With public attention of healthcare costs continuing at a fairly high pitch, the last thing the industry needs is a financial black eye. But as economic stakes increase in the medical-care delivery system, fraud is on the rise.
What's worrisome is that financial fraud no longer is the province of individual practitioners, such as physicians and dentists. Hospital-based scams, often involving large sums of money, have produced big headlines in recent months.
This burgeoning criminal activity has not escaped the attention of the federal government. The Internal Revenue Service is conducting an investigation of academic medical centers, and earlier this month the U.S. Justice Department said it would boost to 450 the number of FBI agents investigating healthcare fraud in the coming year. Multi-agency healthcare fraud working groups will be established throughout the country.
Just last week the Justice Department announced that healthcare fraud cases in fiscal 1994 netted more than $411 million in judgments and civil settlements-making it second only to defense procurement fraud. Of the total recovered, $324 million came from National Medical Enterprises, which settled charges that its psychiatric hospitals overbilled Medicare.
Other cases surfacing recently:
At Wheeling (W.Va.) Hospital, which is sponsored by the Roman Catholic Church, the former chief executive officer and administrator has been charged with using funds for years to support a lavish lifestyle for his family (Aug. 8, p. 30). A $1.5 million suit filed by the hospital alleges that Samuel Nazzaro falsified paperwork; used hospital staff to perform work at his home; and had employees collect coins from a newspaper box, exchange them for bills and deliver the money to him in a sealed envelope. Mr. Nazzaro has filed a countersuit saying he was falsely accused. He is seeking $6 million in damages.
An Alameda County, Calif., grand jury has charged Ophelia Long, administrator of Highland Hospital, in Oakland, Calif., with improperly spending more than $30,000 from a patient fund for a gala ball and hiring her friends as consultants.
In Ohio, 57-bed Paulding County Hospital fired its administrator, Laris Keefer, after reports that he had hired a friend with questionable credentials to be the hospital's human resources director and maintenance supervisor. The community later learned that Mr. Keefer had put the friend on the payroll at Mena (Ark.) Medical Center, his previous post (Aug. 15, p. 20).
At Cape Coral (Fla.) Hospital, the CEO, chief financial officer and chief operating officer were fired after being accused of financial irregularities, including arranging excessive compensation and benefits packages for themselves. If the charges are true, they involve collusion of the top three fiscal officers of the institution. The trio allegedly used hospital credit cards to buy jewelry and other personal items, bought a warehouse with hospital funds and leased it back to the hospital at above-market price, and converted 8,500 troy ounces of silver residue collected from used X-ray film to their own use.
Some members of Congress are concerned. Sen. William Cohen (R-Maine) sought in the closing days of the session to introduce healthcare fraud legislation but was unsuccessful in finding a vehicle for his amendment. His proposed bill would codify healthcare fraud as a crime so federal officials would no longer have to prosecute under mail or wire fraud statutes. The vigor of his effort indicates the issue probably is not dead.
With the government seeking to stop the outflow of healthcare dollars from the federal treasury, agents assigned to uncovering healthcare fraud are bound to be aggressive in publicizing any questionable schemes they find. With nearly $1 trillion annually flowing through the healthcare system, it's perhaps inevitable that some will be tempted. The burden is on those charged with the governance of healthcare systems and networks to assure their communities that sufficient fiscal safeguards exist to minimize the monetary mischief.