The FBI is no longer turning a blind eye to embezzlement, money laundering, kickbacks and theft by healthcare executives.
Over the last four years, the bureau has steadily increased the number of agents assigned to 42 regional medical fraud units to 260.
From 1991 to 1995, U.S. attorneys sent more than 1,160 healthcare executives to jail, won 1,711 indictments, and forced more than $675 million in fines, penalties and restitution, the FBI said.
To further crack down on healthcare crime, legislation has been introduced in Congress this year that would establish new federal healthcare fraud offenses, allow the FBI to issue administrative subpoenas and create a National Health Care Fraud Control Center.
One measure would authorize the hiring of 475 new FBI employees, bringing the total to 720, and add $32 million to enhance current law enforcement efforts. It's included in the Senate health insurance reform legislation sponsored by Sens. Nancy Kassebaum (R-Kan.) and Edward Kennedy (D-Mass.). A House version, the Health Care Fraud Abuse and Prevention Act of 1996, is sponsored by Rep. Steven Schiff (R-N.M.).
"This would greatly enhance our effort to reduce healthcare inflation and bring criminals to justice," said Lynne Hunt, the FBI's chief of healthcare fraud in Washington.
To emphasize its enforcement effort in the healthcare arena, the FBI later this summer will unveil a new section in its annual Uniform Crime Report that will track provider and executive fraud, embezzlement, money laundering and a host of other crimes, Hunt said.
The healthcare section will be the first time the FBI has identified a type of white-collar crime and highlighted a specific industry, a bureau spokeswoman said.
State and federal law enforcement agencies investigate and prosecute all types of healthcare crimes. They include false billing, supply diversion, money laundering, illegal patient referrals and kickbacks.
The FBI's targets include hospitals, physicians, suppliers, vendors, laboratories, pharmacies, nursing homes, home healthcare, HMOs, diet clinics, specialty clinics and ambulance services.
For example, National Medical Enterprises (now Tenet Healthcare Corp.) pleaded guilty in 1994 to various patient referral schemes that defrauded Medicare and private insurance companies. NME agreed to pay $379 million in fines, civil damages and restitution.
The FBI and the Justice Department also are stepping up investigations of hospital executives who blatantly line their own pockets, officials said.
These rip-offs affect government because the scams inflate Medicare costs, contribute to medical inflation and indirectly rob citizens of tax dollars, Hunt said.
Experts estimated that in 1994 fraud accounted for some $52 billion, or 5%, of $1 trillion spent on healthcare. Another $156 billion was deemed "questioned costs," a category that could include either fraud or waste, said the U.S. Chamber of Commerce. Together, fraud and questioned costs amounted to 20% of the nation's 1994 healthcare expenditures.
FBI statistics indicate the level of healthcare fraud is increasing. In 1995, there were 1,878 cases, a 25% increase from 1,500 in 1994. The agency predicts its caseload will mushroom to more than 3,000 this year as more crimes are uncovered.
Indictments increased 101% to 593 last year from 295 in 1994. As a result, convictions increased 11% to 345 in 1995 from 311 in 1994, and fines jumped 383% to $57.5 million in 1995 from $11.9 million in 1994.
Experts say that while no one knows how much the incidence of total healthcare crime is increasing, greater enforcement and public attention to the problem are resulting in more fraud being uncovered. Greater financial controls within the healthcare industry also are contributing to the number of cases.
HHS' inspector general's office has joined the Justice Department and the FBI in establishing an Executive Level Health Care Fraud Policy Group. The umbrella organization identifies new methods to battle medical fraud and identify priority areas for enforcement.
"Insurance scams and kickbacks in the healthcare industry are widespread problems that have become quite common," said William Mahon, executive director of the National Health Care Anti-Fraud Association, a Washington-based group representing insurance companies.
"Healthcare is no longer a cottage industry when it comes to crime," he said. "There are some big-time (criminal) operations."