FOR IMMEDIATE RELEASENIJ
TUESDAY, FEBRUARY 2, 1999202/307-0703

JUSTICE DEPARTMENT STUDY EXAMINES HEALTH CARE FRAUD

WASHINGTON, D.C. -- While more than $1 trillion is spent on health care each year in the United States, the related losses due to fraud and abuse remains difficult to measure and control, according to a report released today by the Justice Department. The National Institute of Justice (NIJ) study, Fraud Control in the Health Care Industry: Assessing the State of the Art, examines the policies, procedures and control systems concerning the unusually high levels of criminal fraud within the health care industry.

"The evidence from this report points out how difficult it is to address fraud control in the health care industry," said Attorney General Janet Reno. "We need to do more to help both public and private insurers identify fraud problems so that we all benefit."

The NIJ study revealed the extent to which certain factors make controlling fraud and abuse in the health care industry particularly challenging, including the acceptability of government and insurance companies in our society as violators, and the level of trust given to health care providers. Criminals have discovered ways to easily circumvent existing controls. Fraud schemes are usually discovered by chance rather than system.

"This research takes us one step closer to understanding the extent to which fraud is evident in the American health care industry," said NIJ Director Jeremy Travis. "Unless insurers are better able to evaluate the fraud problem, effective fraud control will continue to elude us."

This study focused on criminal fraud rather than abuse because fraud controls are aimed at an entirely different audience. For instance, controls may work well in revealing billing errors to well-intentioned doctors, but those same control systems may not offer an effective defense against skilled criminals. Many control systems are designed for honest providers, not the sophisticated, well-educated criminals who are determined to steal as much as they can.

The study was conducted by Professor Malcolm K. Sparrow of the Kennedy School of Government at Harvard University.

The National Institute of Justice (NIJ), the research arm of the Department of Justice, is the primary sponsor of criminal justice research and evaluations of programs to reduce crime. For additional information about NIJ, the Internet address is http://www.ojp.usdoj.gov/nij.

General information about the Office of Justice Programs (OJP) is available at http://www.ojp.usdoj.gov.

The report is available on the Internet at http://www.ojp.usdoj.gov/nij, or from the National Criminal Justice Reference Service (NCJRS) by calling toll-free, 1-800/851-3420.

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NIJ 99-035

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