Tampa Bay Chapter - ACFE       http://TampaBayCFE.org           March 2006

7th Annual Fraud & Computer Crimes Seminar

The Tampa Bay Chapter's 7th Annual Fraud & Computer Crimes Seminar promises to be a good one. The location (Ruth Eckerd Hall) is booked; the food and beverages are ordered; the speakers have committed; and their topics are confirmed. Information is available on our web site at: http://tampabaycfe.org/seminar.htm.

A Serious and Costly Reality For All Americans

Since the early 1990s, health care fraud – i.e., the deliberate submittal of false claims to private health insurance plans and/or tax-funded public health insurance programs such as Medicare and Medicaid – has been viewed as a serious and still-growing nationwide crime phenomenon, linked directly to the nation’s ever-growing annual health care outlay, which in calendar-year 2003 alone amounted to $1.7 trillion (the Office of the Actuary, Centers for Medicare & Medicaid Services). This represents a growth of 7.7 percent over the prior year.

That Some Health Insurance Claims Are Fraudulent is Beyond Dispute

It is an undisputed reality that some of the more than 4 billion health insurance benefit transactions processed in the United States every year are fraudulent.  Although they constitute only a small fraction, those fraudulent claims carry a very high price tag.

Each year, for example, the Office of Inspector General of the U.S. Department of Health and Human Services conducts a formal audit of the Medicare program’s fee-for-service claim payment system.  On February 21, 2002, the HHS-OIG reported its finding that of the $191.8 billion such claims paid in 2001, 6.3 percent – amounting to $12.1 billion – should not have been paid due to erroneous billing or payment, inadequate provider documentation of services to back up the claims and/or outright fraud.

In May, 2004, the National Health Care Anti-Fraud Association (NHCAA) reported in its Anti-Fraud Management Survey that 52 of its member insurers collectively recovered or prevented payment of $503 million in 2003 as a direct result of their anti-fraud activities – a great deal of money, but barely a measurable fraction of the total estimated loss.

The bottom line:  The NHCAA estimates that of the nation’s annual health care outlay, at least 3 percent – or $51 billion in calendar-year 2003- is lost to outright fraud.  Other estimates by government and law enforcement agencies place the loss as high as 10 percent of our annual expenditure – or $170 billion – each year.

Although the immediate targets and victims of that fraud are private health payers and government-funded health plans, all of us ultimately pay for the crime – through higher health insurance premiums (or fewer benefits) for employers and individuals, higher taxes, and higher insurance co-payments for privately and publicly insured patients.

The Involvement of Organized Criminal Groups

So strong an invitation to some is the country’s ever-larger pool of health care money that in certain areas – Florida, for example – law enforcement agencies and health insurers have witnessed in recent years the migration of some criminals from illegal drug trafficking into the safer and far more lucrative business of perpetrating fraud schemes against Medicare, Medicaid and private health insurance companies.

In South Florida alone, government programs and private insurers have lost hundreds of millions of dollars in recent years to criminal rings – some of them based in Central and South America – that fabricate claims from non-existent clinics, using genuine patient-insurance and provider-billing information that the perpetrators have bought and/or stolen for that purpose. When the bogus claims are paid, the mailing address in most instances belongs to a freight forwarder that bundles up the mail and ships it off shore.

TRAINING

Association of Certified Fraud Examiners

17th Annual ACFE Fraud Conference and Exhibition

CPE Credits: 44
7/9/2006 - 7/14/2006

The Venetian
3355 Las Vegas Blvd.
Las Vegas, NV  89109
(877) 283-6423
(702) 414-1000 (Fax)
Room Rate: $169.00 - subject to availability

Tampa Bay Chapter

Dinner Meetings

Annual Meeting
April 11, 2006
"Health Care Fraud, Waste and Abuse"

 7th Annual Fraud & Computer Crimes Seminar

May 9 - 10, 2006
Ruth Eckerd Hall
1111 McMullen Booth Road
Clearwater, FL 33759

2005 - 2006
OFFICERS & DIRECTORS

PRESIDENT
Steve Hooper, CIA, CFE, CCSA
Clerk of the Circuit Court Hillsborough County, FL
(813) 276-2029 x3703

VICE PRESIDENT
Christine Dever, CPA, CFE
 

SECRETARY
Kara Preston, CFE
Polk County Sheriff's Office
(863) 499-2400

TREASURER
Laura Krueger Brock, CFE, CPA
Cherry, Bekaert, Holland, LLP
(727) 822-8811

DIRECTOR
 Mark Dubina, CFE
Florida Department of Law Enforcement
(813) 878-7366

DIRECTOR
Ellen Wilcox, CFE
Florida Department of Law Enforcement
(727) 298-2482

DIRECTOR
 Penny Borjas, CFE, CIA
ACL Certified Trainer

CHAPTER TRAINING
Wayne Boytim, CFE
City of Tampa, Internal Audit
(813) 274-7167


A Federal Crime with Stiff Penalties

In response to these realities, Congress—through the Health Insurance Portability and Accountability Act of 1996 (HIPAA)—specifically established health care fraud as a federal criminal offense, with the basic crime carrying a federal prison term of up to 10 years in addition to significant financial penalties. [United States Code, Title 18, Section 1347.]

The federal law also provides that should a perpetrator's fraud result in the injury of a patient, the prison term can double, to 20 years; and should it result in a patient's death, a perpetrator can be sentenced to life in federal prison.

Congress also mandated the establishment of a nationwide "Coordinated Fraud and Abuse Control Program," to coordinate federal, state and local law enforcement efforts against health care fraud and to include "the coordination and sharing of data" with private health insurers.

In their capacities as health insurance regulators, many states also have responded vigorously since the early 1990s, not only by strengthening their insurance fraud laws and penalties, but also by requiring health insurers to meet certain standards of fraud detection, investigation and referral as a condition of maintaining their insurance or HMO licenses. 

Source: http://www.nhcaa.org/about_health_care_fraud/ 

News from the ACFE

CPE Compliance Reminder

Your 2005 Continuing Professional Education (CPE) Compliance confirmation may be past due! CPE Compliance/ACFE Bylaw confirmation was due online before Jan 31, 2006. Login to the My Account section on ACFE.com to check your compliance status.

Who is required to certify compliance with CPE requirements?
All CFEs in Active, Lifetime, and statuses certified before Jan 01, 2005.

If you use the CFE designation professionally, CPE is required. For information on Retired and Inactive statuses, please contact Member Services at (800) 245-3321 or +1 (512) 478-9000.

ACFE has simplified requirements on how CFEs communicate compliance with annual CPE credits earned. It’s as easy as 1-2-3!

  • Earn at least 20 total credits between January and December each year, 10 of which must be fraud-related

  • Certify compliance for the preceding year by January 31st as requested by ACFE. ACFE’s online certification form updates your record instantly

  • Maintain documentation of earning your CPE credits for up to three years in case you are randomly selected for an ACFE CPE audit.

That’s it! No detailed reports, no confusing deadlines, and no worry whether a mailed or faxed document arrived by the deadline.

Read about CPE requirements and acceptable forms of credit in the Career Center and then confirm your CPE compliance in the My Account section on ACFE.com today!

Please contact Member Services at (800) 245-3321 or +1 (512) 478-9000 if you have any questions.

Chapter News

Chapter Elections

It is that time of year again . . . Chapter Elections. Chapter CFEs and Associate Members are eligible to vote. Please cast your ballot by visiting http://tampabaycfe.org/ballot.htm.

Scholarship Winner

Kevin Ferzoco was selected by the Chapter Board of Directors to receive a $500 graduate student scholarship. Kevin is in his second term at the University of Tampa, working on his MBA with a concentration in accounting. He is the graduate assistant to Professor Lisa Bostick at the University. An early assignment to research fraud articles in the Wall Street Journal was the key to his gaining a keen interest in fraud. He is registered to attend her fraud class later this year and expressed the desire to take the CFE examination. Kevin is a graduate of Babson College in Massachusetts and finished with a cumulative 3.06 GPA. At the University of Tampa, his GPA is 3.21.

Dinner Meeting News

Our next Dinner Meeting is scheduled for April 11th

Alice H. Pandolfi RN, CFE, AHFI, Director Special Investigations Unit, WellCare, will present "Health Care Fraud, Waste and Abuse" at our March 14 Dinner Meeting. Alice went to Nursing School in Boston in the late sixties. In 1985, she joined Aetna in Connecticut for a nearly 20 year journey, the last 10 years managing their Special Investigations Unit. Along the way she acquired her Masters in Management from Renssellaer, her Certified Fraud Examiner designation and AHFI accreditation. In addition, Alice is board certified in Quality Assurance, Utilization Review and Managed Care. Recently moved to Florida, she joined WellCare as their Director of Special Investigations. Alice is presently on the Board of Governors for the National Health Care AntiFraud Association.

Most providers and members are honest.  Unfortunately some providers and beneficiaries are not. Fraud is the intentional deception or misrepresentation that an individual knows to be false and makes knowing that the deception could result in some unauthorized benefit to them or some other person.

It is estimated that 100 Billion dollars per year is lost to Health Care Fraud and its partners; waste and abuse.  It is not a victimless crime.  It affects each one of us by increasing our insurance premiums, creating new more complex restrictions to receiving health care i.e., co-pays, deductibles, drug step therapy, pre-certification, and limits on the number or frequency of some types of care.

The dinner meeting will be held at the Clarion Hotel Tampa Westshore, located at 5303 West Kennedy Blvd., 11th floor. The hotel is just west of Westshore Plaza on the north side of Kennedy Blvd. Evenings will begin with a social at 6:00 P.M., followed by a buffet dinner at 6:30 and a presentation at 7:00. The cost remains only $15.

To make your reservation, please use the following link Chapter Meeting Reservation and complete the form at the bottom of the page.  You can also make your reservation by emailing Wayne Boytim or calling him at (813) 274-7167 by the Friday before the meeting date. Reservations will be accepted after that date and walk-ups are always welcome. Please remember that cancellations are accepted up to the afternoon of the meeting. No shows will be billed after the second missed meeting. Please help us keep our costs down by letting us know if you are unable to attend.

February 7th Dinner Meeting

During his presentation on real estate fraud, Silvio Cherjovsky, President and CEO of Grasil, Inc., scared us all about entering into a real estate contract. Undoubtedly, engaging in a real estate transaction without representation is not for the amateur. There are many people involved. Typically the real estate agent, an Appraiser, the Inspector, the Lender, the closing agent, the seller or buyer and you will all have a say in what’s what. All of who have a vested interest in the monetary outcome of the deal. So it is no wonder that real estate fraud is committed often. There are many schemes, to include but not limited to, foreclosure bailout, home equity and home renovation fraud, rental fraud, deceptive timeshares, ID theft, and mortgage fraud. Mortgage fraud is easily done because there are so many forms to understand. Without a general understanding of multiple page title searches and mortgages, you can get cheated fairly easy.

In recent years, the State of Florida lowered the pass percentage needed to pass the Real Estate state exam. The lowering of this requirement has allowed for more substandard real estate agents. Additionally, about $2000.00 is all that is needed to declare you as a full-time real estate agent. This amount is a little more expensive to become a REALTOR. But both REALTORS and real estate agents are legally allowed to engage in transactions. Another cause for increasing fraudulent transactions is the spike in population. With the demand so high to get in on the real estate market boom, more and more fly-by-night companies are opening their doors.

Considering the percentage of real estate transactions that happen every day, it is expected that there will be snags along the way. Buying a house is not as simple as paying thousands of cash, signing a few papers, and transferring the keys. Most REALTORS are honest hard-working people. But for those few who are not, it is good to know that there is someone out there like Silvio, who can protect the client.

Submitted by: Kara Preston, Chapter Secretary

The Department of Health and Human Services
And
The Department of Justice
Health Care Fraud and Abuse Control Program
Annual Report For FY 2004

Executive Summary

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) established a national Health Care Fraud and Abuse Control Program (HCFAC or the Program), under the joint direction of the Attorney General and the Secretary of the Department of Health and Human Services (HHS) 1, acting through the Department’s Inspector General (HHS/OIG), designed to coordinate federal, state and local law enforcement activities with respect to health care fraud and abuse. In its eighth year of operation, the Program’s continued success again confirmed the soundness of a collaborative approach to identify and prosecute the most egregious instances of health care fraud, to prevent future fraud or abuse, and to protect program beneficiaries.

Monetary Results

During 2004, the Federal Government won or negotiated approximately $605 million in judgments and settlements, and it attained additional administrative impositions in health care fraud cases and proceedings. The Medicare Trust Fund received transfers of more than $1.51 billion during this period as a result of these efforts, as well as those of preceding years, and an additional $99 million in federal Medicaid money was similarly transferred to the Centers for Medicare and Medicaid Services (CMS) as a result of these efforts. The HCFAC account has returned over $7.3 billion to the Medicare Trust Fund since the inception of the program in 1997.

Enforcement Actions

In FY 2004, U.S. Attorneys' Offices opened 1,002 new criminal health care fraud investigations involving 1,685 potential defendants. Federal prosecutors had 1,626 health care fraud criminal investigations pending, involving 2,361 potential defendants, and filed criminal charges in 395 cases involving 646 defendants. A total of 459 defendants were convicted for health care fraud-related crimes during the year. Also in FY 2004, the Department of Justice opened 868 new civil health care fraud investigations, and had 1,362 open civil health care fraud investigations. The Department of Justice filed complaints or intervened in 269 civil health care cases in 2004.

For the full report, visit http://www.usdoj.gov/dag/pubdoc/hcfacreport2004.htm.

Dishonest Health Care Providers Take the Greatest Toll

Individual patients can, and in some cases do, commit health care fraud—either on their own or in collusion with dishonest health care providers.  By far the greatest damage, though, is attributable to fraud committed by dishonest health care providers. This is not because large numbers of physicians and other health care professionals are dishonest.  On the contrary, the vast majority are honest and ethical, and they too are victimized both by the dishonest few within their professions and by the increasing number of professional criminal operations that pose as health care providers for purposes of committing fraud.

The few who make up that dishonest minority, however, have all the necessary tools with which to commit ongoing fraud on a very broad scale:

  • The entire population of insured patients to attract and exploit;

  • The entire range of potential medical conditions and treatments on which to base false claims; and

  • The ability to spread false billings among many insurers simultaneously, increasing their fraud proceeds while lessening their chances of being detected by any one insurer.

The most common types of fraud committed by dishonest providers are:

  • Billing for services that were never rendered—either by using genuine patient information to fabricate entire claims or by padding claims with charges for procedures or services that did not take place;

  • Billing for more expensive services or procedures than were actually provided or performed, commonly known as "upcoding"—i.e., falsely billing for a higher-priced treatment than was actually provided (which often requires the accompanying "inflation" of the patient's diagnosis code to a more serious condition consistent with the false procedure code);

  • Performing medically unnecessary services solely for the purpose of generating insurance payments—seen very often in nerve-conduction and other diagnostic-testing schemes. Recently, the Rent-a-Patient schemes in Southern California have resulted in clinics performing unnecessary, and sometime harmful, surgeries on patients who have been recruited, and paid, to have these unnecessary surgeries performed; and

  • Misrepresenting non-covered treatments as medically necessary covered treatments for purposes of obtaining insurance payments—widely seen in cosmetic-surgery schemes, in which non-covered cosmetic procedures such as "nose jobs," "tummy tucks," liposuction or breast augmentations, for example, are billed to patients' insurers as deviated-septum repairs, hernia repairs, or lumpectomies.

The illicit proceeds of such schemes typically amount to very significant sums of money. In cases involving individual dishonest providers, it is not uncommon to see schemes in which the thefts have ranged from a few hundred thousand dollars to several million dollars in a relatively short period—e.g., two, three, or four years—prior to their detection. 

In November, 2001, for example, an Arlington, Texas chiropractor was sentenced to five years in prison after pleading guilty to masterminding a broad-based scheme responsible for submitting $5.7 million in false claims—of which $3.2 million were paid—to a variety of health insurers over a five-year period.  (In the same scheme, one physician was convicted, two more submitted guilty pleas, and two former physicians were indicted).  

In “institutional” cases, involving such perpetrators as hospital chains, national laboratory companies, transportation, pharmaceutical and medical equipment companies, the totals in various federal criminal and civil fraud cases of recent years have ranged from tens of millions to hundreds of millions of dollars. Several recent high-profile fraud cases involving hospital chains and pharmaceutical companies, for example, have resulted in criminal and/or civil settlements ranging from $600 million to $850 million.