DoD Fraud, Waste, and Abuse Policy Guide for Healthcare Organizations

Overview of DoD Fraud, Waste, and Abuse Policy

Purpose and scope

The Department of Defense (DoD) sets policies to prevent, detect, and address fraud, waste, and abuse across the Military Health System. This guide explains how healthcare organizations that support TRICARE and military treatment facilities can align operations with those expectations.

Key definitions

Fraud is an intentional deception to obtain an unauthorized benefit or to cause a loss. Waste is the careless or needless use of resources. Abuse includes practices inconsistent with sound fiscal, business, or medical practices that directly or indirectly lead to unnecessary costs or improper payments.

Applicability to healthcare operations

Policies extend to providers, billing companies, suppliers, pharmacies, labs, and managed-care entities serving beneficiaries. You are expected to embed Military Health System Compliance into governance, contracting, clinical documentation, coding, and revenue cycle processes.

Policy pillars

• Prevention through internal controls, training, and ethical culture.
• Detection via monitoring, data analytics, and Fraud Detection Audits.
• Reporting of credible concerns through defined channels without delay.
• Enforcement and remediation, including restitution and sustained fixes.
• Continuous improvement through Program Effectiveness Evaluations.

Role of DoD Inspector General

Independent oversight

The DoD Inspector General provides independent oversight of programs and operations, including health care. The IG conducts audits, inspections, and investigations to safeguard resources and ensure mission readiness.

Investigations and coordination

Working with the Defense Criminal Investigative Service and service-specific law enforcement, the IG leads and coordinates Health Care Fraud Enforcement matters. The office also partners with the Department of Justice and other federal entities when cases cross jurisdictions.

Hotline, guidance, and prevention

The IG operates reporting channels, issues guidance, and analyzes trends to prevent recurrence. Findings inform Program Effectiveness Evaluations and recommendations that healthcare leaders should translate into updated controls and training.

Reporting Requirements for Healthcare Organizations

When to report

Report credible indications of improper claims, kickbacks, falsified records, upcoding, unbundling, or other misconduct. You should also report identified overpayments and material control failures that could enable abuse or fraud.

Where and how to report

Use internal compliance channels first when appropriate, then elevate to the DoD Inspector General hotline, TRICARE Program Integrity, or relevant contracting officer as required. Provide concise facts, dates, involved parties, and affected dollar amounts.

Documentation and cooperation

Secure records, halt data destruction, and preserve devices or logs. Assign a point of contact, cooperate with requests, and avoid any actions that could be perceived as retaliation or interference with the review.

Timeliness and follow-up

Act promptly once concerns are credible. Track the matter through intake, triage, referral, and closure, documenting corrective actions and repayments where necessary.

Enforcement Agencies and Legal Consequences

Agencies you may encounter

Depending on the matter, enforcement can involve the DoD Inspector General, Defense Criminal Investigative Service, service law enforcement (e.g., Army CID, NCIS, AFOSI), TRICARE Program Integrity, the Department of Justice, and the Department of Health and Human Services OIG.

Administrative and contractual actions

Consequences may include payment suspension, adverse past performance ratings, termination for default, and suspension or debarment. Repeated or serious violations can lead to Federal Healthcare Program Exclusion from government-funded health programs.

Civil liability

Civil actions may pursue restitution, treble damages under false claims theories, and Civil Monetary Penalties. Organizations can also face corporate integrity obligations and mandated Program Effectiveness Evaluations to verify remediation.

Criminal exposure

Intentional schemes—such as bribery, kickbacks, or falsification—can result in felony charges, fines, and imprisonment. Individuals and entities can both be charged, and parallel civil and administrative actions are common.

Prevention Strategies in Military Health System

Risk-based controls

Map high-risk processes—enrollment, credentialing, ordering, prescribing, documentation, coding, billing, and refunds. Implement segregation of duties, approvals, and automated edits that flag anomalies before claims are submitted.

Education and culture

Provide targeted training for clinicians, coders, revenue cycle staff, and leaders. Reinforce a speak-up culture with non-retaliation policies, and publicize reporting channels so employees know how to escalate concerns.

Third-party oversight

Screen employees and vendors, monitor subcontractors, and include audit and access clauses in contracts. Periodically test prior authorizations, medical necessity documentation, and pharmacy/lab ordering patterns.

Data analytics and monitoring

Use predictive models and outlier analysis to identify potential fraud, waste, and abuse. Schedule routine and surprise Fraud Detection Audits focused on high-risk CPT/HCPCS codes, DRGs, and providers with atypical utilization.

Auditing and Investigative Processes

Building an audit plan

Develop an annual plan that blends risk-based reviews, random sampling, and continuous monitoring. Align scopes with regulatory expectations and prior findings to confirm sustained improvements.

Executing reviews

Define objectives, criteria, and sampling methods up front. Validate medical necessity, documentation sufficiency, and coding accuracy; trace findings to root causes, then quantify impact for remediation and, if needed, disclosure.

Investigations

For suspected misconduct, open a case file, preserve evidence, and maintain chain of custody. Coordinate with legal and compliance leadership to determine whether to notify the DoD Inspector General or other authorities.

Closing the loop

Implement corrective actions, training, and control updates. Re-test through Program Effectiveness Evaluations to ensure fixes work and that issues do not recur.

Compliance Best Practices for Healthcare Providers

Core program elements

Establish clear policies, a designated compliance officer, effective training, open reporting channels, timely investigations, consistent discipline, and ongoing monitoring. Tie incentives and evaluations to Military Health System Compliance objectives.

Documentation and coding discipline

Standardize templates, use clinical decision support, and require coder-clinician queries when documentation is unclear. Apply pre- and post-bill analytics to catch errors before submission and promptly refund confirmed overpayments.

Contracting and vendor management

Perform due diligence, assess conflicts of interest, and monitor referral relationships. Include audit rights, anti-kickback safeguards, and termination clauses tied to compliance expectations.

Self-disclosure and remediation

Use a structured decision process to evaluate self-disclosure when violations are identified. Cooperate with authorities, remediate control gaps, and document Health Care Fraud Enforcement responses to demonstrate accountability.

By embedding rigorous controls, transparent reporting, and continuous Program Effectiveness Evaluations, your organization can reduce risk, protect beneficiaries, and sustain trust in the Military Health System.

FAQs

What is the role of the DoD Inspector General in fraud prevention?

The DoD Inspector General provides independent oversight, conducts audits and investigations, operates reporting channels, and coordinates with enforcement partners. The IG also issues recommendations that drive systemic fixes and Program Effectiveness Evaluations across healthcare operations.

How should healthcare organizations report suspected fraud and abuse?

Report promptly through internal compliance channels and, when appropriate, to the DoD Inspector General hotline or TRICARE Program Integrity. Include clear facts, amounts, dates, and involved parties; preserve records; and cooperate fully with any inquiries.

What are the legal consequences of violating the DoD fraud policy?

Consequences can include administrative actions, repayment, Civil Monetary Penalties, and civil litigation, as well as criminal charges for intentional misconduct. Entities may face suspension, debarment, or Federal Healthcare Program Exclusion in severe or repeated cases.

How can healthcare providers ensure compliance with DoD fraud, waste, and abuse guidelines?

Adopt a robust compliance program, train staff, use analytics for Fraud Detection Audits, monitor vendors, and respond quickly to issues. Routinely test Military Health System Compliance through targeted reviews and Program Effectiveness Evaluations to confirm that controls are working.