What is FWA in Healthcare?

FWA in healthcare stands for fraud, waste, and abuse – an issue currently estimated to cost the country between $68 billion and $230 billion each year, or between 3% and 10% of annual healthcare spending. However, the fact is that nobody really knows how much money is lost due to FWA in healthcare.

Fraud, waste, and abuse in healthcare is not a victimless crime. Every dollar acquired through fraud and abuse of the system – or wasted through inefficiency – is a dollar that has to be replaced. Furthermore, in additional to paying higher premiums (when health plans are defrauded) or higher taxes (when Medicare is defrauded), patients can also undergo unnecessary treatments.

However, the scale of fraud, waste, and abuse in healthcare is not a new problem. In 1996, as the final touches where being made to the Health Insurance Portability and Accountability Act (HIPAA), a report presented to the House Committee on Ways and Means claimed “as much as 10% of total health care costs are lost to fraudulent or abusive practices by unscrupulous health care providers”.

The “10%” claim was based on a report prepared in 1993 by the General Accounting Office that acknowledged “only a small amount of the fraud and abuse committed in the health care system is identified and dealt with”. The scale of implied FWA in healthcare was sufficient for Congress to approve and fund the Health Care Fraud and Abuse Control Program created in Title II of HIPAA.

Examples of FWA in Healthcare

As a condition of funding for the Health Care Fraud and Abuse Program, the Departments of Health and Human Services and Justice are required to publish an annual report. The most report – for FY 2021 – includes a number of examples of FWA in healthcare. For example:

In December 2020, a Florida doctor pled guilty to 56 counts of committing health care fraud, conspiracy to commit heath care fraud, and aggravated identity theft. From late 2015 to early 2020, the defendant committed unnecessary and invasive surgical procedures on hundreds of patients, and billed for additional procedures not performed. He was ordered to pay a $30 million civil fine.


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In April 2021, four executives of a Texas healthcare company were sentenced to prison terms of between 30 and 120 months and ordered to pay approximately $62 million in restitution after being found guilty of running a kickback scheme which resulted in patients being referred for unnecessary mental health treatments (i.e. because the patients were suffering from Alzheimer’s).

Also in April 2021, a chiropractor was sentenced to 108 months in prison and ordered to forfeit $9 million after being found guilty of submitting claims to insurance providers, including Medicare, for medically unnecessary services and procedures or services that were not actually rendered. As the result of his fraud, several patients suffered adverse effects and one patient died of complications.

In May 2021, the University of Miami agreed to pay $22 million to resolve civil allegations that it ordered medically unnecessary laboratory tests and submitted false claims through its laboratory and off campus hospital-based facilities. The allegations included that the University billed federal health care programs for medically unnecessary tests on patients who receive kidney transplants.

In July 2021, the Minnesota-based medical device company – St. Jude Medical Inc. – agreed to pay $27 million to settle civil allegations that it knowingly sold defective heart devices to health care facilities that, in turn, implanted the devices into patients insured by federal health care programs. It was alleged that the depletion of the battery could cause serious adverse health events for patients.

Other Laws to Tackle Fraud, Waste, and Abuse

In addition to the Health Care Fraud and Abuse Control Program, the Departments of Health and Human Services and Justice can take advantage of other laws to tackle fraud, waste, and abuse in healthcare. One of the most frequently used laws is the False Claims Act (FCA), which makes a person liable for civil or criminal penalties if they knowingly:

  • Get – or conspire to get – government property by misrepresentation.
  • Conceal, improperly avoid, or decrease an obligation to pay the government.
  • Make or use a false record or statement to support a false claim
  • Present a false claim to the government for payment or approval.

The penalties for violating the False Claims Act are civil monetary penalties of up to three times the amount claimed from the government plus $11,000 per fraudulent claim filed. It is important to be aware it is not necessary for prosecutors to establish an intent to defraud. Healthcare organizations can be found guilty of FCA violations for ignoring or disregarding the law.

Other laws to tackle fraud, waste, and abuse in healthcare include the Anti-Kickback Statute which prohibits healthcare organizations paying for referrals, the Physician Self-Referral Law (also known as Stark’s Law) which prohibits physicians referring patients to entities with whom they have a financial relationship, and the Criminal Health Care Fraud Statute which carries a prison term of up to 20 years.

Possibly the most effective law to tackle FWA in healthcare is the Exclusion Statute (also known as HHS OIG Exclusions). This statute not only excludes individuals and organizations convicted of violating any of the above laws from participating in federal health care programs, healthcare providers in the Medicare program risk exclusion from the program if they obtain goods or services from an individual or organization excluded by the Statute.

Conclusion – Healthcare Providers Should be Alert to FWA

Although the scale of FWA in healthcare does not appear to have decreased in the past thirty years, progress is being made tackling the problem. CMS has made it a condition of Medicare participation that employees involved in the administration of healthcare claims undergo annual FWA training and an increasing number of group plans are adopting AI solutions to identify fraud and reduce billing errors. In one test, an AI solution found $235 million of previously identified fraud in historic claims.

Due to the increased likelihood of fraud, waste, and abuse being detected, healthcare providers should be alert to FWA in their organizations in order to avoid allegations of violating an anti-fraud law. One way to mitigate the risk of fraud, waste, and abuse is to enforce the standards of the HIPAA Privacy and Security Rules to control access to Protected Health Information and monitor how it is used. Organizations requiring advice on how to do this should seek HIPAA compliance advice.

About Liam Johnson
Liam Johnson has produced articles about HIPAA for several years. He has extensive experience in healthcare privacy and security. With a deep understanding of the complex legal and regulatory landscape surrounding patient data protection, Liam has dedicated his career to helping organizations navigate the intricacies of HIPAA compliance. Liam focusses on the challenges faced by healthcare providers, insurance companies, and business associates in complying with HIPAA regulations. Liam has been published in leading healthcare publications, including The HIPAA Journal. Liam was appointed Editor-in-Chief of The HIPAA Guide in 2023. Contact Liam via LinkedIn: https://www.linkedin.com/in/liamhipaa/