efforts.\12 Similarly, at three of the six state
investigative and prosecutive agencies we visited, officials told us
a database of ongoing investigations would be useful to health care
fraud enforcement efforts.
However, one state fraud bureau official pointed out that because of
the sensitivity of the information and the need for security, access
to the database probably would have to be restricted to law
enforcement agencies only. In this official's opinion, if insurance
company investigators are cut off from this valuable source of
intelligence, they will not be as effective in their own anti-fraud
efforts.
--------------------
\12 See appendix III, question number 24.
VIEWS OF PRIVATE INDUSTRY
OFFICIALS
------------------------------------------------------ Chapter 3:3.2.3
At 4 of the 13 insurance companies we visited, officials we spoke
with identified an ongoing investigations database as being useful to
health care fraud enforcement efforts. According to one insurance
company investigator, having access to a database of ongoing
investigations would provide investigators a means to combine efforts
across jurisdictions. This investigator further commented that in
many instances, any one insurer may have incurred only minimal dollar
losses due to the fraud committed; however, fraud schemes are often
perpetrated simultaneously in multiple jurisdictions. He said that
if an investigator can identify other ongoing investigations
targeting the same individuals, these investigations may be combined
into a larger investigation. This would potentially allow
investigators to develop larger, more significant fraud cases that
are more attractive to prosecutors.
One indication of the potential positive effect of sharing ongoing
investigative information can be found in recent statistics developed
by NHCAA with regard to its Provider Indexing Network System. As of
April 1995, NHCAA reported that 7.2 percent of the known or suspected
fraud perpetrators listed in its computerized database had been
entered by more than one member organization. These duplicate
listings illustrate a potential opportunity for investigators in
different organizations to share investigative information and
possibly combine their enforcement efforts.
With regard to potential drawbacks, one insurance company
investigator told us that insurers might be unwilling to report
ongoing investigative information to the database if they are not
granted access to it. Another insurance company official stated that
insurers would have to be provided immunity for reporting such
information because of the potential liability if the information
were disclosed.\13 Demonstrating the reality of this concern, one
investigator noted that her company will not place ongoing
investigative information in NHCAA's Provider Indexing Network System
because the company could not be sure that another member insurer
would not misuse the information, thus exposing the reporting company
to potential civil liability.
--------------------
\13 Such immunity would have been provided to insurers under the Bush
administration's proposal to create a database of active fraud
investigations (see ch. 2).
ESTABLISHING A DATABASE OF
SUSPECTED FRAUD REFERRALS
-------------------------------------------------------- Chapter 3:3.3
Although not identified in any of the recent health care fraud
database proposals, one alternative to the two database approaches
noted above is a database of suspected fraud referrals. Most health
care fraud cases begin as fraud referrals to investigative agencies.
These referrals come from both formal sources (e.g., government
agencies, insurers) and informal sources (e.g., fraud hotlines,
beneficiaries). The investigative agencies review these referrals
and, on the basis of relatively limited information, select the most
promising leads for assignment to an investigator. Because suspected
fraud referrals typically have not yet been thoroughly investigated,
they involve information that is less certain than information about
either ongoing investigations or final adverse actions. There is a
federal precedent for the creation of a fraud referral database.
Such a database has been established at the Financial Crimes
Enforcement Network to obtain and track information about suspected
financial institution fraud.
Officials at 8 of the 31 federal, state, and insurance company
offices we visited suggested the creation of a health care fraud
referral database as a useful tool to enhance health care fraud
enforcement efforts. Many of the respondents to our survey of state
insurance commissioners also supported creation of a fraud referral
database. Specifically, 22 of the 29 survey respondents who
indicated they investigated health care fraud during 1994 favored
creation of a fraud referral database.\14 In addition, the FBI has
recently suggested that Congress pass legislation to create a
criminal referral system, whereby all health benefit programs would
be required to report suspected fraud to a federal government
database to be used to track patterns of criminal activity throughout
the health care system.\15
Regarding potential benefits, one FBI supervisory agent told us that
a database of suspected fraud referrals would expedite the early
stages of an investigation by possibly helping to determine the
extent and amount of fraud involved. An insurance company
investigator also noted that encouraging private insurers to report
suspected fraud to a national database would allow government
investigators to better identify fraudulent schemes involving
multiple private insurers and--since these schemes tend to involve
both private and public sector insurers simultaneously--would very
likely also lead to the discovery of more public sector fraud.
According to an Assistant U.S. Attorney, in order to be most useful,
a suspected fraud referral database would have to include (1) a
requirement for all insurers to report suspected fraud, along with a
grant of immunity for doing so; (2) a specified reporting format; and
(3) a designated entity to centrally collect and maintain the
information.
Concerns were raised, however, about the feasibility of establishing
a fraud referral database. For example, unlike the banking and
savings and loan industries, the insurance industry is subject
principally to state, rather than federal, regulation.\16
One FBI supervisory agent noted that access to suspected fraud
referrals was helpful in fighting bank fraud, and a database of
health care fraud referrals could help investigators initiate health
care fraud cases. The agent said that to encourage private insurers
to actively refer suspected fraud, ideally federal law should require
mandatory reporting of such fraud and provide immunity for doing so.
However, the agent believes that because there is no federal
regulatory entity governing private insurers, such a law may not be
possible.
According to an insurance company official, absent such a reporting
requirement, private insurers may not feel compelled to report
suspected fraud to a national referral database, thus making it less
comprehensive in scope and, therefore, less useful to investigators.
Also, many states already require insurers to report suspected fraud
to state agencies (see app. II). According to a U.S. Postal
Service investigator, in those states with suspected fraud reporting
requirements, an additional federal reporting requirement might be
viewed by some private insurers as being unnecessary.
In addition, because of the sensitive nature of suspected fraud
referral information, several officials noted that security for and
access to a database of suspected fraud referrals would likely be a
critical issue. According to one FBI supervisory agent, some of the
information in a suspected referral database might be nothing more
than unsupported allegations, and the release or misuse of such
information might ruin an innocent doctor's reputation or career.
Therefore, access to and use of the information in the database would
have to be tightly controlled. And, as pointed out by one Assistant
U.S. Attorney, access to information of this nature would likely
have to be restricted to law enforcement agencies only, in order to
best protect against misuse and inappropriate disclosures.
--------------------
\14 See appendix III, question number 24.
\15 FBI, Health Care Fraud: Medical Fraud and Legislative Remedies,
December 1994.
\16 The 1945 McCarran-Ferguson Act affirmed the states' primary
responsibility for regulating the insurance industry, including
responsibility for establishing and enforcing rules under which
insurers operate.
CONCLUSIONS
---------------------------------------------------------- Chapter 3:4
Recent proposals to establish a centralized health care fraud
database, if implemented, would provide investigators and prosecutors
an additional tool to enhance anti-fraud enforcement efforts. Senate
Bill 1088 would establish a health care fraud database of final
adverse actions, accessible by law enforcement and regulatory
agencies and insurers. Law enforcement and industry officials
identified certain other types of information--ongoing investigative
information and reports of suspected fraud--that might also be useful
to include in a health care fraud database. However, although these
types of information would be potentially beneficial, they would also
pose increased risks of inappropriate disclosure and misuse.
Many law enforcement, regulatory, and industry officials we spoke
with agreed that a database comprising final adverse actions may
benefit investigators only marginally. Although they said this type
of information would be useful in compiling general background
information on suspects, they added that it is already publicly
available from other sources. However, the officials noted that
disclosure of such information would likely pose minimal risks of
civil lawsuits for violation of individuals' privacy rights. Ongoing
investigation information has a lesser degree of credibility and a
higher degree of sensitivity than final adverse actions information.
The officials said that this type of information can be used to help
build prosecutable cases; however, such information has not yet been
adjudicated and would therefore have to be protected against
inappropriate disclosures.
A database of suspected fraud referrals also poses risks from
inappropriate disclosures. In many instances, minimal investigative
time has been spent to verify the validity of fraud referral
information. However, according to the officials we spoke with, such
information can be useful to investigators in identifying previously
undiscovered fraud. In addition to the issues noted above,
centralized databases also pose uncertainties about development and
operating costs. These costs generally have not been addressed by
any of the proposals discussed above.
COMMENTS AND OUR EVALUATION
---------------------------------------------------------- Chapter 3:5
In its written comments on the draft report, NHCAA commented that a
centralized database, if properly created, would be a useful
additional tool in fighting health care fraud. As an analogy, NHCAA
referred to the Provider Indexing Network System and said that a
database is most useful when it (a) includes information on active
investigations, (b) has safeguards and procedures that are carefully
outlined, and (c) has modest costs. Further, NHCAA commented that a
centralized database would be particularly helpful if there is
disclosure of information by both law enforcement agencies and
private payers on a regular basis. Finally, NHCAA made some
technical and clarifying comments, which we incorporated where
appropriate.
In its written comments on the draft report, the American Medical
Association supported the sharing of information related to fraud and
abuse but said that creating a national database may not be the best
use of limited enforcement dollars. The Association commented that
databases can be exceedingly expensive to establish and maintain,
have great potential for problems with inappropriate use and
disclosure of information, and also may not sufficiently protect the
confidentiality of patient records.
ORGANIZATIONS CONTACTED BY GAO
=========================================================== Appendix I
As listed in tables I.1 and I.2, we contacted 12 offices of federal
agencies, 6 offices of state agencies, and 13 private insurance
companies.
Table I.1
Federal and State Agencies and Private
Insurers Contacted in Four States
State Federal State Private insurers
------------------ ------------------ ------------------ --------------------
Florida U.S. Attorney's Department of Blue Cross/Blue
Office, Middle Insurance, Shield of Florida
District of Division of (Jacksonville)
Florida Insurance Fraud
(Jacksonville) (Tallahassee)
U.S. Attorney's Nationwide Insurance
Office, Northern (Gainesville)
District of
Florida
(Tallahassee)
Federal Bureau of
Investigation
(Jacksonville)
Maryland U.S. Attorney's Insurance Blue Cross/Blue
Office, District Administration Shield of Maryland
of Maryland (Baltimore) (Owings Mills)
(Baltimore)
Federal Bureau of Office of the U.S. Fidelity and
Investigation Attorney General Guaranty Company
(Baltimore) (Baltimore) (Baltimore)
Postal Inspection Maryland Insurance
Service Fraud Unit
(Baltimore) (Baltimore)
Massachusetts U.S. Attorney's Insurance Fraud Allmerica Financial
Office, District Bureau (Boston) (Worcester)
of Massachusetts
(Boston)
Federal Bureau of Massachusetts Mutual
Investigation Life Insurance
(Boston) Company
(Springfield)
Postal Inspection
Service (Boston)
Texas U.S. Attorney's Department of Blue Cross/Blue
Office, Southern Insurance, Shield of Texas
District of Texas Insurance Fraud (Richardson)
(Houston) Unit (Austin)
Federal Bureau of GEICO Insurance
Investigation (Houston)
(Houston)
Postal Inspection
Service (Houston)
--------------------------------------------------------------------------------
Table I.2
National Insurance Companies Contacted
in Connecticut and Illinois
State Insurer
---------------------- ----------------------------------------------
Connecticut Aetna Health Plans (Middletown)
ITT Hartford Insurance (Simsbury)
Illinois CNA Insurance Companies (Chicago)
Kemper National Insurance Companies (Long
Grove)
State Farm Insurance Companies (Bloomington)
----------------------------------------------------------------------
COMPARISON OF STATE IMMUNITY
STATUTES
========================================================== Appendix II
Federal National
State law law Associatio
Requires enforcemen enforcemen n of
reportin Immunity t Insurance t Federal Insurance
g of provided authoritie commission authoritie regulatory Commission Other Other\ Bad Fraudulent
State fraud?\a ? s er s agencies ers insurers b Malice faith intent Other\c
-------------- -------- -------- ---------- ---------- ---------- ---------- ---------- -------- ------ ------ ------ ---------- -------
AK Yes Yes X X
AL No No
AR No Yes X X X X X X X
AZ Yes Yes X X
CA Yes Yes X X X X X X
CO No Yes X X X X
CT No Yes X X X
DE Yes Yes X X X X X X X X
FL Yes Yes X X X X X X X X X
GA Yes Yes X X X X X
HI No No
IA No Yes X X X X X X X X
ID Yes Yes X X X X
IL No Yes X X X X
IN No Yes X X X X X X X X X
KS No Yes X X X X X X X X
KY Yes Yes X X X X X X X X
LA Yes Yes X X X X X X X X
MA Yes Yes X X X
MD Yes Yes X X X X
ME No Yes X X X X X X X X
MI No No
MN Yes Yes X X X X
MO Yes Yes X X
MS No No
MT Yes Yes X X X
NC Yes Yes X X
ND Yes Yes X X X X X X X
NE No Yes X X X X X X X
NH No Yes X X X X X X X X
NJ Yes Yes X X X
NM No Yes X X X X X X X X
NV Yes Yes X X X X X
NY Yes Yes X X X X
OH Yes Yes X X X X X X X X X X
OK No No
OR No No
PA Yes Yes X X X X X X
RI No No
SC Yes Yes X X X X
SD No Yes X X X X X
TN No No
TX Yes Yes X X X X X X X X
UT No Yes X X X X X X
VA No No
VT No No
WA Yes Yes X X X X
WI No Yes X X
WV No No
WY No No
-----------------------------------------------------------------------------------------------------------------------------------------------------
Note: Survey responses about state immunity laws were not
independently verified by GAO.
\a Applicable state statutes generally apply to all types of
insurance fraud and do not focus specifically or soley on health care
fraud. The reporting requirements vary by who is required to report
suspected fraud and to whom the report is made.
\b Florida also grants immunity for sharing with the National
Insurance Crime Bureau; Indiana also grants immunity for sharing with
any organization established to detect and prevent fraudulent
insurance acts; Massachusetts grants immunity only for sharing with
the fraud bureau (which is not a state law enforcement entity); Maine
also grants immunity for sharing with organizations established to
detect and prevent fraudulent insurance acts; New Hampshire also
grants immunity for sharing with any state or federal agency
established to detect, prevent, or prosecute insurance fraud; and
Ohio grants immunity for sharing with any person involved in the
detection or prevention of fraudulent insurance acts.
\c California also requires absence of willful intent (as defined in
California Penal Code); Connecticut also requires absence of willful
intent to injure any person; Florida also requires absence of
reckless disregard for the rights of any insured; and Kentucky also
requires absence of gross negligence.
Source: GAO survey of state insurance commissioners.
(See figure in printed edition.)Appendix III
STATE INSURANCE COMMISSIONERS
HEALTH CARE FRAUD SURVEY
========================================================== Appendix II
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
DATABASES AND OTHER INFORMATION
RESOURCES THAT MAY BE USEFUL TO
HEALTH CARE FRAUD INVESTIGATORS
========================================================== Appendix IV
FEDERAL RESOURCES
-------------------------------------------------------- Appendix IV:1
NATIONAL CRIME INFORMATION
CENTER
------------------------------------------------------ Appendix IV:1.1
The National Crime Information Center is the nation's most extensive
computerized criminal justice information system. The system
consists of a central computer at FBI headquarters in Washington,
D.C.; dedicated telecommunications lines; and a coordinated network
of federal and state criminal justice information systems. The
system provides users with access to over 24 million records in 14
files, such as files on wanted persons, stolen vehicles, and missing
persons. The system's largest file, the Interstate Identification
Index, provides access to about 17 million criminal history
information records contained in state systems.
Over 19,000 federal, state, and local law enforcement and other
criminal justice agencies in the United States and Canada can access
the National Crime Information Center directly. About 97,000
computer terminals in these agencies can access the system. An
additional 51,000 law enforcement and other criminal justice agencies
can access the system indirectly through agreements with user
agencies that have direct access. More than 500,000 individuals
within the user agencies can access the system, either directly from
their own computer terminals or indirectly through computer terminal
operators.
The FBI is responsible for overall management of the National Crime
Information Center. However, an Advisory Policy Board, composed of
managers of state and local user systems, is responsible for
establishing and implementing operational policies, including
security.
HHS SANCTIONS
------------------------------------------------------ Appendix IV:1.2
HHS has the authority to exclude from participation in the Medicare
and Medicaid programs any health care providers and practitioners
determined to have engaged in fraudulent or abusive practices. Under
section 1128(a) of the Social Security Act, exclusion is mandatory
for program-related convictions and for patient abuse or neglect
convictions. Section 1128(b) of the act lists 14 bases upon which
HHS has permissive or optional authority to make exclusions. These
exclusion bases include, for example, fraud-related convictions,
license revocations or suspensions by state boards,\1 and defaults on
health education loan obligations. During fiscal years 1990 through
1995, HHS reported that it excluded 6,986 providers and practitioners
from the Medicare and Medicaid programs.
HHS makes the names of excluded providers and practitioners available
through various channels. Twice a year, for example, the HHS Office
of Inspector General prepares a Cumulative Sanction Report, which is
an alphabetical listing of excluded individuals and entities. For
each name listed, the report shows date of birth (for individuals),
health care specialty, address, and basic information on the
exclusion (type of action, date of notice, and length of the
exclusion period). Upon request, HHS provides the report (a paper
copy or downloaded to a diskette) to interested parties. Also,
beginning in fall 1995, HHS made the list of excluded providers and
practitioners accessible via Internet. Further, HHS provides monthly
exclusion updates to the National Federation of State Licensing
Boards.
--------------------
\1 According to HHS Office of Inspector General officials, the agency
routinely obtains reports (of license revocations and suspensions)
from the National Federation of State Licensing Boards.
HEALTH CARE FINANCING
ADMINISTRATION'S FRAUD
INVESTIGATION DATABASE
------------------------------------------------------ Appendix IV:1.3
The Fraud Investigation Database will be the first nationwide system
devoted solely to Medicare fraud and abuse data accumulation. In
January 1996, the Health Care Financing Administration field tested
the system and plans to have it fully operational later in the year.
As currently planned, the system will provide the current status of
all Medicare fraud cases, a chronology of events, and documentation
of those cases referred to law enforcement agencies. Organizations
with access to the system will include Health Care Financing
Administration central and regional offices, Medicare contractors,
HHS Office of Inspector General, DOJ, and FBI.
NATIONAL PRACTITIONER DATA
BANK
------------------------------------------------------ Appendix IV:1.4
Pursuant to the Health Care Quality Improvement Act of 1986 (Title IV
of P.L. 99-660), the National Practitioner Data Bank was created as
a clearinghouse for the collection and release of certain information
related to the professional competence and conduct of physicians,
dentists, and other health care practitioners. The intent of the
1986 act is to improve the quality of health care by (1) encouraging
health care practitioners to identify and discipline those engaged in
unprofessional behavior and (2) restricting the ability of unethical
or incompetent practitioners to move from state to state without
disclosure or discovery of their previous damaging or incompetent
performance.
The Data Bank is intended to function primarily as a flagging system
to facilitate a comprehensive review of professional credentials.
The law requires applicable entities to report adverse action
information to the Secretary of HHS for inclusion in the Data Bank.
Specifically, within 15 days of an adverse action, hospitals, other
health care entities, and professional societies must submit reports
to the appropriate state medical or dental boards.\2 In turn, within
15 days these boards are responsible for forwarding the reports to
the Data Bank. In addition, with regard to licensure actions--such
as revocation or suspension of a physican's or dentist's
license--reports to the Data Bank must be submitted by the boards
within 30 days of the date such action is taken. Also, within 30
days of a payment, medical malpractice payers must submit reports to
the Data Bank and to the appropriate state licensing board.
According to HHS guidelines:
"The Data Bank is intended to augment, not replace, traditional
forms of credentials review. As a nationwide flagging system,
it provides another resource to assist State Licensing Boards,
hospitals, and other health care entities in conducting
extensive, independent investigations of the qualifications of
the health care practitioners they seek to license, hire, or to
whom they wish to grant clinical privileges."\3
In December 1988, HHS' Health Resources and Service Administration
awarded a 5-year, $15.8-million contract to the Unisys Corporation to
develop and operate the Data Bank at the company's computer facility
in Camarillo, California. In September 1990, this national
clearinghouse system began operating. The 1986 act allows HHS to
charge user fees to recover the costs of processing queries. When
the Data Bank first opened, the basic user fee was $2 per query;
however, due to higher than expected processing costs, the fee was
increased to $6 within the first year of operations. At the time of
our review in 1995, the basic fee was still $6 per query.
In general, to be eligible to query the Data Bank, an entity must be
(1) a board of medical examiners or other state licensing board, (2)
a hospital or other health care entity that provides health care
services and engages in formal peer review activity, (3) a
professional society that engages in professional review activity
through a formal peer review process, or (4) a health care
practitioner who requests information concerning himself or
herself.\4 The general public may not request information from the
Data Bank, except in a form that does not allow identification of a
particular person or entity. Also, medical malpractice payers may
not request information even though they are required to report.
As of December 1994, the Data Bank contained reports on more than
97,000 disciplinary/adverse actions or malpractice payments involving
almost 73,000 individual practitioners. Of these practitioners, 75.1
percent were physicians, 15.5 percent were dentists, and the
remaining 9.4 percent were other health care practitioners. From
September 1990 through December 1994, the Data Bank responded to over
4.5 million queries from hospitals, licensing boards, professional
societies, and individual practitioners. According to a Health
Resources and Service Administration official, responses to Data Bank
queries are electronically disseminated to requesters by modem or
diskette (about 88 percent) or by mail (about 12 percent).
--------------------
\2 Adverse actions are defined as adverse licensure actions, adverse
clinical privilege actions, and adverse professional society
membership actions.
\3 HHS, Health Resources and Service Administration, National
Practitioner Data Bank Guidebook, Publication No. HRSA-94-027
(Rockville, MD: October 1994), p. A-3.
\4 Note that the list of entities eligible to query the Data Bank
does not include law enforcement agencies. Entities entitled to
participate in the Data Bank are defined in provisions of the 1986
Act, as amended, and in regulations codified at 45 CFR Part 60.
FINANCIAL CRIMES ENFORCEMENT
NETWORK
------------------------------------------------------ Appendix IV:1.5
Established in 1990, the Financial Crimes Enforcement Network
(FinCEN) is a separate office within the Department of the Treasury.
FinCEN is a governmentwide, multisource intelligence and analytical
entity that does not initiate or carry out any investigations on its
own. Rather, its primary purpose is to assist other agencies by (1)
identifying suspected offenders and reporting on trends and patterns
in money laundering by analyzing various databases maintained by
other agencies, (2) developing and disseminating research and policy
studies on money laundering enforcement, (3) supporting
governmentwide law enforcement by providing tactical support for
ongoing investigations, and (4) supporting other law enforcement
agencies by using database queries to answer requests for information
received at a communications center.
Currency transaction and other reports required by the Bank Secrecy
Act (P.L. 91-508, 84 Stat. 1114) are the primary source for most of
the financial intelligence information accessed and disseminated by
FinCEN staff. Generally, by accessing and researching various
databases, FinCEN analysts uncover and piece together information
about (1) bank accounts, bearer bonds and other securities, real
property, vehicles, and other assets; (2) accomplices, known
associates, additional suspects, and witnesses; and (3) Social
Security numbers, birth dates, addresses, phone numbers, and other
identifying items.
STATE RESOURCES
-------------------------------------------------------- Appendix IV:2
NATIONAL ASSOCIATION OF
INSURANCE COMMISSIONERS
------------------------------------------------------ Appendix IV:2.1
As the nation's oldest association of state officials, the National
Association of Insurance Commissioners coordinates the insurance
regulatory efforts of the various states. The Association maintains
the largest insurance industry database in the world. The database
contains information from the annual financial statements of more
than 5,000 U.S. insurers--which represent about 99 percent of all
U.S.-based insurance companies. The database provides state
insurance commissioners and state departments of insurance with the
information needed to regulate and monitor the solvency of insurance
companies, among other things.
The database also contains a synopsis of formal regulatory or
disciplinary actions--cease and desist orders, license revocations
and suspensions, fines and penalties, etc.--taken against insurance
agents and companies. Available on-line since 1988, this information
can be searched routinely by regulators to help prevent violations in
multiple jurisdictions. Search options include Social Security
numbers, dates of birth, and company codes; also, reports may be
generated for any given date range.
In 1990, the database's regulatory and disciplinary action
information became available to the public. For example, according
to Association literature, insurers can purchase the information to
screen applicants for agent licensure purposes and to identify
current agents. In 1994, more than 12,800 new actions were added to
the database. As of 1995, the database contained the names of more
than 50,000 insurance agents and companies against which some
regulatory actions have been taken. Also, during 1995, this database
information became available to regulators and insurers in a CD-ROM
format.
INDUSTRY AND COMMERCIAL
RESOURCES
-------------------------------------------------------- Appendix IV:3
PROVIDER INDEXING NETWORK
SYSTEM
------------------------------------------------------ Appendix IV:3.1
The Provider Indexing Network System is a database that enables NHCAA
corporate members and participating public sector organizations
(including the FBI and the HHS Office of Inspector General) to share
information on health care fraud and possibly combine investigative
cases in order to make them prosecutable at the federal level.
Information in the database includes (1) the names and full business
identities of providers suspected, indicted, or convicted of health
care fraud; and (2) a description of the specific types of fraudulent
activity involved. According to NHCAA officials, data are entered
into the system only if the information pertains to (1) an actual
ongoing fraud investigation by a member company, (2) a fraud-related
criminal indictment, or (3) a fraud conviction. Further, an
Association official told us that beginning in 1994, the system began
to include data on sanctions imposed by HHS on Medicare and Medicaid
providers.
The database is located at NHCAA headquarters in Washington, D.C. It
is a bulletin board system with on-line, password-protected
data-input and data-retrieval access available to authorized users by
telephone modem. Users can focus or customize access queries to
obtain, for example, information involving a specific health care
specialty, a certain type of fraud, or a given geographic area.
NATIONAL INSURANCE CRIME
BUREAU
------------------------------------------------------ Appendix IV:3.2
The National Insurance Crime Bureau is a nonprofit organization
supported by approximately 1,000 property/casualty insurers and
self-insured companies for the purpose of actively assisting law
enforcement. Among the Crime Bureau's goals are to (1) promote
deterrence and prevention of insurance crimes by working with the
public, law enforcement, insurance departments, and elected
officials; and (2) provide a single information-sharing network to
optimize insurance crime investigation, prosecution, and restitution.
As a tool to enhance investigative effectiveness, the Crime Bureau
maintains an interactive database containing comprehensive insurance
claim and vehicle-related information, such as automobile theft and
accident claims and workers' compensation claims. The database is
continually updated with records provided by insurance companies,
self-insured companies, vehicle manufacturers, impound lots, shipping
lines, state fraud bureaus, law enforcement agencies, and the U.S.
Customs Service. The Crime Bureau also maintains historical stolen
vehicle and property records that the FBI has purged from National
Crime Information Center files.
Although the Crime Bureau's database contains information primarily
involving property/casualty and automobile insurance fraud, there is
often a health care fraud component to such fraud. For example,
staged automobile accidents often are designed to generate fraudulent
bodily injury claims. Furtherance of these schemes requires the
knowing participation of health care providers to falsely document
injuries. The identity of these providers is important intelligence
for insurance fraud investigators because unethical providers are
often involved in many fraud schemes simultaneously.
(See figure in printed edition.)Appendix V
COMMENTS FROM THE NATIONAL HEALTH
CARE ANTI-FRAUD ASSOCIATION
========================================================== Appendix IV
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)Appendix VI
COMMENTS FROM THE AMERICAN MEDICAL
ASSOCIATION
========================================================== Appendix IV
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix VII
GENERAL GOVERNMENT DIVISION,
WASHINGTON, D.C.
------------------------------------------------------- Appendix VII:1
David P. Alexander, Senior Social Science Analyst
Pamela V. Williams, Communications Analyst
OFFICE OF THE GENERAL COUNSEL
------------------------------------------------------- Appendix VII:2
Jan B. Montgomery, Assistant General Counsel
DALLAS FIELD OFFICE
------------------------------------------------------- Appendix VII:3
Danny R. Burton, Assistant Director
Philip D. Caramia, Senior Evaluator
Warren M. Lundy, Evaluator
Frederick T. Lyles, Evaluator
Dorothy M. Tejada, Computer Specialist
Beth D. Atkins, Technical Information Specialist
*** End of document. ***