Fraud is a huge problem for American health insurance — both public and private. As the Cato Institute’s Michael F. Cannon pointed out in NR several months ago, fraud against Medicare and Medicaid alone costs about $87 billion a year.
The good news is that the Obama administration is on track to increase health-care-fraud prosecutions by about 85 percent this year. The bad news is that it’s not enough — last year, there were only 731 such prosecutions; another 600 or so will be merely a drop in the bucket.
Over at the Cato blog, Cannon quotes fraud expert Malcolm Sparrow:
By taking the fraud and abuse problem seriously this administration might be able to save 10 percent or even 20 percent from [the] Medicare and Medicaid budgets. But to do that, one would have to spend 1 percent or maybe 2 percent (as opposed to the prevailing 0.1 percent) in order to check that the other 98 percent or 99 percent of the funds were well spent. But please realize what a massive departure that would be from the status quo. This would mean increasing the budgets for control operations by a factor of 10 or 20. Not by 10 percent or 20 percent, but by a factor of 10 or 20.
Is there any truth to IBM's offering at one time its resources gratis to the O administration to identify fraud and waste in Medicare and Medicaid? Or is this an urban myth?
If the offer was refused, was there any reason given?
Reply to this commentLinkReport AbuseI think you need to proceed carefully here. Many government agencies use the threat of prosecution or other action to effectively extort money out of businesses and/or people. I can't believe that the government agencies that oversee the medicare and medicaid programs don't do the same thing.
Reply to this commentLinkReport AbuseSpeaking as someone who spent his entire career in health care finance, increased prosecution is just treating the symptom more aggressively, rather than attacking the disease.
In my opinion, the primary problem with the current system is that no one is directly spending their own money. If you really want to reduce fraud, and just as importantly, unnecessary utilization, you need to make physicians responsible for a group's health, put the money in their hands and let them spend it as they see fit. In other words, the Kaiser model -- a closed panel HMO.
This is not just theory by the way. At one point I was in charge of designing and implementing the payment system for a physician-hospital joint venture which received a lump sum payment each month for taking care of some 10,000 people. After several false starts we discovered (big duh here) that bringing the physicians detailed information about where their money was going and giving them a financial stake in the hospital's profitability generated reductions in utilization of roughly 25%. All without an impact on outcomes or perceived quality by the beneficiaries. Turns out that doctors care very much how money is spent by the system when it comes out of their own pockets. Who'd of thunk it?
Reply to this commentLinkReport AbuseI agree with you 100%. Most private insurances are trying to make tools to see the cost of care more transparent to their members. Also many plans are being more flexible. Like Rx plans that read "You can choose the brand over generic, you just have to pay the difference between the two."
Plus those evil 'for profit' companies have an incentive to reduce fraud and waste the government doesn't. That profit thing libs don't seem to get.
Problem is, we need a more financially educated populace.
Standard disclaimer: I work for an insurance company. I don't speak for them, and they sure as hell don't want me to.
Reply to this commentLinkReport AbuseMedicare's ignoring the fraud and abuse has been my concern for the last 30 years. True, having your own money in the game makes all the difference. An independent insurance company doesn't allow all of the fraud that Medicare does. More checks must be instituted to find the fraud before a single provider receives $100 million in fraudulent payments.
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