Our health care system is broken in many ways and laws are unlikely to solve the problem. In 2009 we each spent about $8,000 on health care. That amounts to $2.5 trillion or nearly 18 percent of the country’s gross domestic product. Unfortunately about a quarter of it is budgeted not for health care, but for fraud! Here are some of the latest scam statistics.
• Medicare and Medicaid billing errors resulted in $108 billion in improper payments.
• Fraudulent claims for Medicare caused $33 billion in losses.
• Improper personal payment payments cost approximately $100 billion.
• Health insurance fraud costs us an estimated $68 billion.
• Fraud insurance payments cost $50 billion.
• Payments for medical errors totaled approximately $38 billion.
• About 10 percent of prescription drugs are counterfeit, costing about $12 billion per year.
All of this means that we waste about $25 million per hour on fraud, waste, and medical abuse. That’s too much and it’s something we all have to worry about because, one way or another, we all pay for it. We pay for it with higher taxes, higher medical costs, and higher health insurance premiums. The government does not “eat” the costs of medical fraud, waste and abuse. Both to insurance companies and doctors. Fees, like all scams, are only passed on to the consumer. You and I. We pay for fraud.
Medical fraud is perpetrated everywhere, by almost everyone. The following is a short list of groups that commit healthcare fraud. Know one?
Who Commits Medical Fraud
• Criminal groups
• Employees who approve claims for themselves or friends
• Provider
• Vendors and suppliers
• Insured patients
• Uninsured patients
One of the attributes of this system that makes it so vulnerable to fraud is that so many players are involved in providing services to patients and then paying for the services. The initial players in the system are patients and care providers. However, it didn’t stop there. Once the patient sees the provider, the payer (patient, insurance company, government) enters into the process. They are followed by employers how to pay all or part of patient insurance premiums and/or pre-tax medical savings accounts, and vendors (eg, drugstores, pharmaceutical companies, vendors and medical device manufacturers). Medical scams are complex and often involve at least three of these players.
Combating Fraud, Waste and Abuse
So what can be done? We do not need another study conducted by a government panel. We do need action. The place to start is with consumers and citizens. A comprehensive fraud prevention program to combat fraud begins with anti-fraud education for consumers and citizens alike. Everyone needs to know how widespread medical fraud is and how much it costs each of us. An effective anti-fraud program starts at the grassroots level with consistent and comprehensive attention. One story in the mainstream media every six months is never enough. Only when citizens know what the problem is and at what cost will they go against the status quo.
The more technical elements of an anti-fraud program to combat fraud, waste, and abuse of healthcare include:
• Fraud prevention programs – systems of internal control in all healthcare organizations to make it difficult for individuals to commit fraud. An adequate review and approval process coupled with good oversight is the key to an internal control system.
• Fraud prevention programs – activities that increase the likelihood that fraud will be detected if it exists. The most common example of a fraud prevention program is the frequent conduct of proactive fraud audits. This is an audit conducted to uncover fraud when there is no indication of fraud.
• Fraud detection program – data mapping, mining and analysis processes to detect fraud if any.
• Fraud investigation program – reactive auditors and investigations carried out when there are indications that healthcare fraud has been committed.
• Fraud recovery programs – payers, whether insurance companies or governments, must recover funds lost through fraud and medical abuse. US Code 18 USC Sec 983(c)(3) claims the right to enforce the seizure of property if the Government can determine that the property was used, facilitated or involved in the commission of a crime, and that there is a substantial breach of the relationship between property and crime.
• Punishment of fraud perpetrators – individuals who commit fraud perform a cost-benefit analysis and usually determine, at least subjectively, that the costs of fraudulent activity (risk of detection, prosecution and punishment and the cost of penalties imposed if convicted) are lower than the assets (money) earned through fraudulent activity. When the perceived benefits weigh heavily on the perceived costs, fraud becomes a rational economic decision. Only by increasing the likelihood of detection, prosecution and punishment, and the severity of penalties, can the cost-benefit analysis be skewed so that the costs outweigh the benefits.
Conclusion
The battle against fraud, waste and medical abuse starts with you. Become an informed consumer. Let your representatives and senators know that you are tired of paying for medical fraud. After all, the money the government spends is your money. Ask your doctor and other healthcare providers what they do in their office to reduce the risk of fraud. Send a note to your insurance company and ask what they do. You can give them some suggestions from the list above. Become a grassroots activist in the fight against fraud and abuse. You can help reduce the cost of medical care.