Privatizing Health Insurance Companies For Anti-Fraud Enforcement

by Michael Volkov

The federal government faces overwhelming challenges in trying to stem the tide of fraud in the health care system.  The problem is massive, and even with the increase in resources, and adoption of new tools to fight fraud, the government’s ability to reduce fraud is intractable.

As the government’s role in healthcare continues to expand, fraudsters will continue to rip the system off.  Healthcare fraudsters are creative and are always looking to game the system with new schemes.  As the potential benefits from crime increase, more criminals will be incentivized to engage in fraud. 

The only way to reduce fraud is to increase proactive steps to prevent fraud and the risk of being caught if fraud occurs.  The government knows it has to improve its performance on both of these scores, and its strategy is coming to light.

The most important step the government has taken and will take in the future is to require health insurance companies to play a more active role in identifying, reporting and putting a stop to fraudulent schemes.  Cynics will label this as “outsourcing” fraud detection and enforcement to the private sector.  As a former prosecutor, I would label this as developing sources of information by requiring those closest to the market to develop more rigorous fraud detection and reporting programs.

Private health insurance companies already have fraud prevention and detection programs in place.   In addition, private insurance companies have established relationships with prosecutors and law enforcement agencies, and regularly share information with these agencies. 

In a July 26, 2012 announcement, the Attorney General, the HHS Secretary and private insurance representatives committed to increase these efforts.  That makes total sense and is a welcome development.

The federal government, however, wants more from private health insurers. Earlier this years, the Centers for Medicare & Medicaid Services released its Final Compliance Program Guidelines for compliance programs for private insurance sponsors of prescription drug services under Medicare Parts C and D (copy here).  In general, the guidance did not include any surprises in terms of compliance program requirements, with the exception of the expansion of insurers’ responsibilities to include not only their own (and their agents) compliance efforts but to health care providers who provide services to beneficiaries under the Medicare program. 

In other words, the government is requiring private insurance companies to prevent and identify fraudulent activities by health care providers, as part of its overall compliance program.  Private insurers are now required to conduct anti-fraud investigations involving providers participating in the Medicare C and D programs.  It is reasonable to assume this same requirement will be imposed later next year when additional guidance is issued by HHS applicable to other federal healthcare programs.

As mentioned above, private health insurers have established Special Investigation Units dedicated to rooting out fraud against the insurer.  SIUs will have to expand their operations and coordinate with Chief Compliance Officers to enhance anti-fraud programs.  By requiring SIUs to operate as part of a company’s compliance program, the challenge will be in designing the most effective means for coordinating these operations.  If a company fails to address this issue, it can face regulatory and potential litigation risks, possibly including potential False Claims Act exposure.

Private health insurance companies need to anticipate new and more robust anti-fraud requirements as part of their overall compliance programs.  Even though the government has not imposed these requirements outside of Medicare C and D sponsors, the industry should expect the government to impose these requirements in upcoming compliance program guidance in the coming year.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

Written by:

Michael Volkov

The Volkov Law Group on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.