Health Care Fraud: Types of Providers Involved in Medicare, Medicaid, and the Children's Health Insurance Program Cases
Published: 2012-09-07T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: GAO has designated Medicare and Medicaid--which are administered by the Centers for Medicare & Medicaid Services (CMS), an agency of HHS--as high-risk programs partly because their size and complexity make them vulnerable to fraud. Several federal agencies conduct health care fraud investigations and related activities, including HHS-OIG and DOJ's Civil Division, and the 93 U.S. Attorney's Offices (USAO). In fiscal year 2011, the federal government devoted at least $608 million to conduct such activities. Additionally, state MFCUs investigate health care fraud in their state's Medicaid and CHIP programs.
GAO was asked to provide information on the types of providers that are the subjects of fraud cases. This report identifies provider types who were the subjects of fraud cases in (1) Medicare, Medicaid, and CHIP that were handled by federal agencies, and changes in the types of providers in 2005 and 2010; and (2) Medicaid and CHIP fraud cases that were handled by MFCUs. To identify subjects of fraud cases handled by federal agencies, GAO combined data from three agency databases--HHS-OIG, USAOs, and DOJ's Civil Division--and removed duplicate subject data. GAO also reviewed public court records, such as indictments, to identify subjects' provider types because the USAOs and DOJ Civil Division data did not consistently include provider type. To describe providers involved in fraud cases handled by the MFCUs, GAO collected aggregate data from 10 state MFCUs, which represented the majority of fraud investigations, indictments, and convictions nationwide.
section_title: What GAO Found
paragraphs: According to 2010 data from the Department of Health and Human Services' Office of the Inspector General (HHS-OIG) and the Department of Justice (DOJ), 10,187 subjects--individuals and entities involved in fraud cases--were investigated for health care fraud, including fraud in Medicare, Medicaid, and the Children's Health Insurance Program (CHIP). These subjects included different types of providers and suppliers--such as physicians, hospitals, durable medical equipment suppliers, home health agencies, and pharmacies--that serve Medicare, Medicaid, and CHIP beneficiaries. For criminal cases in 2010, medical facilities--including medical centers, clinics, or practices--and durable medical equipment suppliers were the most-frequent subjects investigated. Hospitals and medical facilities were the most-frequent subjects investigated in civil fraud cases, including cases that resulted in judgments or settlements.
Subjects of criminal cases: Many of the 7,848 criminal subjects in 2010 were medical facilities or durable medical equipment suppliers, representing about 40 percent of subjects of criminal cases. Similarly, in 2005, medical facilities and durable medical equipment suppliers accounted for 41 percent of criminal case subjects. Data from 2010 show that most of the subjects were in cases that were not referred by HHS-OIG to DOJ for prosecution (85 percent). Of the subjects whose cases were pursued, most were found guilty or pled guilty or no contest.
Subjects of civil cases: Over one-third of the 2,339 subjects of civil cases in 2010 were hospitals and medical facilities. In 2010, about 35 percent more subjects were investigated in civil fraud cases than in 2005. Nearly half of the subjects of 2010 cases were pursued. Among the subjects whose cases were pursued, 55 percent resulted in judgments or settlements.
Additionally, data from HHS-OIG show that nearly 2,200 individuals and entities were excluded from program participation for health care fraud convictions and other reasons, including license revocation and program-related convictions. About 60 percent of those individuals and entities excluded were in the nursing profession. Pharmacies or individuals affiliated with pharmacies were the next-largest provider type excluded, representing about 7 percent of those excluded.
According to data GAO collected from 10 state Medicaid Fraud Control Units (MFCU), over 40 percent of the 2,742 subjects investigated for health care fraud in Medicaid and CHIP in 2010 were home health care providers and health care practitioners. Of the criminal cases pursued by these MFCUs, home health care providers comprised nearly 40 percent of criminal convictions and 45 percent of subjects sentenced in 2010. Civil health care fraud cases pursued by these MFCUs in 2010 resulted in judgments and settlements totaling nearly $829 million. Pharmaceutical manufacturers were to pay more than 60 percent ($509 million) of the total amount of civil judgments and settlements.
GAO provided a draft of the report to DOJ and HHS. DOJ provided technical comments, which have been incorporated as appropriate.

section_title: Letter
paragraphs: In fiscal year 2011, 48.4 million individuals were enrolled in Medicare;  55.6 million in Medicaid; and 8.7 million in the Children’s Health Insurance  Program (CHIP). Together, these programs accounted for approximately  $849.2 billion in federal expenditures. The federal government allocated  at least $608 million in funding to investigate and prosecute cases of  alleged health care fraud in health care programs that year.different types of providers and suppliers who serve Medicare, Medicaid,   Many  and CHIP beneficiaries are subjects of fraud cases, including physicians,  hospitals, durable medical equipment suppliers, home health agencies,  and pharmacies. Because their size and complexity make them  vulnerable to fraud, we have designated Medicare and Medicaid as high- risk programs. According to the Department of Health and Human  Services’ Office of Inspector General (HHS-OIG), common health care  fraud schemes include providers or suppliers billing for services or  supplies not provided or not medically necessary, purposely billing for a  higher level of service than that provided, misreporting data to increase  payments, paying kickbacks to providers for referring beneficiaries for  specific services or to certain entities, and stealing providers’ or  beneficiaries’ identities.
The Centers for Medicare & Medicaid Services (CMS)—an agency within  the Department of Health and Human Services (HHS) that oversees  Medicare, Medicaid, and CHIP—along with HHS-OIG, and the  Department of Justice (DOJ)—including the Federal Bureau of  Investigation (FBI)—work together to investigate and prosecute alleged  fraud in Medicare, Medicaid, and CHIP. For example, CMS, HHS-OIG,  and DOJ officials comprise Medicare Strike Force teams, which are  designed to use data analysis techniques to identify and stop Medicare  fraud. Additionally, these agencies coordinate with state Medicaid Fraud  Control Units (MFCU), which are primarily responsible for investigating  and prosecuting fraud within their state Medicaid programs.
HHS-OIG, FBI, and MFCUs receive referrals of alleged fraud from a  variety of sources, including program beneficiaries, state agencies, law  enforcement, and whistleblowers. CMS and its contractors report alleged  fraud cases to HHS-OIG for investigation. HHS-OIG typically refers  investigations of the alleged fraud cases that it believes have merit to  DOJ for civil litigation or criminal prosecution because it does not have  the authority to prosecute health care fraud cases. MFCUs—which are  generally located in the state offices of the Attorney General—investigate  and typically prosecute health care fraud cases under state laws.  Additionally, MFCUs coordinate with HHS-OIG and DOJ on certain fraud  cases. DOJ and its divisions may also receive referrals of alleged fraud  through civil cases filed by individuals under the False Claims Act (FCA).  The outcomes of health care fraud cases can include civil and criminal  penalties. Civil penalties include monetary settlements, and criminal  penalties include incarceration sentences, fines, and restitution. HHS-OIG  also can impose administrative penalties on providers—including  imposing a civil monetary penalty, or excluding a provider from  participating in federal health care programs. In fiscal year 2011, the  federal government won or negotiated approximately $2.4 billion in  judgments and settlements related to health care fraud.
Concerns have been raised about the need to better detect and combat  fraud in federal health care programs, such as Medicare, Medicaid, and  CHIP. Some of these concerns have specifically focused on determining  whether resources to fight fraud are being targeted toward the types of  health care providers committing the most fraud. This report provides  information on individuals or entities involved in health care fraud cases in  Medicare, Medicaid, and CHIP. These individuals and entities are  generally referred to as “subjects” of health care fraud cases. In this  report, we identify: (1) subjects of health care fraud cases by provider  type involving Medicare, Medicaid, or CHIP that were handled by federal  agencies, and changes in the types of providers in 2005 and 2010; and  (2) subjects of health care fraud cases by provider type for those cases  involving Medicaid or CHIP that were handled by MFCUs, and changes in  the types of providers investigated in fraud cases in 2005 and 2010.
To identify subjects of health care fraud cases—including referrals,  investigations, prosecutions, and outcomes—by provider type for cases  involving Medicare, Medicaid, or CHIP that were handled by federal  agencies, and to examine changes in the types of provider in 2005 and  2010, we obtained data on closed health care fraud cases from HHS- OIG, DOJ’s Civil Division, and the Executive Office of U.S. Attorneys  (EOUSA), which provides administrative support for the 94 U.S.  Attorney’s Offices (USAO). We obtained data on fraud cases involving  Medicare, Medicaid, and CHIP—including any cases that were closed in  calendar years 2005 and 2010. However, due to limitations with some of  the 2005 data, our analysis of the changes in the types of providers in  2005 and 2010 is limited. Each fraud case can have more than one  subject, and our analysis focuses on the subjects of the fraud cases  rather than the cases themselves. Additionally, a fraud subject can be  either an entity itself or an individual affiliated with an entity. The data  we received from HHS-OIG pertained only to health care fraud in  Medicare, Medicaid, and CHIP; however, data we received from the  USAOs and DOJ’s Civil Division may also include other federal health  care program fraud as well as fraud in the private sector as the databases  used to track fraud cases do not capture fraud exclusively in Medicare,  Medicaid, and CHIP. Since many fraud cases are handled jointly by HHS- OIG, USAOs, and DOJ’s Civil Division (and entered into each agency’s  own database), we identified fraud case subjects that were in more than  one data set we received by comparing subject information to the extent  possible. However, it is possible that our analysis still includes some  duplication in fraud case subjects. With the exception of one analysis at  the agency level, we excluded duplicate data so that each subject was  only included once. The data we received from HHS-OIG contained  information on the provider type of the subject; provider type is not a  required field in the USAOs database, consequently, the USAOs do not  consistently have provider type information, and DOJ’s Civil Division does  not collect data by provider type. In order to identify the provider type of  subjects in the USAO and DOJ Civil Division data that were missing  information, it was necessary for us to conduct an extensive search of  publicly available court records to identify the provider type for 2,470  subjects. We searched for the subjects in the Public Access to Court  Electronic Records (PACER) database and reviewed indictments, plea  agreements, and other court documents to obtain information on the  subject’s provider type. After we identified the provider types for data we  received from USAOs and DOJ’s Civil Division and after reviewing the  data on provider types in the HHS-OIG data, we aggregated the various  provider types into broad categories, which are described in appendix I.  We also reviewed agency documents and conducted interviews with  officials from HHS-OIG and DOJ—including the Civil and Criminal  Divisions, FBI, and EOUSA—to obtain information about health care  fraud cases and the databases used to track these cases. To assess the  reliability of the data, we interviewed officials from these agencies to  discuss the quality of the data we obtained, reviewed relevant  documentation, and examined the data for reasonableness and internal  consistency. We found these data were sufficiently reliable for the  purposes of our report (see app. I for additional information about our  methodology).
To identify subjects of health care fraud cases by provider type for those  cases involving Medicaid or CHIP that were handled by state MFCUs,  and to examine changes in the types of providers investigated and  prosecuted for fraud in 2005 and 2010, we collected aggregate data on  closed fraud cases from 10 state MFCUs for 2005 and 2010. These  MFCUs were selected because, collectively, they accounted for the  majority of open fraud investigations, fraud indictments or charges, fraud  convictions, amounts recovered from civil settlements and judgments,  MFCU grant expenditures, and number of MFCU staff in fiscal year  2010. The 10 selected MFCUs were in California, Florida, Illinois,  Indiana, Louisiana, Massachusetts, New York, Ohio, Texas, and  Virginia. We developed a standardized data-collection instrument based  on the HHS-OIG’s Quarterly Statistical MFCU Report Template and  accompanying definitions. We received feedback on a draft of the data- collection instrument from officials from two MFCUs before finalizing it.  Although the data we received from the 10 MFCUs represent a majority of  fraud cases handled by all MFCUs nationwide, the data are not  generalizable to other states. The data we received represented actions  related to fraud cases that occurred only in the years we requested.  Each instance of fraud in the data submitted by the 10 MFCUs represents  one individual, facility, or organization that we refer to as the subject of  the fraud case. Fraud case subjects may be an individual, such as a  dentist or a nurse; an organization, such as a pharmaceutical  manufacturer; or a facility, such as a hospital. Several subjects may be  investigated in one fraud case; however, each subject in a fraud case is  counted separately. Additionally, for our analysis, we aggregated various  provider types into broad categories, which are described in appendix II.  Because the state MFCUs may work together on certain cases that cross  state lines, it is possible that duplicate data are included in our analysis.  We also conducted interviews with officials from CMS, the HHS-OIG’s  Office of Evaluations and Inspections, and the National Association of  MFCUs to obtain information on fraud cases handled by the MFCUs. We  relied on the data as reported by the 10 MFCUs and did not  independently verify these data. However, we reviewed the data for  reasonableness and followed up with state officials for clarification when  necessary. On the basis of these activities, we determined these data  were sufficiently reliable for the purpose of our report (see app. II for  additional information).
We conducted this performance audit from June 2011 to September 2012  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for any findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: Medicare, Medicaid, and CHIP beneficiaries receive health care from a  variety of providers and in different settings. When suspected cases of  fraud emerge, many agencies are involved in investigating and  prosecuting these cases and they rely on multiple statutes.
subsections: section_title: Medicare, Medicaid, and CHIP Health Care Providers
paragraphs: Medicare, Medicaid, and CHIP beneficiaries receive health care from a  variety of providers—including physicians, nurses, dentists, and other  medical professionals—in many different settings, such as hospitals,  medical practices, clinics, and health centers. Additionally, beneficiaries  may receive care and assistance from home health agencies and aides,  durable medical equipment suppliers, and medical transportation  companies. In 2010, about $478 billion in federal Medicare, Medicaid, and  CHIP spending was attributable to hospital care (41.3 percent of total  spending) and physician and clinical services (18.3 percent of total  spending) based on National Health Expenditure Account data from CMS.  Expenditures for prescription drugs accounted for 9.3 percent of spending  in these programs, and nursing home care accounted for 7.8 percent.  Many other categories of providers accounted for the remaining   23.4 percent.
section_title: Agencies That Investigate and Prosecute Health Care Fraud
paragraphs: Several agencies are involved in investigating and prosecuting health  care fraud cases, including the HHS-OIG; DOJ’s Civil and Criminal  divisions; the 94 USAOs; the FBI; and state MFCUs. The HHS-OIG and  FBI primarily conduct investigations of health care fraud, and DOJ’s  divisions typically prosecute or litigate those cases.additional information about the role of each agency in fraud  investigations and prosecutions.
These agencies often work together to investigate and prosecute health  care fraud cases. For example, HHS-OIG may open a fraud case, work  with the FBI during the investigation, and then refer the case to a USAO  for prosecution. Additionally, HHS-OIG, the FBI, a USAO, and DOJ’s  Criminal Division work jointly on health care fraud cases handled by  Medicare Strike Force teams. Health care fraud cases are opened by the  agencies either when they receive information about suspected fraudulent  activity from a source—which can include program beneficiaries and CMS  and its contractors—or if they proactively identify possible fraudulent  behavior through data analysis. Additionally, in civil cases known as qui  tam cases, individuals—referred to as relators—with evidence of fraud  can file a civil suit under the False Claims Act (FCA). These qui tam  cases are handled by a USAO or DOJ’s Civil Division, though they may  receive assistance in the investigation from HHS-OIG or the FBI. In other  fraud cases, if a fraud case is opened by HHS-OIG, the agency typically  conducts its investigation, determines whether the case has merit, and  refers the case to DOJ for criminal prosecution or civil litigation.  Alternatively, HHS-OIG may find that the case does not have merit and  may close the case. HHS-OIG also has authority to impose civil monetary  penalties or exclude the provider from participating in federal health care   Similarly, DOJ’s divisions may choose not to pursue a fraud  programs.case for a number of reasons, including a lack of evidence or insufficient  evidence to support the charges, or a lack of resources for investigation  or prosecution.
MFCUs investigate and typically prosecute health care fraud cases in the  state’s Medicaid program under state laws, and frequently coordinate with  HHS-OIG and DOJ on the investigation and prosecution of certain fraud  cases. Many MFCUs have authority to prosecute cases of fraud, but not  all MFCUs are able to do so and refer cases to other agencies for  prosecution. For example, Texas’ MFCU does not have the authority to  prosecute cases and refers cases to another agency or office, such as  the U.S. Attorney’s Office or the state’s District Attorney, for prosecution.
section_title: Fraud Statutes and Outcomes
paragraphs: Several statutes concern health care fraud.following:
Civil monetary penalty provisions of the Social Security Act are  applicable to certain enumerated activities, such as knowingly  presenting a claim for medical services that is known to be false and  fraudulent. The Social Security Act also provides for criminal  penalties for knowing and willful false statements in applications for  payment. In addition, providers may be excluded on a mandatory or  permissive basis from participating in federal health care programs for  engaging in certain fraudulent activities.
The Anti-Kickback statute makes it a criminal offense for anyone to  knowingly and willfully solicit, receive, offer, or pay any remuneration  in return for or to induce referrals of items or services reimbursable  under a federal health care program, subject to statutory exceptions  and regulatory safe harbors.
For example, a payment program  under which a hospital paid physicians who referred patients for  admission would implicate the anti-kickback statute.
The Stark law and its implementing regulations prohibit physicians  from making “self-referrals”—certain referrals for “designated health  services” paid for by Medicare to entities with which the physician  (or immediate family) has a financial relationship. The Stark law also  prohibits these entities that perform the “designated health services”  from presenting claims to Medicare or billing for these services.
The Federal Food, Drug, and Cosmetic Act makes it unlawful to,  among other things, introduce an adulterated or misbranded  pharmaceutical product or device into interstate commerce.
The False Claims Act (FCA) is often used by the federal government  in health care fraud cases.including the knowing presentation of a false claim for payment by the  federal government. Claims that are submitted in violation of certain  other statutes may also be considered false claims and, as a result,  create additional liability under the FCA. Many health care fraud cases  pursued under the FCA are for billing for goods or services not  rendered, billing for unnecessary health care goods or services, or  billing for goods or services at a higher rate than what was provided.  Under the FCA, civil cases can be brought by the U.S. government or  by a private citizen.
The FCA prohibits certain actions,  The outcome of a fraud case can depend on whether the case is civil or  criminal, and if the case is prosecuted or litigated, the penalties  authorized under the relevant statutes. For example, civil cases that are  litigated may result in judgments imposed by a court or settlements  reached by the subjects and litigators of the fraud case. In criminal cases,  outcomes can include incarceration, probation, and fines. HHS-OIG may  also impose civil monetary penalties on providers for committing fraud,  and may exclude providers from participating in federal health care  programs. In some cases, a subject may receive both civil and criminal  penalties, and be excluded.
section_title: Medical Facilities Were the Most Frequent Subjects of Criminal Investigations, and Hospitals Were the Most Frequent Subjects of Civil Investigations
paragraphs: According to 2010 data, 10,187 subjects were investigated for health care  fraud. Medical facilities (such as medical centers, clinics, and medical  practices) and durable medical equipment suppliers were the most  frequent subjects of criminal fraud cases in 2010. Hospitals and medical  facilities were the most frequent subjects of civil fraud cases, including  cases that resulted in judgments or settlements. Nearly 2,200 individuals  were excluded from program participation by HHS-OIG, about 60 percent  of whom were in the nursing profession.
subsections: section_title: Approximately 10,200 Subjects Were Investigated for Health Care Fraud in 2010
paragraphs: According to 2010 data, 10,187 subjects were investigated for health care  fraud—of which, 7,848 were subjects of criminal fraud cases, and 2,339  were subjects of civil fraud cases. Data from 2010 shows that HHS-OIG  investigated health care fraud cases for nearly 8,900 subjects, many  more than were opened by the USAOs and DOJ’s Civil Division. Table 2  contains information on health care fraud subjects by agency, reflecting  the work of each agency in 2010. To fully reflect the work of each agency,  data on subjects that were included in more than one agency database  were included in the top portion of the table. The duplicate cases were  removed to arrive at the unique count of subjects and were not included  in our other analyses. Data comparing cases handled in 2005 and 2010  show that HHS-OIG investigated cases for nearly 2,800 more subjects in  2010 than it did in 2005, while the USAOs and DOJ’s Civil Division  handled cases for approximately the same number of subjects.
According to 2010 HHS-OIG data, most of the subjects involved in fraud  cases were referred to HHS-OIG by federal law enforcement agencies— such as the FBI—(38 percent), or state or local law enforcement agencies  (10 percent). Case subjects were also referred to HHS-OIG by CMS  contractors tasked with program integrity (14 percent), current or former  employees of providers (9 percent), or individuals (9 percent), and the  remainder were from other sources. (See table 3 for additional  information on the source of health care fraud cases referred to HHS- OIG.)
About 49 percent of criminal health care fraud subjects were, or were  affiliated with, medical facilities (such as medical practices, clinics, or  centers), durable medical equipment suppliers, and home health  agencies. Of the 7,848 subjects associated with criminal cases, about  1,100 were charged, and 85 percent of those charged were found guilty  or pled guilty or no contest. Of those subjects who were found guilty or  pled guilty or no contest, about 37 percent were medical facilities and  durable medical equipment suppliers.
According to 2010 data, many different types of providers—including  medical facilities and hospitals, or individuals affiliated with these  entities—were suspected of health care fraud. Specifically, about one- quarter of subjects investigated in criminal health care fraud cases were  medical facilities or were affiliated with these facilities. Additionally, about  16 percent of subjects were durable medical equipment suppliers. Over  19 percent were subjects for which we could not determine an affiliation.  See table 4 for additional information on the subjects of criminal health  care fraud cases by provider type for 2010.
Among the 7,848 subjects in 2010 criminal cases, nearly 50 percent were  the entities themselves, rather than individuals affiliated with those  entities. See table 5 for more detailed information on the types of  providers that were subjects in 2010 criminal cases. Of the 3,864 subjects  that were entities, most were durable medical equipment suppliers (819),  home health agencies (507), medical centers or clinics (506), or medical  practices (486). Additionally, more than 15 percent were physicians, and  about 14 percent were management employees—such as owners,  operators, or managers.
Our data show that 2010 criminal cases involved 2,300 more subjects  than 2005 cases. Additionally, some provider types had particularly large  increases in 2010 compared to the number of subjects investigated in  criminal cases in 2005. For example, cases where pharmacies were the  subjects increased from 99 subjects in 2005 to 321 in 2010 (an increase  of 224 percent), and the number of home health agency subjects  increased from 284 to 639 (an increase of 125 percent). The 2005 data  show that medical facilities and durable medical equipment suppliers  were the provider types with the most subjects investigated in cases, as  was also the case with 2010 data. In 2005, medical facilities represented  23 percent of all subjects in criminal cases, and durable medical  equipment suppliers accounted for 18 percent. Similarly, in 2010, medical  facilities accounted for 24 percent of all subjects in criminal cases, and  durable medical equipment suppliers accounted for 16 percent.
Most of the 7,848 subjects who were investigated for criminal fraud in  2010 were not pursued—meaning that HHS-OIG did not refer the  subject’s case to DOJ for prosecution. Most subjects—about   85 percent—were investigated in criminal cases that were not pursued   for a variety of reasons, mainly due to lack of resources or insufficient  evidence. The 2010 data indicated that 1,086 subjects were charged in  criminal fraud cases, which represented about 14 percent of all criminal  case subjects. Additionally, nearly 1 percent of subjects were involved in  criminal case appeals, most of which were decided favorably for the U.S.  government. See table 6 for additional information about the number of  subjects in criminal cases by outcome.
Among the 1,086 subjects that were charged, over 85 percent   (925 subjects) were found guilty, pled guilty, or pled no contest to some or  all of the criminal charges against them. For the remaining 15 percent of  subjects, charges were dismissed (9.4 percent), subjects were found not  guilty (1.2 percent), or had another outcome (4.2 percent).
Of the 925 subjects who were found guilty or pled guilty or no contest,  about 19 percent were from medical facilities—including medical centers,  clinics, or practices. Although 2010 Medicare, Medicaid, and CHIP  expenditures on durable medical equipment services was 1.3 percent of  total spending in those programs, approximately 19 percent of subjects  that were found guilty or pled guilty or no contest were durable medical  equipment suppliers. Many different provider types were among the  remaining subjects found guilty or that pled guilty or no contest. We could  not identify the affiliation of nearly one-third of the subjects, including both  health care providers and individuals. See table 7 for additional  information on these subjects in 2010 criminal cases by provider type.
Of the 925 subjects who were found guilty or pled guilty or no contest,   60 percent were sentenced to incarceration, and 73 percent were  sentenced to probation. Nearly 26 percent of those sentenced to  incarceration were subjects affiliated with durable medical equipment  suppliers, and 21 percent were affiliated with medical facilities. Similarly,  both durable medical equipment suppliers and medical facilities each  represented 17 percent of subjects sentenced to probation. The average  length of a sentence to incarceration was about 3.5 years, and the  maximum sentence received was a life sentence. Nearly 60 percent of  subjects sentenced to incarceration received sentences between 2 and   5 years, while nearly 21 percent received a term of 1 year or less. More  than 13 percent received sentences between 6 and 10 years and about   5 percent received sentences of more than 10 years of incarceration. The  average probation term was 2.8 years, and the maximum term was   10 years. Nearly 78 percent of subjects sentenced to probation received a  probation term between 2 and 5 years.
Subjects of criminal fraud cases could also be sentenced to home  detention, public service, or their sentences could be suspended.  Additionally, subjects could also be ordered to pay fines and restitution.  Data from HHS-OIG contained information on these types of penalties,  but data we received from the USAOs did not. According to 2010 data  from HHS-OIG
56 subjects were sentenced to home detention terms;
75 subjects were sentenced to complete public service;
31 subjects received suspended sentences;
440 subjects were required to pay a fine; and
307 subjects were required to pay restitution.
Among those subjects that were required to pay fines or restitution, or  both, the average amounts required were $898,361 in fines, and   $1.8 million in restitution. In total, subjects were ordered to pay nearly  $960 million in combined fines and restitution.
section_title: Hospitals and Medical Facilities Were the Most Frequent Subjects of Civil Fraud Cases, Including Cases That Resulted in Judgments or Settlements
paragraphs: According to 2010 civil case data for health care fraud, 2,339 subjects  were investigated in civil cases. Hospitals represented nearly 20 percent  of these subjects, and medical facilities about 18 percent. Civil cases  involving approximately 1,100 subjects were pursued—meaning that the  USAOs or DOJ’s Civil Division received the cases and took some sort of  action, such as litigating the case; and of those, 55 percent resulted in a  judgment for the government or in a settlement. For those cases that  resulted in a judgment or settlement, or both, about 44 percent of the  subjects were hospitals and medical facilities.
According to 2010 data, hospitals were nearly 20 percent of the subjects  of civil fraud cases, and medical facilities were also frequently the  subjects of civil cases, making up about 18 percent of the subjects. We  were unable to determine the provider type or their affiliation for about   18 percent of the subjects of civil cases. (See table 8 for additional  information on the subjects of civil health care fraud cases by provider  type for 2010.)
As previously mentioned, individuals can bring civil health care fraud  suits, known as qui tam cases, under the FCA. According to 2010 data  from the USAOs and DOJ’s Civil Division, 88 percent of subjects  investigated in civil cases were investigated in qui tam cases.
Nearly 61 percent of the subjects investigated in 2010 civil cases were  entities themselves, rather than individuals affiliated with those entities.  Most of these entities were hospitals, medical centers or clinics, medical  practices, or pharmaceutical manufacturers or suppliers. Additionally,  physicians represented 12 percent of the subjects; and management  employees, such as owners, operators, or managers, represented   8 percent of the civil case subjects. (See table 9 for more-detailed  information on the types of providers that were subjects in 2010 civil  cases.)
In 2010, over 600 more subjects were investigated in civil cases than in  2005, about a 35 percent total increase. Changes in provider types for  civil cases are not reported here because we were unable to identify  provider types for about 31 percent of the subjects in the 2005 data. In  the 2010 data, we were unable to identify the provider type for about   18 percent of subjects. Because of this limitation, the percentage  increases in certain provider types investigated in civil fraud cases may  not be an accurate reflection of the actual increases in provider types of  civil fraud cases.
Not all of the subjects investigated in 2010 civil cases were pursued— meaning that the USAOs or DOJ’s Civil Division received the case and  took some sort of action. According to the data we received, 1,087  subjects were involved in civil cases that were pursued, representing  nearly 47 percent of all civil case subjects. Among other subjects of civil  cases, more than 53 percent were not pursued for numerous reasons,  including a lack of resources or insufficient evidence. Additionally, less  than 1 percent of subjects were involved in civil appeals cases. (See table  10 for additional information about the number of subjects involved in civil  cases by outcome.)
According to data from the USAOs and DOJ’s Civil Division, most qui tam  cases did not result in a judgment or settlement. For example, 52 percent  of subjects in qui tam cases were either voluntarily dismissed by the  relator (34 percent) or were declined by the USAOs or DOJ’s Civil  Division (18 percent). Nearly 24 percent of qui tam cases were settled  and in 8 percent of qui tam cases there was a judgment for the  government.
For the 602 subjects for which cases resulted in a settlement or judgment  for the government or for the relator, 27 percent of the subjects were  hospitals and about 17 percent were medical facilities. For nearly   16 percent of subjects, we were unable to determine the affiliation of the  provider or individual. (See table 11 for information on provider types for  subjects where the case resulted in a settlement or judgment for the  government or relator.)
According to data from HHS-OIG, of those subjects investigated in cases  with a judgment or settlement, 275 subjects were to pay restitution as a  result of the judgment or settlement and 89 subjects were to pay fines.  Approximately 38 percent of the subjects that were to pay restitution were  hospitals; 17 percent were medical facilities; and 11 percent were  physicians whose affiliation we were unable to determine. Among those  subjects that were to pay fines or restitution, or both, the average  amounts were about $7.1 million in fines and about $5.4 million in  restitution. In total, subjects were to pay over $2.1 billion in combined  fines and restitution as a result of the judgments or settlements.
section_title: Nearly 2,200 Individuals and Entities Were Excluded from Program Participation by HHS-OIG, about 60 Percent of Whom Were in the Nursing Profession
paragraphs: HHS-OIG excluded individuals and entities from participating in federal  health care programs for a variety of reasons in 2010. These reasons  included convictions for health care fraud as well as reasons other than  for health care fraud, such as patient abuse or neglect. When  individuals or entities are excluded, their provider enrollment is revoked   According to 2010  and they are not eligible to bill for services provided.exclusion data we received from HHS-OIG, 2,190 individuals and entities  were excluded. About 60 percent of the individuals and entities excluded  were those in the nursing profession, such as nurses and nurses’ aides.  The next-largest provider type excluded was pharmacies or individuals  affiliated with pharmacies, though they only represented about 7 percent  of the 2010 exclusions. (See table 12 for additional information on the  types of providers excluded.)
There were a number of reasons why the 2,190 individuals and entities  were excluded; about 42 percent were excluded for license revocation,  suspension, or surrender; over 28 percent were for program-related  convictions; and about 10 percent were for felony health care fraud  convictions. Most of those excluded because of revoked, suspended, or  surrendered licenses were in the nursing profession. (See table 13 for  additional information on the reasons for excluding individuals in 2010.)
section_title: Home Health Providers Were the Largest Percentage of Criminal Convictions for MFCUs, and Pharmaceutical Manufacturers Were Ordered to Pay the Most in Civil Cases
paragraphs: Data we received from 10 state MFCUs show that more than 40 percent  of the fraud subjects were home health care providers, and health care  practitioners. Home health care providers also accounted for nearly   40 percent of criminal convictions and about 45 percent of subjects  sentenced in 2010. In 2010, pharmaceutical manufacturers were to pay  more than 60 percent of the total amount of civil judgments and  settlements.
subsections: section_title: More Than 40 Percent of Subjects in Fraud Cases Were Home Health Care Providers and Health Care Practitioners
paragraphs: Of the 2,742 subjects of health care fraud in Medicaid and CHIP referred  to MFCUs for investigation, more than 40 percent were affiliated with two  provider categories: home health care providers (26.6 percent) and health  care practitioners (14.8 percent). Home health care providers and  pharmaceutical manufacturers are the two provider categories that  experienced the highest increases when comparing 2005 and 2010 data.  For example, the number of home health care providers suspected of  fraud increased significantly from 2005 to 2010, from 357 subjects to 730,  a 104 percent increase. This was primarily driven by an increase in fraud  cases among health care aides, which increased from 79 subjects in  2005 to 324 in 2010. Similarly, the number of pharmaceutical  manufacturers in fraud cases increased significantly from 71 in 2005 to  296 in 2010. (See table 14, below, for additional information on provider  types referred to MFCUs in fraud investigations.)
Over half of the MFCUs’ subjects of fraud cases in 2010 were referred   by the states’ Medicaid agencies (30.9 percent) and private citizens   (25.1 percent). MFCUs do not pursue all cases of health care fraud that  are referred to them.
section_title: Home Health Providers Accounted for Nearly 40 percent of Criminal Convictions and About 45 Percent of Subjects Sentenced for 2010
paragraphs: In 2010, 692 subjects were indicted or charged in criminal health care  fraud cases handled by 10 MFCUs; of those, nearly 40 percent were  home health care providers—which includes home health care agencies,  and home health care aides. Home health care providers also accounted  for nearly 40 percent of criminal fraud convictions in 2010; health care  practitioners—physicians, doctors of osteopathy, nurses, physician  assistants, and nurse practitioners—had the second-highest percentage  of criminal convictions in 2010 with approximately 16 percent. The  number of home health care providers convicted in criminal cases more  than doubled from 79 convictions in 2005 to 192 convictions in 2010, and  health care practitioners had an increase of 11 convictions compared to  2005. (See table 15 for additional information about criminal case  outcomes and prosecutions of subjects by provider type for cases  handled by 10 MFCUs.)
According to 2010 data for cases handled by the 10 MFCUs, home health  care providers had the largest number of subjects sentenced to  incarceration, probation, or other criminal case outcomes, accounting for  nearly 45 percent of the total number of subjects. Durable medical  equipment suppliers accounted for the largest monetary penalties, yet  had relatively few subjects sentenced to incarceration, probation, or other  criminal case outcomes, such as deferred sentences. Of all of the  subjects sentenced, 42 percent were sentenced to probation, 32 percent  were sentenced to incarceration, and 26 percent received other criminal  case outcomes.outcomes.)
section_title: Agency Comments
paragraphs: GAO provided a draft of the report to DOJ and HHS. DOJ provided  technical comments, which have been incorporated as appropriate. HHS  did not comment on the draft.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the Secretaries of Health  and Human Services and Justice, the Inspector General of HHS, and  other interested parties. In addition, the report will be available at no  charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-7114 or kingk@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made key contributions to this report are  listed in appendix III.
section_title: Appendix I: Methodology for Analyzing Data Obtained from the Federal Agencies
paragraphs: To identify subjects of health care fraud cases in Medicare, Medicaid, and  the Children’s Health Insurance Program (CHIP)—including referrals,  investigations, prosecutions, and outcomes—by provider type, and to  examine changes in the distribution of provider types in 2005 and 2010,  we obtained data on health care fraud cases from the Department of  Health and Human Services’ Office of Inspector General (HHS-OIG), the  Department of Justice’s (DOJ) Executive Office of U.S. Attorneys  (EOUSA)—which provides administrative support for the 94 U.S.  Attorney’s Offices (USAO)—and DOJ’s Civil Division. We obtained data  on fraud cases involving Medicare, Medicaid, and CHIP that were closed  in calendar year 2005 or 2010. We collected data for closed cases only— meaning that the agencies were no longer actively investigating or  prosecuting a case—to avoid concerns about analyzing or reporting  information about open cases.
We obtained data from HHS-OIG’s Investigative Reporting and  Information System, which contains information on health care fraud  cases received or investigated by HHS-OIG. The data we received  contained information on civil and criminal health care fraud cases closed  in calendar years 2005 or 2010, as well as exclusions from program  participation. The HHS-OIG data included information about the subjects,  sources of the cases, outcomes of the investigations and prosecutions (if  the cases were pursued), and the reasons for which the cases were  closed (such as lack of evidence). The data we received from HHS-OIG  also contained information on the provider types of the subjects.
Additionally, we obtained data from two divisions within DOJ—EOUSA  and the Civil Division. The data we received from EOUSA was from the  Legal Information Office Network System and contained information  about the subjects of the fraud cases, outcomes of the prosecutions, and  the reasons for which the cases were closed. Provider type is not a  required field in the USAOs database; consequently the USAOs do not  consistently have provider type information. DOJ’s Civil Division provided  us data from the CASES database. The data received contained  information about the subjects, outcomes of the fraud cases, and reasons  the cases were closed. The DOJ Civil Division does not collect  information on the subject’s provider type. The data we received from  HHS-OIG pertained only to health care fraud in Medicare, Medicaid, and  CHIP; however, data we received from the USAOs and DOJ’s Civil  Division may have also included other federal health care program fraud  as well as fraud in the private sector as the databases used to track fraud  cases do not capture fraud exclusively in Medicare, Medicaid, and CHIP.
Many fraud cases are handled jointly with HHS-OIG, USAOs, and DOJ’s  Civil Division, and are entered separately into each agency’s database  that tracks fraud cases. As a result, the data we received contains  duplicate information on health care fraud cases and subjects. In order to  minimize the duplication across the data we received, we identified fraud  case subjects that were in more than one data set we received by  comparing subject information to the extent possible. We then excluded  the duplicate data that we identified so that each subject was only  included once. However, it is possible that our analysis still includes some  duplication in fraud cases and subjects. For cases and subjects that we  identified as a match, we used the information in the HHS-OIG data  instead of either the USAO data or DOJ’s Civil Division data because the  HHS-OIG data contained information on the subject’s provider type.  Among the data involving criminal cases, we identified 590 subjects—291  subjects in the 2005 data and 299 subjects in the 2010 data—that were  matches between the HHS-OIG data and the USAO data. For civil case  data, we identified 423 subjects—166 subjects in the 2005 data and 257  subjects in the 2010 data—that were matches between data we received  from HHS-OIG, the USAOs, or DOJ’s Civil Division. We removed the  duplicate subjects we identified from parts of our analysis.
In the USAO and Civil Division data, there were 2,470 subjects—1,484 of  which were investigated in civil cases, and 986 that were investigated in  criminal cases—for which we did not identify a duplicate case in the HHS- OIG data, and did not contain information on the provider type. To identify  the type of provider for these subjects, we obtained information from court  records using the Public Access to Court Electronic Records (PACER).
We reviewed court documents, such as indictments and plea  agreements, to obtain information on the subject’s provider type. We  reviewed information we found using PACER and categorized it into one  of the provider categories in our analysis. However, our analysis of the  changes in the types of providers in 2005 and 2010 is limited since the  percentage of subjects for which we were unable to determine the  provider type was substantially higher in 2005 for civil case subjects. One  of the reasons we could not determine the provider type was because  many of the court records for 2005 were not available in PACER.
After we identified the provider types for data we received from USAOs  and DOJ’s Civil Division, and after reviewing the data on provider types in  the HHS-OIG data, we created categories of providers in order to analyze  the data. We assigned the subjects categories: the entity in which health  care was provided, and the subject’s role in providing care (if care was  provided). For example, an owner of a durable medical equipment supply  company was categorized into an entity (durable medical equipment  supplier) and a role (management employee); a physician employed by a  hospital would be categorized as hospital for the entity and physician for  the role. Table 18 provides additional details about the categories we  developed for our analysis.
To assess the reliability of the data we received from HHS-OIG, USAOs,  and DOJ’s Civil Division, we interviewed officials from each of those  agencies about the quality of the data, reviewed relevant documentation,  and examined the data for reasonableness and internal consistency. We  found these data were sufficiently reliable for the purposes of our report.
section_title: Appendix II: Methodology for Selecting State Medicaid Fraud Control Units and Analyzing Submitted Data
paragraphs: To identify subjects of Medicaid and Children’s Health Insurance Program  (CHIP) fraud cases investigated or prosecuted, or both, by Medicaid  Fraud Control Units (MFCU) by provider type, and to examine changes in  the distribution of provider types investigated and prosecuted for fraud in  2005 and 2010, we collected data from 10 state MFCUs. Using data  about MFCUs collected by the Department of Health and Human  Services’ Office of Inspector General (HHS-OIG), we selected the   10 state MFCUs that collectively accounted for the majority of open fraud  investigations, fraud indictments or charges, fraud convictions, MFCU  grant expenditures, and number of MFCU staff for all MFCUs in fiscal  year 2010. The state MFCUs we selected also represented over   40 percent of the civil settlements and judgments—though we were not  able to analyze fraud-specific civil settlements and judgments because  the HHS-OIG data available do not separate out fraud settlements and  judgments from abuse and neglect case settlements and judgments. The  10 selected MFCUs were in California, Florida, Illinois, Indiana, Louisiana,  Massachusetts, New York, Ohio, Texas, and Virginia. The 10 selected  MFCUs accounted for 66 percent of MFCU grant expenditures. (See   table 19 for additional information about the MFCUs.)
We collected data from the state MFCUs by developing a standardized  data-collection instrument based on the HHS-OIG’s Quarterly Statistical  MFCU Report Template and accompanying definitions. (See table 20 for  additional information about the definitions for the categories of provider  types.)
Before finalizing the data-collection instrument, we asked officials from  two MFCUs to review the instrument to determine if the instrument would  elicit appropriate responses, and to identify any data that would be  particularly challenging for a MFCU to provide. We also interviewed  officials from the Centers for Medicare & Medicaid Services, the HHS- OIG’s Office of Evaluation and Inspections, and the National Association  of MFCUs to obtain information on fraud cases handled by the MFCUs.
We collected data for closed health care fraud cases only—meaning that  agencies were no longer actively investigating or prosecuting a case—to  avoid concerns about analyzing or reporting information about open  cases. We requested data from the state MFCUs for any actions—such  as indictments, convictions, or penalties—that occurred on a subject’s  fraud case in 2005 or 2010. For example, if a subject was indicted in 2004  and sentenced in 2005, the MFCU data would only include information  about the subject’s sentencing in 2005, because the indictment occurred  in a year outside of our data request. We requested aggregate subject- level data, rather than case-level data, from the MFCUs using a  standardized data-collection instrument. The MFCUs reported  information on the total number of fraud subjects they investigated and  prosecuted, and did not provide detailed information for each instance of  fraud. Because the state MFCUs may work together on certain cases that  cross state lines, it is possible that duplicate data are included in our  analysis. We relied on the data as reported by the 10 MFCUs and did not  independently verify these data. However, we reviewed the data for  reasonableness and followed up with state officials for clarification when  necessary. We found that these data were sufficiently reliable for the  purposes of our report.
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, key contributors to this report  were Martin T. Gahart, Assistant Director; Christie Enders; Jawaria Gilani;  Dan Lee; Drew Long; Dawn Nelson; and Monica Perez-Nelson.