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Fraud Control in the Health Care Industry: Assessing the State of the Art, Research in Brief

NCJ Number
Date Published
December 1998
11 pages
Publication Series
Fraud control methods in the health care industry were examined with respect to the assumptions, policies, and mechanisms involved in controlling criminal fraud; their strengths and weaknesses; and methods for increasing their effectiveness.
The research collected information from literature searches, interactions with public and private organizations during 1992-96, and interviews conducted at 8 sites reputed to be among the best in the industry in terms of fraud control. The analysis noted that the incidence of health care fraud remains at alarmingly high levels despite unprecedented attention in recent years from policymakers and law enforcement. Major scams appear to be artfully designed to circumvent routine controls and may remain invisible for long periods. Discovery seems often to result more from luck than from judgment. One problem is that officials responsible for payment safeguards generally receive no formal training in fraud control. In addition, the social acceptability of government and insurance companies as targets for fraud and the degree of trust that society places in health care providers make fraud control particularly difficult in the health care industry. Moreover, most public and private insurers have failed to measure their fraud problem systematically; therefore, they massively underinvest in fraud control. Existing fraud control arrangements appear very useful in correcting honest billing errors and in detecting unorthodox medical practice, but are ineffective in detecting criminal fraud. The advent of highly automated claims processing mechanisms presents new dangers for fraud control. Finally, under capitated managed care programs, the main forms of fraud involve the diversion of capitation payments away from front-line service delivery; the result is patterns of underutilization that may be more dangerous to human health than traditional fee-for-service fraud schemes. Reference notes

Date Published: December 1, 1998