Lynn Nolan, Government Law Review member
Approximately $125–175 billion are lost to fraud each year in both the private and public health care sectors. The FBI estimates that in fiscal year 2009, $75–250 billion were stolen from public and private healthcare programs through fraudulent billings alone. With the prevalence of health care fraud becoming more apparent the government is taking action to prevent and prosecute fraudulent activity. President Obama has made combating health care fraud a priority of his administration by encouraging the development of innovative methods of preventing fraud and pursuing policy changes to facilitate reform.
One of the Administration’s signature initiatives is the Health Care Fraud Prevention and Enforcement Action Team (HEAT), which is a collaborative task force derived from the Department of Health and Human Services (HHS) and the Department of Justice (DOJ). The HEAT task force was established on May 20, 2009 to aid in the identification of perpetrators of fraud in order to recover funds which have been stolen and prohibit perpetrators from abusing federally funded health care programs, such as Medicare and Medicaid. The latest initiative of HEAT was the National Summit on Health Care Fraud which was held on January 28, 2010. The National Summit was held to address the issue of health care fraud and promote the participation of the private health care sector in collaboratively fighting fraud to aid government efforts. Secretary Sebelius addressed the private sector in saying,
[h]ealth care fraud isn’t just a government problem. Criminals don’t discriminate and they are stealing from Medicare, Medicaid and private companies at an unacceptable rate . . . [w]e have a shared interest in stopping these crimes and today’s summit brought us together to discuss how we can all work together to fight fraud.
At the summit workgroups were set up to discuss the development of effective prevention policies and effective law enforcement strategies, as well as the use of technology to detect and prevent fraud. Further, discussion on measuring health care fraud and assessing recoveries also took place.
President Obama’s FY 2010 budget invested $311 million in discretionary resources to fraud prevention efforts—twice as much as funding as was allocated in 2009—in hopes of saving an estimated $2.7 billion over a five-year period. With the measures in place in FY 2009 health care fraud recoveries reached $1.6 billion, the administration aims to increase the amount of recoveries for FY 2010 though its enhanced measures. The President’s FY 2011 budget which is to be announced shortly is alleged to facilitate anti-fraud measures which could save billions of dollars over a ten year span.
Health care fraud occurs in a multitude of ways, some of which are harmful to patients, all of which are detrimental to the sustainability of the health care system. There have been cases of billing for services never provided, intentional provision of unnecessary or inappropriate services, misrepresentation of the cost of care, kickbacks for referrals for unnecessary services, misbranding of a drug by pharmaceutical companies, and individuals obtaining prescriptions to facilitate a drug addiction. Regardless how the fraud occurs,“[t]he Obama Administration has zero tolerance for health care fraud and abuse.”
In 2010, over ninety-eight million Americans will be beneficiaries of a federally sponsored healthcare program, such as Medicare and Medicaid. The Center for Medicare & Medicaid Services (CMS) expects to outlay $803.1 billion for benefit costs throughout the fiscal year. It additionally expects that non-benefit costs, which include fraud abuse control, management, administration, and improvement measures, will total $21.2 billion. In order to meet the growing needs of the beneficiaries, money will be allocated to CMS programs that is not accounted for, thus contributing to the national debt held by the public. When individuals and corporations commit healthcare fraud they are stealing current taxpayer’s dollars, and creating a future obligation for taxpayers to pay off.
Though a significant amount of capital is misappropriated through health care fraud, recovered funds alone will not result in the current health care system to become sustainable. The Medicare program alone presents the nation with an obligation of $85.6 trillion which is currently unfunded, as there is not enough revenue to cover the outlays (which results in the accumulation of debt). The Medicare system is the third largest program run by the federal government—after defense and Social Security—and is expected to need more outlays in the near future as the number of seniors qualifying for Medicare increases due to the retirement of the “baby-boom” generation. To achieve sustainability the health care system, and specifically the Medicare system, a structural overhaul is necessary. Eliminating fraud and abuse of Medicare and Medicaid programs will not achieve their sustainability, but the efforts are nonetheless necessary to ascertain and prosecute individuals who intentionally are targeting the funds of a public service which many Americans rely upon. Money that is wrongfully diverted from programs which are federally funded not only drains the revenue obtained from tax-payers dollars but further contributes to the economic deficit.
The Obama administration is taking a step in the right direction by recognizing problems with the health care system that can be fixed and addressing them accordingly. Reform of the public healthcare system to achieve sustainability is going to be an arduous task; but by addressing one issue at a time, as a nation we progressively move in the right direction.
Edited by Shane Egan & Stephen Dushko
 Robert Kelly, Where Can $700 Billion in Waste Be Cut Annually from the U.S. Healthcare System? 17 (Thomson Reuters 2009), available at http://info.thomsonhealthcare.com/?elqPURLPage=582.
 Statement, William Corr, J.D., U.S. Department of Health and Human Services, Deputy Secretary, Effective Strategies for Preventing Health Care Fraud (Oct. 28 2009), available at http://www.hhs.gov/asl/testify/2009/10/t20091028a.html.
Press Release, Health and Human Services, Health & Human Services Secretary Kathleen Sebelius, Attorney General Eric Holder Convene National Summit on Health Care Fraud, Unveil Historic Commitment to Fighting Fraud in President’s FY 2011 Budget: Summit Brings Private and Public Sectors, Law Enforcement Together to Fight Fraud (Jan. 28, 2010) [hereinafter Summit on Health Care Fraud], available at http://www.hhs.gov/news/press/2010pres/01/20100128a.html.
 Press Release, Health and Human Services, Attorney General Holder and HSS Secretary Sebelius Announce New Interagency Health Care Fraud Prevention and Enforcement Action Team (May 20, 2009), available at http://www.hhs.gov/news/press/2009pres/05/20090520a.html.
Press Release, Department of Justice, Justice Department Recovers $2.4 Billion in False Claims Cases in Fiscal Year 2009; More than $24 Billion Since 1986 (Nov. 19, 2009), available at http://www.justice.gov/opa/pr/2009/November/09-civ-1253.html
 Press Release, Summit on Health Care Fraud, supra note 6.
 Kelly, supra note 1, at 17.
 Press Release, Summit on Health Care Fraud, supra note 6.
 Department of Health & Human Services, Centers for Medicare & Medicaid Services, “Message from the Acting Administrator,” FY 2010 Online Performance Appendix (2009), available at http://www.hhs.gov/asrt/ob/docbudget/index.html.
 Department of Health & Human Services, Centers for Medicare & Medicaid Services, “Executive Summary,” Justification of Estimates for Appropriations Committee, Fiscal Year 2010 2 (2009), available at http://www.hhs.gov/asrt/ob/docbudget/index.html.
 J.D. Foster, Ph.D., “A First Big Step Toward Medicare Sustainability” Backgrounder, No. 2253, 5 (The Heritage Foundation, 2009).
 See Centers for Medicare and Medicaid Services, 2008 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplemental Medical Insurance Trust Funds, (Mar. 2008), available at http://www.cms.hhs.gov/ReportsTrustFunds/downloads/tr2008.pdf; “This figure reflects the perpetual time horizon, which is preferred to the trustees’ alternative 75-year horizon because Medicare is expected to operate beyond 75 years and because reforms that may render Medicare sustainable over 75 years will not necessarily ensure sustainability over a longer period. The 75-year figure is $36 trillion.” Foster, supra note 20, at n1.
 Foster, supra note 20, at 1, 7.
 Id. at 5.
 Id. at 5-7.