The financial recoveries for healthcare fraud are staggering.  The Justice Department and Health and Human Services (Office of Inspector General (“OIG”) and Centers for Medicare and Medicaid Services (“CMS”)) regularly trumpet another round of healthcare fraud arrests and prosecutions.   They have turned healthcare fraud prosecutions into a cottage industry with phenomenal results.

But who is committing all of this fraud?  A recent Government Accounting Office study provided a detailed answer to that question.  A copy of the report is available here.

Federal healthcare expenditures through Medicare, Medicaid and the Children’s Health Insurance Program (“CHIP”) total almost $900 billion each year.  The federal government spends about $600 million each year to investigate and prosecute healthcare fraud.

Providers or suppliers engage in a variety of fraud schemes, including billing for services or supplies not provided or not medically necessary, upcoding for services which are reimbursed at a higher amount than that actually provided, misreporting data to obtain an increased payment, paying kickbacks to providers for referring patients for certain services or to certain entities, and stealing providers or patients’ identities.

Federal law enforcement has joined together to create Medicare Strike Forces and rely heavily on data analysis to identify potential Medicare fraud.  Together, federal law enforcement coordinates its efforts with state Medicaid Fraud Control Units to investigate and prosecute Medicaid fraud.

All of these entities receive case referrals from program beneficiaries, state agencies, law enforcement, and whistleblowers.  CMS and its contractors regularly report fraud cases for investigation.

In 2010, approximately 10,000 subjects were investigated for healthcare fraud.  A little more than 75 percent were criminally investigated while the remaining 25 percent was investigated for civil violations.

Almost half of the criminal cases investigated involved medical facilities (25 percent medical practices, clinics or medical centers), durable medical equipment suppliers (16 percent) and home health agencies (9 percent).  Hospitals were involved in approximately 5 percent of the criminal cases.

Physicians were the largest group of individuals investigated for criminal violations (15 percent of all cases), and management employees at medical facilities were the second most frequent subjects of criminal investigations.

Durable medical equipment companies were the largest group of entities investigated for criminal violations (21 percent), and home health and medical centers or clinics were roughly tied for second of entities investigated for criminal violations  (13 percent respectively).

For civil healthcare fraud cases, approximately 2,300 subjects were investigated.  Hospitals were about 20 percent of these subjects and medical facilities were about 18 percent of the cases.

Hospitals were the largest group of entities investigated for civil violations (30 percent).  Medical centers and medical facilities were roughly ties for second of the entities investigated for civil violations (8 percent respectively) while pharmaceutical companies were next of the entities subject of civil investigations (7 percent).