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1 Emerging Issues in Healthcare Fraud Rebecca S. Busch, RN, MBA, CCM, CBM, CFE, FIALCP, FHFMA CEO, Medical Business Associates 580 Oakmont Lane, Westmont.

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Presentation on theme: "1 Emerging Issues in Healthcare Fraud Rebecca S. Busch, RN, MBA, CCM, CBM, CFE, FIALCP, FHFMA CEO, Medical Business Associates 580 Oakmont Lane, Westmont."— Presentation transcript:

1 1 Emerging Issues in Healthcare Fraud Rebecca S. Busch, RN, MBA, CCM, CBM, CFE, FIALCP, FHFMA CEO, Medical Business Associates 580 Oakmont Lane, Westmont IL August 31,

2 2 Agenda  Fraud: key initiative in healthcare reform  Global Perspective on Fraud & Fraud Concepts in Healthcare  Profiling Fraud  Review Critical Schemes  Review Latest Fraud Issues  Who Gets Hurt?  Trigger Points 2

3 3 FRAUD – Technical Definition  Misrepresentation of a material fact consisting of a false representation, concealment or non-disclosure;  Knowledge of the falsity  Intent to deceive and induce reliance;  Justifiable and actual reliance on the misrepresentation; and  Resulting damages. 3

4 4 FRAUD – On the front line  “Things” or “Events” that hurt people  Affecting ones person, home, family, assets, and community  Resulting in disability, financial devastation, loss of loved ones, and death  Leaving a person with a loss of faith, hope, trust, and sense of identity 4

5 5 WHY AN ISSUE?  2 TRILLION DOLLAR Industry  OIG ROI ON AUDITS/INVESTIGTATION $17 TO $1  Estimated that $60 billion annually goes to fraud Source: 5

6 6 OIG areas of concern  Payments for unallowable services  Improper services not rendered  Improper claims submissions  Medicare reimbursement rates are too high for certain services.  Payments for inadequately documented services  Manipulation of billing systems  Inaccurate wage data  Manipulative gaming through discharge or transfer of patients to facilities for financial versus clinical reason.  Unreasonable and not medically necessary services Source: 6

7 7 OIG Identified Vulnerabilities  DME suppliers circumventing enrollment and billing controls  High levels of improper Medicare payment for certain types of CME, prosthetics, orthotics, and supplies (DMEPOS);  Inappropriate reimbursement rate for certain DMEPOS. Source: 7

8 8 5 Principals of Effective Anti Fraud Activity 1.Scrutinize individuals and entities that want to participate as providers and suppliers prior to their enrollment in health care programs. 2.Establish payment methodologies that are reasonable and responsive to change in the market place. 3.Assist health care providers and supplier in adopting practices that promote compliance with program requirements, including quality and safety standards. 4.Vigilantly monitor the programs for evidence of fraud, waste, and abuse. 5.Respond swiftly to detected frauds, impose sufficient punishment to deter others, and promptly remedy program vulnerabilities. Source: 8

9 9 Global Perspective  Primary Healthcare Continuum  Secondary Healthcare Continuum  Information Continuum  Consequence Continuum  Transparency Continuum 9

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16 16 Healthcare Continuum 16

17 17 $ - money exchange D – Discounted Price DP- Discounted Product R – Rebates P- Product 17

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21 21 Fraud Issues  Medical Identity Theft  Illicit Provider Rx Sales  Illicit Internet Rx Sales  Drug Diversion, Adulterated Drugs  Counterfeit Drug Activity  Theft of limited Resources (medically unnecessary services) 21

22 22 Fraud Issues  Vulnerable Patients – Neglect & Abuse  Patient Experimentation  Off Label Medication Use  Provider False Claim  Foreign Nationals Shopping Health Dollars in US  Vendor/TPA Fraud 22

23 23 Medical Identity Theft  MIT is the theft of IIHI for the purpose of misrepresentation of health information to obtain access to property or permanently deprive or harm an individual while interacting within the healthcare continuum. Use of an individual’s identity outside the healthcare continuum is considered identity theft.  When a perpetrator steals all or part of the IIHI elements from a medical record file to open up a credit card account and go on a shopping spree, it is considered identity theft—not medical identity theft. The differentiating factor for medical identity theft is that the stolen information is used for illegal gains within the healthcare domain 23

24 24 Illicit Prescription Activity  Counterfeit Drugs  Adulterated Drugs 24

25 25 Target Drugs  Antibiotics, vaccines  Antimalarials  Hormones  Steroids.  Anticancer  Antiviral drugs  Transplant rejection drugs  Anything else available 25

26 26 Sample: Procrit 26

27 27 Sample: Procrit 27

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29 29 Sample: Ponstan Although similar in appearance to the authentic tablets, the counterfeit Ponstan tablet on the left contains no active ingredient. Instead, it is composed of boric acid, brick dust and paint. Boric Acid is a pesticide that can cause gastrointestinal and renal failure. 29

30 30 The counterfeit Lipitor tablets on the left are nearly identical from the authentic tablets on the right. Only distinguishable to the consumer by their bitter taste, the counterfeit tablets were among more than 18 million counterfeit Lipitor tablets removed from the U.S. supply chain in Columbian authorities raided this manufacturing site where they found more than 800,000 counterfeit Ponstan tablets, as well as large quantities of Terramycin, packaging for both products, and manufacturing equipment. 30

31 31 Sample: Viagra This is a Viagra counterfeiting site in Egypt. Counterfeit tablets were being given their blue coloring using an old cement mixer. Clearly, the manufacturing conditions were far from sterile. 31

32 32 This an old cement mixer used to give counterfeit Viagra tablets their blue coloring. 32

33 33 Counterfeit One Touch Basic/Profile Test Strips  Counterfeit One Touch Basic/Profile Test Strips, lot numbers A, , and  Lot Numbers A, , or appears on the outer carton and on the inside container (vial).  The outer carton is written in Multiple Languages including English, Greek and Portuguese.  The outer carton is labeled as 50-Count One Touch (Basic/Profile)Test Strip packages  The bottom of the outer carton does not include an NDC number. 33

34 34 What Else?....Rx Providers  “JORGE A. MARTINEZ, M.D. (CLEVELAND): This investigation resulted in the first known prosecution involving a criminal charge of Health Care Fraud resulting in death.  The case focused on the illegal distribution of pharmaceutical narcotics and billing for unnecessary medical procedures.  The investigation revealed that Dr. Martinez provided excessive narcotic prescriptions, including Oxycontin, to patients in exchange for the patients enduring unnecessary nerve block injections. Dr. Martinez’ actions directly resulted in the death of two of his patients. From 1998 until his arrest in 2004, Martinez submitted more than $59 million in claims to Medicare, Medicaid, and the Ohio Bureau of Worker's Compensation. 34

35 35 What Else?....Rx Providers  In January 2006, a jury found Martinez guilty of 56 criminal counts, including distribution of controlled substances, mail fraud, wire fraud, Health Care Fraud, and Health Care Fraud resulting in death. Martinez was later sentenced to life in prison.  This investigation was conducted jointly with the HHS-OIG, Ohio Bureau of Workers Compensation, DEA Diversion, AdvanceMed, Ohio Department of Job and Family Services, Anthem Blue Cross Blue Shield and Medical Mutual of Ohio.”[1][1] [1] 006/financial_crime_2006.htm 35

36 36 What Else?...Drugs  BANSAL ORGANIZATION (PHILADELPHIA): This investigation was conducted jointly with the DEA and IRS and was focused on a Philadelphia-based Internet pharmacy drug distributor which was smuggling drugs into the U.S. from India and selling them over the Internet.  The criminal organization shipped several thousand packages per week to individuals around the country. In April 2005, 24 individuals were indicted on charges of distributing controlled substances, importing controlled substances, involvement in a continuing criminal enterprise, introducing misbranded drugs into interstate commerce, and participating in money laundering. Over $8 million has been seized to date as a result of the charges. 36

37 37 What Else?...Drugs  As of December 1, 2006, 12 suspects have pled guilty, three have been convicted at trial, four are in foreign custody, and five remain fugitives. This investigation was worked jointly with the DEA, IRS, ICE, USPIS, and the Lower Merion Police Department. I]] [i] [i] 2006/financial_crime_2006.htm. 37

38 38 Dangerous Doses  Operation Stone Cold Florida counterfeit ring  Ring charged with trafficking in bad medicine – indicted in 2003 on charges of racketeering, conspiracy to commit racketeering, organized scheme to defraud, grand theft, dealing in stolen property, sale or delivery of a controlled substance, possession with intent to sell prescription drugs, sale and delivery of a controlled substance and purchase or receipt of a prescription drug from an authorized person. 38

39 39 Perpetrators  Michael Carlow – ex-convict  Candace Carlow, wife  Thomas Atkins, brother in law  Marilyn Atkins, mother in law  Jose L. Benitez, business partner  14 other parties  $42 million dollar enterprise 39

40 40 Profile of one victim  Timothy Fagan  16 years of age  Receive a successful live transplant  Mom injecting Epogen at home once per week  Timothy experienced excruciating pain  Mom checks in with Doc – receives notice of counterfeit Epogen 40

41 41 How did this happen?  Investigation found that no chain of custody exists once the drug leaves the manufacturer.  Drugs lost in the secondary wholesaler market  Anyone can apply for a license 41

42 42 Manufacturer National Wholesaler Gray Market Regional Wholesaler National Wholesaler Pharmacy Patient 42

43 43 Jury Convicts Miami Physician and Nurse of $11 Million HIV Infusion Medicare Fraud  Miami physician Ana Alvarez-Jacinto, 54, and nurse Sandra Mateos, 43, were found guilty by a Miami jury for their roles in an $11 million HIV/AIDS infusion fraud scheme.  Evidence at trial established that both defendants worked at Saint Jude Rehab Center Inc. ( St. Jude ), a clinic that purported to specialize in treating HIV/AIDS patients. St. Jude was operated and owned by indicted fugitives Carlos Benitez and Luis Benitez, and managed by convicted co- conspirators Aisa Perera and Mariela Rodriguez. 43

44 44 Jury Convicts Miami Physician and Nurse of $11 Million HIV Infusion Medicare Fraud  Evidence at trial proved that between June and November 2003, Alvarez-Jacinto, with the assistance Mateos, ordered hundreds of medically unnecessary HIV infusion treatments at the clinic.  Evidence at trial also established that HIV-positive Medicare patients were brought to the clinic by Carlos and Luis Benitez for the purpose of getting cash payments in exchange for allowing the clinic to bill for unnecessary treatments. 44

45 45 Jury Convicts Miami Physician and Nurse of $11 Million HIV Infusion Medicare Fraud  Testimony at trial revealed that defendant Mateos and other co-conspirators paid the patients cash kickbacks of approximately $150 per visit.  After patients had been paid, they agreed to allow Alvarez-Jacinto and her co-conspirators to prescribe, and sometimes administer, unnecessary infusion treatments.  According to testimony at trial, St. Jude then billed Medicare for approximately $11 million for the unnecessary services. For those claims, Medicare paid more than $8 million to St. Jude. 45

46 46 WHO GETS HURT?  HIV (Human immunodeficiency virus) primarily infects vital cells in the human immune system  AIDS (Acquired immune deficiency syndrome) the progression of disease  These individuals mostly die from opportunistic infections or malignancies associated with the progressive failure of the immune system 46

47 47 WHO GETS HURT?  The aim of antiretroviral treatment is to keep the amount of HIV in the body at a low level. This stops any weakening of the immune system and allows it to recover from any damage that HIV might have caused already.  AIDS can attack cells in the immune system for example Platelets: Cells that help the blood to clot. 47

48 48 WHO GETS HURT?  $11 million dollars stolen  $1,000 per infusion  11,000 patients (2.3%)  At the end of 2007, the estimated number of persons living with AIDS in the United States and dependent areas was 468,578 48

49 49 March 2009 Arrest in Florida  Two Miami-area residents pleaded guilty today in connection with a $10 million Medicare fraud scheme involving HIV infusion clinics  $11 million dollars stolen  $1,000 per infusion  10,000 patients 49

50 50 March 2009 Arrest in Florida  To make it appear that the patients actually had low platelet levels, Del Cueto admitted that she and her co- conspirators used chemists, including Dagnesses, to manipulate the blood samples drawn from Midway's patients before the blood was sent to a laboratory for analysis. 50

51 51 More IV infusion Cases  November 2004, brothers Carlos and Luis Benitez conspired to submit about $110 million in false claims to the Medicare program for HIV infusion services. 110,000 patients neglected  Garcia faces a maximum of 85 years in prison. Freire faces a maximum of 65 years in prison if convicted on all charges for $56 million. 56,000 patients neglected. 51

52 52 The Numbers Tell the Story  Just 4 Cases Alone  187,000 Patients  40% of Patient Living in the US with HIV/AIDS 52

53 53 Trigger Points: DATA  Data – Volume of claims by provider  Reconciliation of infusion claims with laboratory tests, CMS-1500 Data, UB-92 Data  Address association, vendor trending, billing agent trending, supply trending  Clinical data analysis  CDC Statistics on Occurrences 53

54 54 Nursing Home Owner Convicted in Bedpan Death  February 2009 The owner of a nursing home in Albuquerque, New Mexico, has been found guilty of felony abuse and neglect in connection to charges stemming from an incident on Christmas day in  As reported by Andrews Publications, Richard Gerhardt, a 76-year-old resident at the nursing home, who was recovering from a broken hip, was placed on a bed pan and left there for 24 hours.  According to reports, the bedpan became imbedded in his skin, causing an open wound that became infected and resulted in his death 5 days later. 54

55 55 Who Gets Hurt?  Vulnerable population – Elderly 55

56 56 The Number Tells the Story  In 2004, about 159,000 current U.S. nursing home residents (11%) had pressure ulcers. Stage 2 pressure ulcers were the most common. (CDC)  15,281 Nursing Homes in US  1,368,230 Nursing Home residents  92.3% with deficiencies  9.7% with no deficiencies  17.6% with serious deficiencies 56

57 57 Trigger Points: Top 10 Issues  Accident Environment 37%  Food Sanitation 35%  Quality of Care 29%  Professional Standards 28%  Comprehensive Care Plans 22% 57

58 58 Trigger Points: Top 10 Issues  Housekeeping 20%  Incontinence/Urinary Care19%  Pressure Sores19%  Unnecessary Drugs19%  Infection Control18% 58

59 59 Doctor experimented on patients, suit alleges February 2009  A whistleblower complaint accuses former osteopathic surgeon Dr. John A. King of experimenting on 26 of his patients.  The federal complaint says King used medical devices in ways that hadn't been approved by the FDA and received illegal kickbacks for doing it.  "King and David McNair [King's physician assistant] were conducting clinical research and human patient experimentation when they performed the anterior lumbar inter-body fusions" on eight patients, the "qui tam," or whistleblower, complaint states.  "King and McNair took studies that failed in laboratory animals, and then, without any reasonable basis to conclude that they would be successful, began to experiment on humans," the complaint says.  King generated 124 medical malpractice lawsuits during his short tenure at Putnam General Hospital between November 2002 and June

60 60 Doctor experimented on patients, suit alleges February 2009  He's lost his medical license in numerous states, including West Virginia. Putnam General's former owner, Hospital Corporation of America, has paid out approximately $100 million to settle King-generated lawsuits.  These new charges against King are contained in a previously sealed whistleblower complaint filed against EBI Inc. on May 12, 2006, in federal court in Charleston. 60

61 61 Doctor experimented on patients, suit alleges February 2009  Along with King and McNair, the complaint targets two companies:  Wright Medical Technology Inc. based in Arlington, Tenn., made Allomatrix, a bone fusion material that failed to work properly during two experimental studies performed on rats and rabbits. A third study, using pig-tailed macaques, rare primates native to Southeast Asia, showed "questionable" benefits.  EBI Inc., a subsidiary of Biomet Inc. in Parsippany, N.J., made spine stimulating devices King used during his surgeries. EBI allegedly paid King a bonus each time he inserted one of their "Ionic Spacers" into a patient's spine. 61

62 62 Doctor experimented on patients, suit alleges February 2009  No consent, no review  According to the complaint, King and McNair undertook deliberate, well-planned experiments on these patients.  For example, they allegedly made sure half the patients were male and half female. They implanted 12 patients with one type of device, and 14 patients with another.  Despite this, patients say they were never informed they would receive an experimental device. 62

63 63 Doctor experimented on patients, suit alleges February 2009  "If any patients were to have been participants by design in an experimental protocol such as that conducted by King and McNair, appropriate informed consents would have to have been obtained from the patients," the complaint states.  There is no evidence patients were asked to sign a consent form.  "Additionally, institutional review board approval would have had to have been granted by the hospital where the clinical study was undertaken" and all procedures "approved by the research committee of the medical center."  Those procedures were never followed at Putnam General.  EBI was fully aware of what King was doing at that time, the qui tam complaint alleges. 63

64 64 Who Gets Hurt?  The Patient 30 Plus people and their families 64

65 65 Trigger Points  Data Statistical Sampling of Occurrence  Data – Volume of claims by provider  Reconciliation of infusion claims with laboratory tests, CMS-1500 Data, UB-92 Data  Address association, vendor trending, billing agent trending, supply trending  Clinical data analysis  Key Patient Documents: Patient Consent Forms 65

66 66 $425 Million Cephalon Civil Settlement and Criminal Fine;  In America's Largest Biotechnology Medicaid Fraud Case; Qui Tam Whistleblower  Attorney Brian P. Kenney, Esq. Filed First Complaint With Client's Off-Label Marketing Allegations In 2003;  $375 Million Civil Settlement, $50 Million Corporate Criminal Fine Today 66

67 67 $425 Million Cephalon Civil Settlement and Criminal Fine  Many Schemes: Intensively marketing Actiq (contains fentanyl, an opioid agonist and a Schedule II controlled substance) to physical medicine and rehabilitation, and pain management specialists; Encouraging sales reps to make false statements about the efficacy of Gabatril, and providing dosing recommendations when none have been determined for depression; Leaving "huge doses of Gabatril" with psychiatrists when no approved use or dosage existed for psychiatrists; Encouraging sales representatives to recruit psychiatrists by paying the physicians honoraria in return for recommending Gabatril to other psychiatrists; and Assisting physicians in securing Medicaid reimbursement for Actiq when off-label use was ineligible for Medicaid payment. 67

68 68 Who Gets Hurt?  Studies have shown the off label use can generate more adverse drug reactions  Significant number of studies in off label use with children – specifically psychotropic medications  Market Dilemma: The FDA has stated,1 and the American Medical Association agrees,2 that physicians are free to prescribe approved drugs for any scientifically supported use, whether on- or off-label. 68

69 69 Trigger Points  Scientifically valid studies  Marketing materials  CDC occurrence analysis by diagnosis and prescription medication 69

70 70 Worldwide injunction granted against American living in B.C.  Thursday, October 23, 2008 Vancouver - A B.C. Supreme Court judge has granted a worldwide injunction to freeze the cash and assets of an American man who has been living in Vancouver for two years and is wanted in the U.S. for a $54-million US Medicare fraud. 70

71 71 Worldwide injunction granted against American living in B.C.  Peter G. Rogan, 62, formerly of Valparaiso, Ind., was detained May 25 by the Canada Border Services Agency when returning to Vancouver from a trip to China.  Paula Faber of the Immigration and Refugee Board in Vancouver said Rogan was detained by the CBSA for "serious criminality" but was released June 3 on terms and conditions after an IRB hearing. 71

72 72 Worldwide injunction granted against American living in B.C.  Rogan sold Edgewater Hospital but continued to control it and medical center through various management companies he owned, U.S. authorities say.  The hospital closed in December 2001 and entered bankruptcy in 2002, when four doctors, a vice president and the management company pleaded guilty to federal criminal health-care fraud charges involving the payment of kickbacks for patient referrals and medically unnecessary hospital admissions, tests, and services.  In September 2006, following a trial, U.S. District Court Judge John Darrah entered a judgment against Rogan for $64,259,032 72

73 73 Who Gets Hurt  331 hospital beds  2002 Average 183 patients per hospital bed  607,702 potential victims – one facility 73

74 74 Trigger Points for Fraud  Data Statistical Sampling of Occurrence  Data – Volume of claims by provider  Reconciliation of infusion claims with laboratory tests, CMS-1500 Data, UB-92 Data  Address association, vendor trending, billing agent trending, supply trending  Clinical data analysis  Key Patient Data: ICD code and CPT reconciliation, Admitting Diagnosis, POA codes 74

75 75 Freeport doctor sentenced for health care fraud 2009  Dr. Robert L. Ignasiak Jr. was sentenced today by Senior U.S. District Judge Lacey A. Collier to 292 months in prison, fined $1 million, and ordered to pay an additional $4,300 Special Monetary Assessment. 75

76 76 Freeport doctor sentenced for health care fraud 2009  Ignasiak was found guilty on Nov. 3, 2008, of 43 charges including: health care fraud; dispensing controlled substances, including fentanyl, hydrocodone, diazepam, chlonazepam, morphine, and alprazolam, the use of which resulted in the death of two persons; and unlawfully dispensing controlled substances, including oxycodone, morphine, fentanyl, hydrocodone, alprazolam, diazepam, clonazepam and carisoprodol 76

77 77 Freeport doctor sentenced for health care fraud 2009  evidence that Ignasiak prescribed controlled substances to patients knowing the patients were addicted to the substances, misusing the substances, or were "doctor shopping," and were requesting additional quantities of controlled substances for their drug habits.  Ignasiak attracted patients from across the Southeastern United States because of his willingness to prescribe controlled substances with little or no medical justification 77

78 78 Freeport doctor sentenced for health care fraud 2009  nearly all of his patients were prescribed controlled substances, even though he claimed to be a family practitioner with no specialty in pain management or in psychiatric medications. 78

79 79 Who Gets Hurt?  Active Addict  Future Addicts  Family members of addicts  The patient – disability death  Lost resources for legitimate patients 79

80 80 Trigger Points:  Data Statistical Sampling of Occurrence  Data – Volume of claims by provider  Reconciliation of infusion claims with laboratory tests, CMS-1500 Data, UB-92 Data  Address association, vendor trending, billing agent trending, supply trending  Clinical data analysis  Key Patient Data: ICD code, CPT, Medication reconciliation, and Admitting Diagnosis, 80

81 81 'Humanitarian' gets prison term in Medicaid fraud  Melee Kermue, 32, pleaded guilty in October to a scheme in which his Reynoldsburg-based health- care business submitted an estimated 4,800 fraudulent claims to the Ohio Medicaid program.  Must repay the $272,525 in claims as part of his sentence  He came to Ohio in 1997, earned an associate degree and founded Hope Home Health Care Inc., which provided skilled nursing to Medicaid patients in their homes. 81

82 82 'Humanitarian' gets prison term in Medicaid fraud  Federal prosecutors said the company submitted claims to Medicaid that included false names and dates of service and claims for services provided by hospitals, not in clients' homes.  Kermue deserved leniency, his attorney, Jeremy Dodgion, said, because he returned to the U.S. on his own to face the charges and has lived as a respected politician and humanitarian in Liberia. A nonprofit organization he operated in the western African nation provided housing for 450 people and medical supplies to refugees  Fraud for profit or philanthropy? 82

83 83 Who Gets Hurt?  2,725 – 3,633 Ohio Medicaid Patients 83

84 84 AmeriChoice of Pennsylvania, Inc. has agreed to pay $1.6 million  Enter into a corporate integrity agreement  Agreed to maintain a claims processing system that will allow providers to query the status of unsettled claims, to settle allegations by the U.S. Attorney for the Eastern District of Pennsylvania and the HHS OIG that the company violated the False Claims Act.  The settlement requires AmeriChoice to pay 95% of clean claims within thirty days of receiving all necessary documentation to process the claim. 84

85 85 AmeriChoice of Pennsylvania, Inc. has agreed to pay $1.6 million  The government alleged that from September 1995 through June 1998, AmeriChoice did not pay providers' health claims in a timely fashion or did not pay them at all.  They did not answer recipient call, altered CPT codes, and other issues related to performance guarantee data  The complaint also alleged that the company did not report claims processing data accurately to regulators. AmeriChoice, previously known as Healthcare Management Alternatives Inc. 85

86 86 Who Gets Hurt?  The patient/beneficiary  The integrity of the program  Legitimate Providers 86

87 87 Trigger Points  Hot line beneficiary complaints  Provider complaints  Excessive denials  Performance Guarantee Reports 87

88 88 Who Gets Hurt?  You  303,824,640 US citizens  832 potential victims on a daily basis  6,706,993,152 World Population  18,375 potential victim on a daily basis 88

89 89 Emerging Issues in Healthcare Fraud Rebecca S. Busch, RN, MBA, CCM, CBM, CFE, CHS-III, FIALCP, FHFMA CEO, Medical Business Associates 580 Oakmont Lane, Westmont IL


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