US Healthcare Reform and Fight Against Fraud: Update

As amendments continue to be made to the Healthcare Reform bill that was signed by US President Barack Obama, there continues to be discussion about the need for a crackdown on healthcare fraud in the US.

Posted by Joe Gerard in Healthcare on March 29th, 2010

“More than $60 billion in public and private healthcare spending was lost to fraud each year. That’s more than the net worth of America’s eight largest private foundations. And it’s 33 times the amount of money that Avatar – now the highest-earning movie of all time- has made at the box office”- Attorney General Eric Holder, National Healthcare Summit.

As amendments continue to be made to the Healthcare Reform bill that was signed by US President Barack Obama, there continues to be discussion about the need for a crackdown on healthcare fraud in the US. In a daily e-mail I receive from Ethisphere and Corpedia, they write that the bill will “dramatically boost fraud enforcement by increasing anti-fraud spending by $250M and even more importantly, it will now be easier to bring criminal and civil prosecutions forward. ” They also suggest that now is the time for healthcare companies to evaluate and improve their existing compliance and ethics programs in order to prepare for the coming changes. President Obama has suggested that the reduction in fraud costs could help pay for the national health care program.

Some Implications for Employers

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The Society for Human Resource Management has created a “Healthcare Reform” page on their website that follows the updates and issues surrounding the passing of the US Healthcare Reform Bill. The SHRM states some of the implications that the health bill will have on employers, consisting of:

“Penalties would be assessed on employers with 50 or more employees who fail to offer coverage to employees.  The penalty would be assessed if even one employee receives a subsidy to purchase coverage through a health insurance exchange.  Employers would also incur penalties if the coverage they offer is considered “unaffordable” to the employee or if the health plan has an actuarial value of less than 60% or pays less than 60% of covered health care expenses.”

Right now it’s approximated that the penalties will be $2000 per employee should the employer opt out of purchasing medical coverage plans for their workplace.  Another feature that affects the plans offered by employers is the change in dependent coverage. There has been an increase in the age of a child dependent- up to age 26, for which a parent or legal guardian can now provide medical coverage for. As it currently stands, placing lifetime limits on coverage will also be banned by law. Another component that is currently included in the bill is the use of automatic enrollment for businesses that employe more than 200 employees. Regarding automatic enrollment, hr.blr.com reports that:

“Legislation will require that employers with more than 200 employees automatically enroll full-time employees in health coverage. The legislation will allow employees to opt-out of the coverage after automatic enrollment.”

In the case of small businesses that choose to offer medical coverage to their employees, hr.blr.com reports that:

“Beginning in 2010, tax credits of up to 35% of premiums will be available to firms that choose to offer coverage. The full credit will be available to firms with 10 or fewer employees with average annual wages of $25,000, while larger small employers will see smaller tax credits. In 2014, tax credits will be up to 50% of premiums for the smallest employers.”

It’s expected that amendments will continue to be made to the bill, as there is a lot of debate over certain elements included in the original bill. As an employer in the US, it will be important to remain up to date on all of the changes made and gain a solid understanding of what your obligations are to your employees regarding the healthcare coverage changes.


Joe Gerard
Joe Gerard

CEO, i-Sight

Spend my days showing off the i-Sight investigative case management software and finding ways to help clients improve their investigations. Usually working with corporate security, HR & employee relations, compliance and legal teams.

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