Healthcare Fraud

by

Paul Jesilow, Bryan Burton, Diana Sun

• LAST REVIEWED: 12 January 2022
• LAST MODIFIED: 12 January 2022
• DOI: 10.1093/obo/9780195396607-0157

Introduction

Healthcare fraud involves wide-ranging illegal behaviors. It includes such activities as physicians who bill insurance companies or the government for services never provided, or that were unnecessary and, in many cases, harmful for the well-being of patients. Corporations are also involved in healthcare fraud, such as pharmaceutical companies that falsify clinical studies to get unsafe drugs approved for general population use. Healthcare fraud, similar to other white-collar crimes, has three general costs: financial, physical, and social. First, the United States is likely the largest financial victim of healthcare fraud in the world. This is in part because the United States unquestionably outspends other advanced industrial nations, in terms of both total expenditures on health as a percentage of gross domestic product and expenditures on health per capita. More money available in the United States for healthcare likely translates into additional opportunities for fraudulent activities and further monies lost due to these illegal acts. Second, healthcare fraud also has a physical cost. Thousands of patients in the United States die from prescription medications that were incorrectly prescribed or from tainted drugs approved by the US Food and Drug Administration as a result of fraudulent testing and reporting. Thousands of additional patients are injured and killed by unnecessary surgeries performed by physicians who want to maximize their reimbursements. A third and final cost of healthcare fraud concerns social costs. Such costs cannot be numerically calculated, and they include a loss of respect for and trust in the medical profession. In general, the financial, physical, and social costs of healthcare fraud are likely substantial in all advanced industrial nations.

General Overviews

Published overviews of healthcare fraud in the United States and other developed and developing countries are available. The report Savedoff and Hussmann 2006 provides a brief introductory discussion on the factors making various healthcare systems around the world susceptible to corruption and fraud. The report supplies a comprehensive discussion on healthcare corruption around the world. How Corruption Is Making People Sick notes healthcare workers around the world report an uptick in corruption during the COVID-19 era. Levi and Smith 2021 provides a more general discussion on fraud and its relation to COVID-19 and other pandemics. Rosoff, et al. 2019 offers a discussion on healthcare fraud and then presents examples of common fraud schemes committed in the United States by providers (e.g., physicians), by suppliers (e.g., durable medical equipment companies), and by patients. Jesilow, et al. 1993; Leap 2011; and Sparrow 2000 each deliver comprehensive analyses of healthcare fraud and abuse in the United States. These books are foundational works in the study of healthcare fraud. Jesilow, et al. 1993 looks specifically at how doctors defraud Medicaid (a program that pays for the healthcare of indigent individuals in the United States), and they discuss early anti-fraud enforcement efforts in the program. Leap 2011 details common fraud schemes throughout the healthcare system in the United States and then presents approaches for reducing criminal and corrupt behaviors. Sparrow 2000 clearly highlights the challenges and complexities of fraud control in the United States and offers a model fraud control strategy. Gee and Button 2015; Jones and Jing 2011; and Mackey and Liang 2012 provide good general overviews of healthcare fraud around the world. Gee and Button 2015 details international estimates for healthcare fraud, which suggest the substantial scale of the behavior around the world. A brief publication, Jones and Jing 2011, provides general estimates of healthcare fraud in various countries and a discussion on the strategies nations are employing in their attempts to reduce and stop fraudulent activities. Mackey and Liang 2012 discusses how healthcare fraud activities transcend borders (e.g., counterfeit medicines can be exported to other countries). Braithwaite 1984 documents how pharmaceutical companies are able to use their worldwide reach in order to get dangerous drugs approved by using fraudulent and corrupt activities. In sum, the citations discussed in this section offer a selective and comprehensive look into healthcare fraud in the United States and around the world.

• Braithwaite, John. 1984. Corporate crime in the pharmaceutical industry. London: Routledge & Kegan Paul.

  This book is a classic in criminology, which details worldwide corporate crime in the pharmaceutical industry. Chapter three specifically examines healthcare fraud by highlighting several cases where drug companies knowingly falsified clinical tests and misrepresented dangerous side effects of drugs to regulators.

• Gee, Jim, and Mark Button. 2015. The financial cost of healthcare fraud 2015: What data from around the world shows. London: PKF Littlejohn.

  Published in collaboration with the University of Portsmouth, this article provides estimates for the costs of healthcare fraud in seven countries: the United Kingdom, United States, France, Belgium, the Netherlands, Australia, and New Zealand. There is also a useful discussion on measuring the extent of healthcare fraud, and its impact on the National Healthcare Service (NHS) in the United Kingdom.

• How corruption is making people sick. Transparency International, 14 September 2020.

  This report notes corruption undermines healthcare systems, which impedes access to treatment and personal protective equipment (PPE). Sales of PPE may be counterfeit and may harm the safety of healthcare workers and patients. More issues of corruption are detailed in this report.

• Jesilow, Paul, Henry Pontell, and Gilbert Geis. 1993. Prescription for profit: How doctors defraud Medicaid. Berkeley: Univ. of California Press.

  DOI: 10.1525/9780520911833

  This book is based upon interviews with healthcare fraud investigators, high-ranking government officials, and healthcare fraud offenders. The authors discuss early patterns of fraud and abuse in Medicaid and early attempts by the government to stop fraud in the program.

• Jones, Ben, and Amy Jing. 2011. Prevention not cure in tackling health-care fraud. Bulletin of the World Health Organization 89.12: 858–859.

  DOI: 10.2471/BLT.11.021211

  This brief publication provides an overview of the various healthcare fraud schemes around the world, and the numerous strategies nations are employing in their attempts to reduce and stop fraud.

• Leap, Terry L. 2011. Phantom billing, fake prescriptions, and the high cost of medicine: Health care fraud and what to do about it. Ithaca, NY: Cornell Univ. Press.

  DOI: 10.7591/cornell/9780801449796.001.0001

  This book provides an in-depth discussion on the causes of healthcare fraud, major healthcare fraud laws, and the common fraud schemes that occur. Criminologists may find chapter 6 on fighting healthcare fraud and abuse particularly useful.

• Levi, M., and R. Smith. 2021. Fraud and its relationship to pandemics and economic crises: From Spanish flu to COVID-19. Research Report no. 19. Canberra: Australian Institute of Criminology.

  This report details the common traits of fraud and other related types of crime that are often coupled with worldwide pandemics. The authors discuss risks that are specific to pandemics and financial crises. Using examples from the 1918 Spanish flu to COVID-19, the authors offer an examination into changes in fraud, such as the rise of online fraud, that are unique in the modern era.

• Mackey, Tim, and Bryan Liang. 2012. Combating healthcare corruption and fraud with improved global health governance. BMC International Health and Human Rights 12:1–7.

  DOI: 10.1186/1472–698X-12-23

  The article demonstrates that healthcare fraud in one nation can impact the health outcomes of other nations. The authors call for global cooperation to fight healthcare corruption and suggest a number of policies to address the problem.

• Rosoff, Stephen, Henry Pontell, and Robert Tillman. 2019. Profit without honor: White collar crime and the looting of America. 7th ed. Sydney, Australia: Pearson Education.

  An accessible textbook examining some of the major forms of medical crimes, provides illustrative case studies of healthcare fraud, discusses law enforcement difficulties, and highlights developing areas for future concern. Chapter 11 discusses medical crimes in good detail.

• Savedoff, William, and Karen Hussmann. 2006. Why are health systems prone to corruption? In Global corruption report 2006. By Transparency International, 4–13. London: Pluto.

  This book chapter is particularly important, since it informs readers of the unique features of healthcare systems that make them vulnerable to fraud and corruption. This chapter is a good starting point for researchers who want to obtain a general overview of healthcare fraud.

• Sparrow, Malcolm K. 2000. License to steal: How fraud bleeds America’s healthcare system. Boulder, CO: Westview.

  Updated edition. This book is a classic contribution to the study of healthcare fraud. It describes the complexities of healthcare fraud regulation in the United States. It is an excellent starting place for researchers in understanding the fraud control challenge.