As the healthcare industry has more and more decision-making workers under increasing pressure to do more with less, opportunities for fraud and misuse of funds have also increased. John LeBlanc of Manatt is an expert on this complex issue, and he recently sat down with us to talk about emerging trends in healthcare fraud and how providers, insurers, and law enforcement work together to fight it.
Surprisingly, LeBlanc says that fraud isn’t the leading cause of increased healthcare costs – ineffective and inefficient practice patterns account for even more expenditures. “The biggest drivers are not due to fraud but bad medical practices,” he explains. “If you look at the data, only about 3% is attributed to fraud.”
But it’s still a big problem. In 2020, the US spent more than $850 billion on Medicare and Medicaid alone, according to LeBlanc’s law firm. Fraud was estimated to account for about 10% of that – or roughly $85 billion. And because it is so easy to steal large numbers of small items – prescriptions at retail pharmacies, for example – it’s easy for criminals to elude detection. Unfortunately, according to LeBlanc, even though the federal government has made some progress in catching fraudsters, not much ever seems to happen to them. “Hospitals can spend millions on compliance, and then an employee will steal $2 million by writing checks out of the wrong checkbook,” says LeBlanc.
The key to combating fraud and waste is collaboration, according to LeBlanc. “It’s getting better,” he says of cooperation between law enforcement and the healthcare industry, but it still has a ways to go.” For example, police are often busy with cold cases or other priorities, so it usually takes time to investigate fraud claims.
As for what makes someone likely to commit health care fraud, LeBlanc says statistics show that most are driven by one of two things: “People steal or cheat because they need the money or they do it for the thrill of doing it.” In addition, many criminals are otherwise law-abiding citizens with families and ties to their communities, making them more challenging to catch.
“It’s an issue we need to pay attention to,” LeBlanc says, “We all pay for insurance, and we don’t want our premiums going up. We need to ensure that we’re getting the best quality and the lowest prices. We all want to play by the rules.”
LeBlanc points to an important 1998 study done in Florida that showed the state would save $34.4 million simply by decreasing overpayments to providers and expanding its fraud unit to fight against such problems.
Until we get better at combating health care fraud, LeBlanc notes, incarceration rates for these crimes are meager compared to other types of white-collar crime. For example, the US Sentencing Commission reported in 2012 that the median sentence for health care fraud was 12 months compared to 46 months for securities, banking, and wire fraud.
LeBlanc says there are things hospitals can do internally to reduce these numbers. “Hospitals have hired more people whose only job it is to go out and look for fraud, waste, and abuse,” he explains. “If you spend money on compliance programs, that becomes an effective deterrent.”
“The key is training employees to know what’s expected of them and reporting anything unusual to management,” LeBlanc says. “A lot of people don’t want to do it because they think someone will get in trouble and they’ll lose their jobs. But that’s not the case.”
“We just need to keep paying attention to this issue and stay educated,” LeBlanc says. “If we do, we can reduce fraud and help keep healthcare costs down, which is good for everyone.”