Funding for the fight against fraud

cash roll

A full repeal of the Affordable Care Act would effectively eliminate the remaining funds earmarked for the Health Care Fraud Abuse Control (HCFAC) program under the law (approximately $140 million), but it wouldn’t wipe out the program’s most significant source of funding.

That’s because most of HCFAC’s budget comes from Congress, which has steadily increased funding to the program over the last several years. According to the most recent annual report, HCFAC received more than $301 million in mandatory funding and $672 million in discretionary funding in FY 2015.

A photo of Gejaa Gobena
Gejaa Gobena

In FY 2016, Congress allocated more than $1.2 billion in mandatory funding for the program (which includes more than $800 million for the Centers for Medicare & Medicaid Services' Center for Program Integrity that is not included in the HCFAC report), along with $681 million in discretionary funding. HCFAC's discretionary budget for 2017 is $725 million. Any changes to the ACA would have no impact on that funding stream.

Furthermore, if Republicans opt to restructure the ACA, rather than repeal it entirely, they might decide to keep the $35 million per year allocated toward antifraud activities, according to Gejaa Gobena, a partner with Hogan Lovells and the former deputy chief of the fraud section in the Justice Department’s criminal division.

“Assuming the new president-elect and Congress are satisfied that it is money well spent, it may be something they want to preserve, just given the return on investment that we’ve seen overall in terms of healthcare fraud,” Gobena says.

That return on investment may be HCFAC’s saving grace. Over the last three years, the agency said it recovered $7.70 for every dollar spent on antifraud activities. 

 

“As [Donald] Trump might say, that’s a ‘huge’ return on investment,” says Jeff Schroder, an attorney with Plunkett Cooney and the former Assistant Attorney General for Michigan’s healthcare fraud division.

However, a large portion of discretionary funding has been directed toward CMS for program integrity efforts, including the agency’s new Fraud Prevention System--a data analytics system designed to identify potentially fraudulent claims.

Gobena notes that high-dollar items naturally draw more scrutiny from lawmakers. Although CMS claims the system has saved $42 billion in improper payments, CMS officials may be asked to account for how that money is being used.

“That’s where there may be some additional scrutiny and kicking of the tires to see whether any adjustments need to be made,” he says.

Funding for the fight against fraud

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