ENFORCEMENT

Enforcement E¢onomi¢$: ROI on US Fraud & Abuse Program Continues to Decline

While still profitable, the business of enforcing health care fraud laws has been providing the federal government a steadily declining return on investment (ROI) in recent years. This long-term trend is among the key findings of the most recent annual report to Congress from the U.S. Departments of Health and Human Services and Justice on the financial performance of the Health Care Fraud and Abuse Control Program (Program).

Key Program Numbers from 2016
Here are some of the key numbers from fiscal year 2016:

  • 975: Criminal health care fraud investigations opened by the DOJ;
  • 930: Civil fraud investigations opened by the DOJ;
  • 480: Criminal health care fraud cases filed by prosecutors;
  • 658: Defendants convicted;
  • 765: Criminal health care fraud actions resulting from OIG investigations;
  • 690: Civil fraud actions resulting from OIG investigations;
  • 3,635: Individuals the OIG excluded from participating in federal programs;
  • $282.1 million: Mandatory funding amount (after $20.6 million in mandatory sequester reductions);
  • $681.0 million: Discretionary funding amount.

ROI Continues Steady Decline
While the Program’s successes are considerable, so are its costs. The result is steadily declining ROI. According to the report, for every dollar spent on the Program during the three-year period 2014-2016, investment return was $5.00—not bad but also significantly below ROI from previous years. Here’s how that ROI compares to the ROI reported in the annual reports going back to 2011 (reported for three-year period ending in that FY):

ROI on Program Activities

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016
$7.20 $7.90 $8.10 $7.70 $6.10 $5.00

The ROI figures are based on a three-year rolling average to smooth over year-to-year variances caused by differences in number of cases settled or adjudicated during a particular year.

Takeaway: Although enforcement efforts remain aggressive, the return on investment has faced decline in recent years.

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