DOJ prosecutes fraud cases  that affect both federal health programs and private health insurance. In addition, the use of smart card technology could introduce  new types of fraud and ways for individuals to illegally access beneficiary  information. The majority of the 739 cases (about 68 percent)  included more than one scheme; 61 percent of the cases had 2 to 4  schemes, about 7 percent had 5 or more schemes. Schemes related to prescription drugs (including  prescription drugs that contained controlled substances), such as  fraudulently obtaining or distributing prescription drugs or marketing  prescription drugs for non-FDA approved uses in order to commit fraud,  were found in about 21 percent of the cases we reviewed. Among the cases in which the beneficiary was complicit, the most  common schemes were billing for services that were not medically  necessary, billing for services that were not provided, and falsifying  records to support the fraud schemes. In about 62 percent of the 739 cases we reviewed, beneficiaries were not  complicit in the schemes. Smart Cards Likely Would Not Have Affected the Majority of Cases Reviewed

Among the 739 cases, we found 165 cases (22 percent) in which the  entire case (2 percent) or part of the case (20 percent) could have been  affected by the use of smart cards. These six schemes were  (1) billing for services that were never actually provided and no legitimate  services were provided; (2) misusing a provider’s identification  information to bill fraudulently (such as using a retired provider’s  identification information); (3) misusing a beneficiary’s identification  information to bill fraudulently (such as using a deceased beneficiary’s  identification information or stealing a beneficiary’s information); (4) billing  more than once for the same service (known as duplicate billing) by  altering a small portion of the claim, such as the date, and resubmitting it  for payment; (5) providing services to ineligible individuals; and (6)  falsifying a substantial part of the records to indicate that beneficiaries or  providers were present at the point of care. In 18 cases (2.4 percent of all cases resolved in 2010 that we reviewed),  the entire case could have been affected because all of the schemes on  those cases involved the lack of verification of the beneficiary or provider  at the point of care. This case could have  been partially affected by the use of smart  cards, as the smart card would have verified  that the beneficiary was present for only one  service in which a duplicate bill was submitted  but would not have affected the ability of the  provider to bill for services that were not  medically necessary. Agency Comments

HHS and DOJ provided technical comments on a draft of this report,  which we have incorporated as appropriate. To describe types of health care fraud, we reviewed our prior reports, as  well as reports from the Department of Health and Human Services  (HHS) Office of Inspector General (OIG) and the Department of Justice  (DOJ) to develop a list of schemes and definitions for these schemes, and  then reviewed cases resolved in 2010 that we obtained through the  course of work for our 2012 report. Using the list of fraud schemes identified, we reviewed court documents  for the health care fraud cases resolved in 2010 to determine the  prevalence of health care fraud schemes. Appendix II: Additional Details on Health Care Fraud Schemes in Cases GAO Reviewed

Tables 6 through 9 provide detailed information on health care fraud  schemes for cases we reviewed, including whether the scheme was the  only scheme in the case or used in combination with other schemes, the  number of schemes used in cases, the role of the provider, and the role of  the beneficiary.
Why GAO Did This Study

While there have been convictions for multimillion dollar schemes that defrauded federal health care programs, there are no reliable estimates of the magnitude of fraud within these programs or across the health care industry. In some fraud cases, individuals have billed federal health care programs or private health insurance by using a beneficiary's or provider's identification information without the beneficiary's or provider's knowledge. One idea to reduce the ability of individuals to commit this type of fraud is to use electronically readable card technology, such as smart cards. Proponents say that these cards could reduce fraud by verifying that the beneficiary and the provider were present at the point of care.
GAO was asked to identify and categorize schemes found in health care fraud cases. This report describes (1) health care fraud schemes and their prevalence among cases resolved in 2010 and (2) the extent to which health care fraud schemes could have been affected by the use of smart card technology. GAO reviewed reports on health care fraud and smart card technology and reviewed court documents for 739 fraud cases resolved in 2010 obtained for a related 2012 GAO report on health care fraud. GAO is not making any recommendations.
The Department of Health and Human Services and the Department of Justice provided technical comments on a draft of this report, which GAO incorporated as appropriate.

What GAO Found

GAO's review of 739 health care fraud cases that were resolved in 2010 showed the following:
About 68 percent of the cases included more than one scheme with 61 percent including two to four schemes and 7 percent including five or more schemes.
The most common health care fraud schemes were related to fraudulent billing, such as billing for services that were not provided (about 43 percent of cases) and billing for services that were not medically necessary (about 25 percent).
Other common schemes included falsifying records to support the fraud scheme (about 25 percent), paying kickbacks to participants in the scheme (about 21 percent), and fraudulently obtaining controlled substances or misbranding prescription drugs (about 21 percent).
Providers were complicit in 62 percent of the cases, and beneficiaries were complicit in 14 percent of the cases.
GAO's analysis found that the use of smart cards could have affected about 22 percent (165 cases) of cases GAO reviewed in which the entire or part of the case could have been affected because they included schemes that involved the lack of verification of the beneficiary or provider at the point of care. However, in the majority of cases (78 percent), smart card use likely would not have affected the cases because either beneficiaries or providers were complicit in the schemes, or for other reasons. For example, the use of cards would not have affected cases in which the provider misrepresented the service (as in billing for services not medically necessary), or when the beneficiary and provider were not directly involved in the scheme (as in illegal marketing of prescription drugs).