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Medical providers convicted of fraud rarely receive punishment from state medical licensing boards, a study concludes.
Only 18% of providers convicted of fraud lost their medical licenses, and fewer than half were punished at all, the study states.
"Licensing boards often fail to take any actions against those licensees who commit felony offenses related to insurance fraud," states the study, conducted by the Coalition Against Insurance Fraud. It examined records from 12 states over a three-year period.
The low percentage of providers punished is "shocking," to Carmine Morano, president of Anthem Health & Life Insurance Co. of New York. "There really should be some action against every provider who has criminally committed fraud," such as license suspension or revocation, he said.
"The penalties have to be tougher," he added.
The coalition, a Washington-based alliance of consumer groups, government agencies and insurance companies, examined federal and state fraud convictions for all types of medical providers for the years 1993-1995, along with those providers excluded from participating in Medicare or Medicaid because they committed insurance fraud. Convictions were compared to punishments handed down by state medical licensing boards.
For the 12 states covered -- California, Florida, Illinois, Indiana, Massachusetts, Minnesota, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Texas -- the coalition found no medical board punishment for 144 (57.4%) of the 251 convicted providers.
Although the coalition conducted a thorough search of the disciplinary rulings, it is possible that some disciplinary actions were not discovered, said Dennis Jay, the coalition's executive director.
The study, prompted by anecdotal evidence, confirmed the coalition's suspicion that medical boards rarely punished providers convicted of fraud, Mr. Jay said.
One problem the coalition encountered in conducting the study was the lack of data available on fraud convictions involving providers. "It was a very tough project," he said.
The study showed that 46 providers (18.3%) lost their licenses: 13 surrendered their medical licenses and 33 had them revoked. Other punishments included 11 warnings (7.3%), 21 license suspensions (8.4%) and 29 cases involving other types of punishment, such as fines.
"Too many medical providers perceive there's little risk that they will be denied the opportunity to continue to practice their profession. . .Remedying this situation could go a long way toward reducing the high cost of insurance fraud to society," the study stated.
The study proposed a number of recommendations to encourage more vigorous punishment. First, states should clarify what offenses could trigger medical board action.
Next, and perhaps most important, courts and prosecutors need to better communicate convictions to state boards. Although most states have laws requiring prosecutors or court clerks to notify state medical boards of convictions, the laws are not well known and are rarely enforced.
"The courts and prosecutors have to do a better job of informing the boards," Mr. Jay said.
Employers and insurers could help correct this problem by notifying medical boards directly of providers' convictions and not assuming their role ends at the convictions.
"I would think (a letter) would carry a lot of weight," with medical boards, Mr. Jay said.
Not notifying licensing boards "really limits the effectiveness of anti-fraud activities," he said.
But because employers don't review claims or directly contract with providers, they are not in a position to detect fraud or to remove fraudulent providers from health plans, said Joyce Cook, vp at The Northern Trust Co. in Chicago. Rather, employers rely on HMOs and health plans to perform this role.
"They are in the best place and have access to the information," to terminate contracts with convicted providers, she said.
Ultimately, suspension or revocation of a provider's license will not only put the offending provider out of business but deter others from committing fraud.
Another reason for the low punishment rate, the study noted, stems from confusion by state boards over their powers to punish the providers. Many board members believe their powers are limited to punishment in cases of medical malpractice. But in fact, Mr. Jay said, the boards in all 12 states studied did have the legal authority to punish providers for fraud convictions.
State medical boards don't put punishment for fraud high on their list of priorities, preferring to concentrate on cases of malpractice, said Joyce Hansen, vp at Integrity Plus Services, a Minneapolis-based United HealthCare subsidiary specializing in health care fraud consulting.
She recommends states pass laws imposing automatic penalties for all providers convicted of fraud.
In addition, those states that want to identify and punish offenders often lack the resources to conduct investigations.
"They need resources to take a look at those people who are siphoning money out of the system," Mr. Jay said.
The coalition plans to promote its recommendations as part of its larger anti-fraud campaign in 11 states starting next year. In particular, the coalition plans to urge state legislatures to pass laws mandating automatic referral by the courts to state medical boards whenever medical providers are convicted of fraud.
The study, entitled "Licensed to Steal: Action and Inaction by State Medical Boards," can be obtained free by writing to the Coalition Against Insurance Fraud at 1511 K St., N.W., Suite 623, Washington, D.C. 20005, or by calling 202-393-7331