Health Insurance:

Vulnerable Payers Lose Billions to Fraud and Abuse

HRD-92-69: Published: May 7, 1992. Publicly Released: May 7, 1992.

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Leslie G. Aronovitz
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Pursuant to a congressional request, GAO examined the: (1) nature of fraud and abuse associated with the health care industry; and (2) problems insurers have in detecting and pursuing such fraud and abuse.

GAO found that: (1) vulnerabilities within the health insurance system allow unscrupulous providers to cheat health insurance companies and programs out of an estimated 10 percent of total health care spending each year; (2) health insurance fraud and abuse practices include overcharging for services, charging for services not rendered, accepting bribes for referring patients, and rendering inappropriate or unnecessary services; (3) health care fraud has expanded beyond single provider fraud to organized activity affecting both government and private insurance programs; (4) insurers have problems detecting and pursuing fraud and abuse because of the multiple activities that take place during claims processing, privacy concerns that limit collaboration among industry members, and the lack of consensus concerning the appropriate regulation of providers and financial arrangements; (5) the development of new, unlicensed medical facilities can impede insurers' ability to trace the source of fraudulent billings and hold them accountable; (6) the appropriate regulation of new health care facilities is complicated by physicians' and other health care providers' financial interest in facilities; and (7) if public and private insurers' efforts were more coordinated, the attack on health care fraud and abuse would be more beneficial.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Many of the issues GAO recommended for study under the auspices of a "National Commission" were examined by an HHS, OIG, DOJ action team. These same issues are being explored during the ongoing health reform debate. In fact, legislative remedies were proposed by both the "action team" and the President's and others' health reform bills. Consequently, there is no longer a need for a National Commission to study these issues and identify legislative remedies. The recommendation can be closed.

    Matter: Congress should consider establishing a national commission to combat health insurance fraud and abuse with a membership balanced in terms of viewpoints represented. Such a commission could include public and private payers and personnel from federal and state investigative and prosecutorial agencies to develop strategies and evaluate legislative remedies for combatting health insurance fraud and abuse.


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