Health Care Fraud and Abuse Control Program (HCFAC) Report, FY 2014

The U.S. Department of Health and Human Services (HHS) and the Department of Justice (DOJ) today released the Heath Care Fraud and Abuse Control Program (HCFAC) Report for Fiscal Year 2014. To view the 92-page report click here.

A bit of background: A national Health Care Fraud and Abuse Control Program (HCFAC) was established under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The Program is carried out jointly at the direction of the Attorney General and the Secretary of the Department of Health and Human Services (HHS), acting through the Inspector General. The Program aims to coordinate federal, state and local law enforcement activities with respect to health care fraud and abuse.

Highlights from the Report include:

  • During FY 2014, the Federal government won or negotiated over $2.3 billion in health care fraud judgments and settlements.
  • In FY 2014, approximately $3.3 billion was returned to the Federal government or paid to provide persons.
  • Of the $3.3 billion, the Medicare Trust Funds received transfers of approximately $1.9 billion, and over $523 million in Federal Medicaid money was similarly transferred separately to the Treasury as a result of these efforts.
  • The HCFAC account has returned over $27.8 billion to the Medicare Trust Funds since the inception of the Program in 1997.
  • In FY 2014, the DOJ opened 924 new criminal health care fraud investigations.
  • Federal prosecutors filed criminal charges in 496 cases involving 805 defendants.
  • A total of 734 defendants were convicted of health care fraud-related crimes during the year.
  • The DOJ opened 782 new civil health care fraud investigations and had 957 civil health care fraud matters pending at the end of the fiscal year.
  • In FY 2014, the Federal Bureau of Investigation (FBI) investigative efforts resulted in over 605 operational disruptions of criminal fraud organizations and the dismantlement of the criminal hierarchy of more than 142 health care fraud criminal enterprises.
  • In FY 2014, HHS Office of Inspector General (HHS-OIG) investigations resulted in 867 criminal actions against individuals or entities that engaged in crimes related to Medicare and Medicaid.
  • In FY 2014, HHS-OIG investigations resulted in 529 civil actions, which include false claims and unjust-enrichment lawsuits filed in Federal district court, civil monetary penalties (CMP) settlements, and administrative recoveries related to provider self-disclosure matters.
  • In FY 2014, HHS-OIG excluded 4,017 individuals and entities from participation in Medicare, Medicaid, and other federal health care programs. Among these were exclusions based on criminal convictions for crimes related to Medicare and Medicaid (1,310) or to other health care programs (432), for patient abuse or neglect (189), and as a result of licensure revocations (1,744).
  • In FY 2014, HHS-OIG also issued numerous audits and evaluations with recommendations that, when implemented, would correct program vulnerabilities and save program funds.

The report acknowledges the impact of sequestration of mandatory funding in 2014, explaining that "there were fewer resources for DOJ, FBI, HHS, and HHS-OIG to fight fraud and abuses against Medicare, Medicaid, and other health care programs. A total of $31.5 million was sequestered from the HCFAC program in FY 2014, for a combined total of $62.1 million in the past two years."

The report reveals a return of investment (ROI) for the HCFAC program of $7.70 returned for every $1.00 expended over the last three years (2012-2014). This is $2 higher than the average ROI for the life of the HCFAC program since 1997 and the third highest ROI overall. Note: Since the annual ROI can vary from year to year depending on the number and type of cases that are settled or adjudicated during that year, DOJ and HHS use a three-year rolling average ROI for results contained in the report.

Page 89 of the report offers an explanation of the Return on Investment (ROI) calculation.

The Healthcare Fraud Prevention Partnership (HFPP) is highlighted on page 9 of the report, described as a "groundbreaking public/private partnership between the government and private sector insurance payers." In addition to describing what the HFPP is, the report describes activity of the HFPP to date, including several studies associated with fraud, waste or abuse.

Upon release of the report, several media outlets have begun publishing stories highlighting various aspects of the report, including The Wall Street Journal (subscription required).

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