Medicare Fraud and Abuse

Health care fraud in the United States costs taxpayers billions of dollars each year. A key weapon against health care fraud is the False Claims Act, which allows the Justice Department to bring civil enforcement actions and seeks significant damages and penalties against providers who knowingly submit fraudulent bills to Medicare, Medicaid, and other federal health programs. The government collected more than $490 million from health care fraud settlements, judgements, and administrative actions in 1999. The Justice Department's use of the act, however, has been controversial. The hospital industry has alleged that a Justice Department investigation of hospitals nationwide has been unfair and overzealous. The Justice Department responded by issuing guidance to its staff on the appropriate use of the act in civil health care matters. In a July 1999 report, GAO found that the Justice Department's process for assessing compliance at U.S. Attorney's Offices appeared superficial and that implementation of the guidance varied among the U.S. Attorney's Offices. GAO recommended that the Justice Department improve its oversight. This report discusses what has been done in response to GAO's earlier recommendations. This report also focuses on the most controversial of the four national initiatives--Laboratory Unbundling.

GAO noted that: (1) since GAO's August 1999 report was issued, DOJ has taken actions to improve its oversight of the U.S. Attorneys' Offices participating in national health care initiatives; (2) it plans to place more emphasis on offices' compliance with the False Claims Act guidance in its periodic evaluations of these offices and has initiated a requirement for offices to certify their compliance annually; (3) DOJ officials also told GAO that the role of the working groups has been expanded; (4) originally, these groups--composed of DOJ attorneys and Assistant U.S. Attorneys--concentrated on coordinating the development and implementation of national initiatives; (5) now enhanced emphasis is being placed on monitoring compliance with the guidance; (6) in addition, DOJ has given special attention to the most problem-prone initiative, Laboratory Unbundling; (7) offices participating in this initiative at the time the guidance was issued were recently required to document their compliance; and (8) the four U.S. Attorneys' Offices that GAO previously reported as being slow to incorporate the guidance into their ongoing Laboratory Unbundling investigations now appear to have addressed their shortcomings.