There are multiple statutes that concern health care fraud, including the following: The False Claims Act is often used by the federal government in health care fraud cases and prohibits certain actions, including the knowing presentation of a false claim for payment by the federal government. Civil monetary penalty provisions of the Social Security Act apply to certain activities, such as knowingly presenting a claim for medical services that is known to be false and fraudulent. In addition, the Social Security Act also provides for criminal penalties for knowing and willful false statements in applications for payment. 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. The Stark law and its implementing regulations generally prohibit physicians from making “self-referrals”—certain referrals for “designated health services” paid for by Medicare to entities with which the physician (or an immediate family member) has a financial relationship—nor may the entities that perform the “designated health services” present claims to Medicare or bill for these services. These prohibitions also extend to payments for Medicaid-covered services to the same extent and under the same terms and conditions as if Medicare had covered them. The Federal Food, Drug, and Cosmetic Act, as amended, makes it unlawful to, among other things, introduce an adulterated or misbranded pharmaceutical product or device into interstate commerce. Health care fraud takes many forms, and a single case can involve more than one fraud scheme. Schemes may include fraudulent billing for services not provided, services provided that were not medically necessary; and services intentionally billed at a higher level than appropriate for the services that were provided, called upcoding. Other fraud schemes include providing compensation—kickbacks—to beneficiaries or providers or others for participating in the fraud scheme and schemes involving prescription drugs (including prescription drugs that contain controlled substances), such as the submission of false claims for prescription drugs that have been improperly marketed for non- FDA-approved uses and the illicit diversion of prescription drugs for profit or abuse. Fraud cases may involve more than one scheme; for example, an infusion clinic may pay kickbacks to a beneficiary for receiving care at the clinic, and the care that was provided and billed for may not have been medically necessary. Providers may be complicit in the schemes or unaware of the schemes. For example, providers who are complicit may willingly use their provider identification information to bill fraudulently, misrepresent services provided to receive higher payment, or receive kickbacks to provide their identification information for others to bill fraudulently. In other cases, providers may be unaware that their identification information has been stolen and used in various fraud schemes. Similarly, beneficiaries can be either complicit in or unaware of the fraud. Beneficiaries who are complicit may willingly provide their identification information to a provider for the purposes of committing fraud or receive kickbacks in exchange for providing their information to or receiving services from a provider. In contrast, they also may be unaware of fraud schemes in which the provider bills for services not medically necessary or uses beneficiaries’ identification information without their knowledge. Additionally, both beneficiaries and some providers may not be involved in the fraud scheme, in the sense that the fraud schemes involved circumstances other than a provider giving care to a beneficiary. For example, a pharmaceutical manufacturing company that marketed prescription drugs for non-FDA approved uses does not involve a provider giving care directly to a beneficiary. Individuals and entities that commit fraud do so in federal health care programs and private insurance programs, and may commit fraud in more than one program simultaneously. Several agencies are involved in investigating and prosecuting health care fraud cases, including CMS; HHS OIG; DOJ’s U.S. Attorneys’ Offices, Civil and Criminal Divisions; and the FBI. HHS OIG and the FBI primarily conduct investigations of health care fraud, and DOJ’s divisions typically prosecute or litigate the cases. DOJ prosecutes fraud cases that affect both federal health programs and private health insurance. Amid concerns about identify theft, proposals have been put forward to replace Medicare’s paper identification cards that contain the beneficiary’s Social Security numbers with electronically readable cards, such as smart cards. Some proposals have suggested that such cards should be issued to providers as well. Electronically readable cards include those that store information on magnetic stripes and bar codes and cards called smart cards that use microprocessor chips to store and process data. In March 2015, we identified three key uses for electronically readable cards: (1) authenticating beneficiary and provider presence at the point of care, (2) electronically exchanging beneficiary medical information, and (3) electronically conveying beneficiary identity and insurance information to providers. We also found that smart cards could provide more rigorous authentication of beneficiaries and providers at the point of care than cards with magnetic stripes and bar codes, though all three types of cards can electronically convey identity and insurance information. Proponents of smart cards have suggested that, among other benefits, using smart cards may reduce health care fraud in the Medicare program. For example, some proponents claim that the use of smart cards to identify the beneficiary and provider at the point of care could potentially curtail certain types of fraud such as schemes in which providers misuse another provider’s information to bill fraudulently. However, our March 2015 report also found that there are several limitations associated with the use of smart cards. Specifically, it is possible that individuals may still be able to commit fraud by adapting and altering the schemes they use to account for the use of smart card technology. In addition, the use of smart card technology could introduce new types of fraud and ways for individuals to illegally access beneficiary information. For example, malicious software could be written onto a smart card and used to compromise provider IT systems. Further, various factors may limit the implementation of smart card technology in the Medicare program. As we found in our March 2015 report, while the use of smart cards to verify the beneficiary identity at the point of care could reduce certain types of fraud, it would have limited effect on Medicare fraud since CMS policy is to pay claims for Medicare beneficiaries even if they do not have a Medicare identification card at the time of care. CMS officials noted that it would not be feasible to require the use of smart cards because of concerns that this would limit beneficiaries’ access to care given that there may be legitimate reasons why a card might not be present at the point of care. For example, beneficiaries who experience a health care emergency may not have their Medicare cards with them at the time care is rendered. Additionally, we concluded that the use of smart cards to verify the beneficiary and provider presence at the point of care would require addressing costs and implementation challenges associated with card management and information technology system enhancements. These enhancements would be needed to update both CMS’s and providers’ claims processing and card management systems in order to achieve a high level of provider and beneficiary authentication as well as meet security requirements. The majority of the 739 cases resolved in 2010 that we reviewed had more than one fraud scheme. Fraudulent billing schemes, such as billing for services that were not provided and billing for services that were not medically necessary, were the most common fraud schemes. Over 20 percent of the cases included kickbacks to providers, beneficiaries, or other individuals. Providers were complicit in the fraud schemes in over half of the cases. In contrast with providers, only about 14 percent of the 739 cases we reviewed had beneficiaries who were complicit in the schemes. Using cases from 2010, we identified 1,679 fraud schemes in the 739 cases that we reviewed. The majority of the 739 cases (about 68 percent) included more than one scheme; 61 percent of the cases had 2 to 4 schemes, about 7 percent had 5 or more schemes. Thirty-two percent had only one scheme. The most common schemes used in the cases we reviewed were related to fraudulent billing, such as billing for services that were not provided (42.6 percent of cases), billing for services that were not medically necessary (24.5 percent), and upcoding, which is billing for a higher level of service than the service actually provided (17.5 percent). Additionally, schemes used to support other fraud were also common, such as falsifying a substantial portion of records to support the fraud scheme (25.2 percent) and paying kickbacks to participants in the scheme (20.6 percent). Schemes related to prescription drugs (including prescription drugs that contained controlled substances), such as fraudulently obtaining or distributing prescription drugs or marketing prescription drugs for non-FDA approved uses in order to commit fraud, were found in about 21 percent of the cases we reviewed. (See table 1 for the number and percentage of cases in which these schemes were used and app. II, table 6, for additional details on schemes we identified in cases.) Many different combinations of schemes were present in the 68 percent of cases with more than one scheme. The most common schemes were also the ones that were most often used together: billing for services not provided along with billing for services that were not medically necessary, billing for services or supplies that were not prescribed by a physician and falsifying a substantial portion of records in order to support the fraud scheme. (See app. II, table 7, for additional analysis of the number of schemes per case.) For example, according to the indictment in a fraud case we reviewed, a DME supplier used two schemes to commit fraud: (1) billing Medicare for medical equipment, such as orthotic braces, that were not provided to Medicare beneficiaries and (2) billing for supplies that had not been prescribed by physicians for these beneficiaries. Many different federal programs and private insurers were affected by fraud schemes in the cases we reviewed. In one-quarter of the cases, more than one program was affected.