Today, healthcare fraud is all over the news. There undoubtedly is Fraud in health care. The same applies to every business or endeavor touched by human hands, e.g., banking, credit, insurance, politics, etc. There is no question that healthcare providers who abuse their position and our trust to steal are a problem. So are those from other professions who do the same. Why does healthcare fraud appear to get the ‘lion’s share of attention?

Could it be that it is the perfect vehicle to drive agendas for divergent groups where taxpayers, healthcare consumers, and providers are dupes in a healthcare fraud shell game operated with ‘sleight-of-hand’ precision? Please take a closer look, and one finds this is no game of chance. Taxpayers, consumers, and providers always lose because the problem with healthcare fraud is not just the Fraud. Still, our government and insurers use the fraud problem to further agendas. At the same time, they fail to be accountable and take responsibility for a fraud problem they facilitate and allow to flourish.

Health Care

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1. Astronomical Cost Estimates

What better way to report on Fraud than to tout fraud cost estimates, e.g.,

– “Fraud perpetrated against public and private health plans costs between $72 and $220 billion annually, increasing the cost of medical care and health insurance and undermining public trust in our health care system… It is no longer a secret that Fraud represents one of the fastest-growing and most costly forms of crime in America today… We pay these costs as taxpayers and through higher health insurance premiums… We must be proactive in combating healthcare fraud and abuse… We must also ensure law enforcement has the tools to deter, detect, and punish health care fraud.” [Senator Ted Kaufman (D-DE), 10/28/09 press release]

– The General Accounting Office (GAO) estimates that Fraud in healthcare ranges from $60 billion to $600 billion per year – or anywhere between 3% and 10% of the $2 trillion healthcare budget. [Health Care Finance News reports, 10/2/09] The GAO is the investigative arm of Congress.

– The National Health Care Anti-Fraud Association (NHCAA) reports over $54 billion is stolen every year in scams designed to stick our insurance companies and us with fraudulent and illegal medical charges. [NHCAA, website] The NCAA was created and is funded by health insurance companies.

Unfortunately, the reliability of the purported estimates is dubious at best. Insurers, state and federal agencies, and others may gather fraud data related to their missions, where the kind, quality, and volume of data compiled varies widely. David Hyman, professor of Law at the University of Maryland, tells us that the widely disseminated estimates of the incidence of healthcare fraud and abuse (assumed to be 10% of total spending) lack any empirical foundation at all; the little we do know about health care fraud and abuse is dwarfed by what we don’t know and what we know that is not so. [The Cato Journal, 3/22/02]

2. Health Care Standards

The laws & rules governing health care – vary from state to state and from payor to payor – are extensive and confusing for providers and others to understand as they are written in legalese and not plain speak.

Providers use specific codes to report conditions treated (ICD-9) and services rendered (CPT-4 and HCPCS). These codes are used when seeking compensation from payors for patient services. Although created universally to facilitate accurate reporting to reflect providers’ services, many insurers instruct providers to report codes based on what the insurer’s computer editing programs recognize – not what the provider rendered. Further, practice-building consultants instruct providers on what codes to write to get paid – in some cases, regulations do not accurately reflect the provider’s service.

Consumers know what services they receive from their doctor or another provider. Still, they may not know what those billing codes or service descriptors mean in explaining benefits acquired from insurers. This lack of understanding may result in consumers moving on without understanding what the regulations mean or in some believing they were improperly billed. The multitude of insurance plans available today, with varying levels of coverage, add a wild card to the equation when services are denied for non-coverage – especially if it is Medicare that denotes non-covered services as not medically necessary.

3. Proactively addressing the healthcare fraud problem

The government and insurers do very little to proactively address the problem with tangible activities that will detect inappropriate claims before they are paid. Indeed, payors of health care claims proclaim to operate a payment system based on trust that providers bill accurately for services rendered. They can not review every claim before payment because the reimbursement system would shut down. They claim to use sophisticated.

Computer programs to look for errors and patterns in claims have increased pre-and post-payment audits of selected providers to detect Fraud and have created consortiums and task forces consisting of law enforcers and insurance investigators to study the problem and share fraud information. However, for the most part, this activity deals with activity after the claim is paid and has little bearing on the proactive detection of Fraud.

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