Overview of Healthcare Fraud and Abuse Laws- Key Legislation and Case Study Examples
Introduction
Fraud in health care occurs when an individual deceives consumers or providers within a healthcare system, intending to profit from such deception. The most common healthcare fraud is the false filing of claims from an insurance firm, individuals, or government-sponsored health coverage programs. Healthcare fraud occurs in cases where patients and insurance companies are charged for unnecessary services, falsified claims and diagnoses are made, payments received, illegal patient referrals for kickbacks, unnecessary prescriptions, and unwarranted medications and services in bills (Drabiak & Wolfson, 2020). Although healthcare-related frauds may have no direct impact on the victims, the effects of such crimes have negative impacts on healthcare systems, such as the costs of healthcare.
Laws Related to Healthcare Fraud and Abuse
Different laws have been formulated to help deal with cases related to healthcare fraud and cases of abuse. Three such laws are the False Claims Act (FCA), Anti-Kickback Statute (AKS), and Physician Self-Referral Law (Stark Law). The FCA was formulated to protect the US government from health frauds related to overcharging and poor quality health services and supplies. According to the Act, an individual who submits fraudulent claims to government healthcare programs, including Medicaid and Medicare, with knowledge of such fraud or with a purpose is liable to civil penalties. The FCA enables the US government to charge the individual three times the cost of the claim or an extra penalty of $22,927 per fraudulently made claim. An individual is also liable for a jail term.
Secondly, the Anti-Kickback Statute (AKS) was formulated to keep check health professionals and providers who solicit for payment or pay for patient referrals directly or indirectly for services paid for by the government health care programs, including Medicaid and Medicare. According to the AKS, all payments made knowingly in such transactions are illegal. Healthcare service providers and consumers who violate the AKS are liable for fines, penalties, imprisonment, exclusion from related health programs, and cancellation of practice licensure. Finally, the Stark Law was formulated to prevent doctors from referring patients to financially beneficial services they provide. Violations of this law include a penalty of $24,478 per service referral, service and program exclusion, and repayment of claims made.
Background
According to Goel (2020), the most significant concern of the healthcare sector regulators, consumers, and other players in the health industry is the containment of costs for both users and providers. However, such efforts have been thwarted by increasing fraud cases across the United States. A study by Crowe Global (Jim. 2019) reported that fraud costs the global economy over US$5 trillion per year, which is represented by 70% of healthcare expenditure. In the United States, The National Health Care Anti-Fraud Association (NHCAA) estimates that healthcare fraud costs the nation an excess of $68 billion annually, which is 3% of the country’s $2.26 trillion budgeted healthcare spending. Subsequently, this adds to the US health expenditure, making the country the largest spender on healthcare compared to any other country globally. Healthcare fraud impacts insurance rates and costs of health operations: consumers pay more to cover losses incurred by health organizations. Health professionals have been noted to be the most featured culprits in a majority of reported healthcare fraud cases (Goel, 2020). However, healthcare frauds and scams have taken various forms.
Implications, Examples, and Solutions
The implications of healthcare fraud include:
The increased cost of health care services for both consumers and providers,
It results in individuals and healthcare organizations facing criminal, civil, and administrative penalties
Reduced quality of health care and poor health outcomes,
Healthcare providers can lose their professional licenses.
It can result in a jail term.
An example of a healthcare fraud case involves the health management firm Physician Partners of America, which was penalized $24.5M due to fraud and kickback charges (Cass, 2022). This particular case includes a direct violation of the False Claims Act and Anti-Kickback Statute (AKS) in multiple ways.
As the US government is focused on reducing the costs of care, the best solution is to employ methods that limit or eliminate healthcare fraud. The suggested solutions to limit or eliminate fraud in healthcare include:
Application of systems that detect fraud early at the source, such as the use of AI claim confirmation systems,
Transparent practice-based compliance and health management systems,
Extensive data mining to identify current and in-progress fraudulent claims,
Research on spatial spillovers of other crimes on healthcare and risk of fraud,
Establishing a system of ethics in practice that helps eliminate cases of fraud and corruption in the health care systems.
Summary
Healthcare fraud is a crime that occurs in multi-level schemes involving health providers, consumers, and other players. It negatively impacts healthcare systems and can lead to increased costs of healthcare services, quality of care, penalties and fines, imprisonment, and forfeiture of licensing for health professionals and organizations. The various laws related to healthcare fraud seek to reduce healthcare fraud by applying penalties and fines upon violating such laws. However, such cases are pervasive and require solutions that eliminate them from the sites where they occur.
References
Cass, A. (2022). Physician Partners of America paying $24.5M to settle fraud, kickback charges. Beckershospitalreview.com. Retrieved 22 April 2022, from https://www.beckershospitalreview.com/legal-regulatory-issues/physician-partners-of-america-paying-24-5m-to-settle-fraud-kickback-charges.html.
Drabiak, K., & Wolfson, J. (2020). What Should Health Care Organizations Do to Reduce Billing Fraud and Abuse?. AMA Journal of Ethics, 22(3), 221-231.
Goel, R. K. (2020). Medical professionals and health care fraud: Do they aid or check abuse?. Managerial and Decision Economics, 41(4), 520-528.
Goel, R. K. (2021). Are healthcare scams infectious? Empirical evidence on contagion in health care fraud. Managerial and Decision Economics, 42(1), 198-208.
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Question 
Provide a synopsis of three laws related to healthcare fraud and abuse and include one example of an actual case within the healthcare industry in which one of the laws was violated. Your weekly readings can help you identify the relevant laws.
Overview of Healthcare Fraud and Abuse Laws- Key Legislation and Case Study Examples
Include one scholarly reference in your post. Use the current APA 7th Edition Example Paper [DOCX] for the APA style and format appropriate to the type of reference you provide.
Reflective Journal Guidelines
Use the APA Reflective Journal Template [DOCX] to write your response. Provide an introductory paragraph under the title heading. Give a brief explanation of the topic background (one paragraph minimum), followed by any implications, examples, and solutions you find to be relevant to the topic. End your response with a summary of your findings.