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'Cancer of fraud' in US healthcare

Nov 25, 2009

WASHINGTON - THE Justice Department and Department of Health and Human Services launched a special strike force in Miami in 2007 to combat Medicare fraud in South Florida and similar units have been set up in Los Angeles, Houston and Detroit.

But critics say far more is needed in terms of meaningful steps to attack fraud in healthcare, which drains the system of resources and forces up insurance premiums.

'We haven't really enlisted all of the troops,' said Peter Budetti, who chairs the Department of Health Administration and Policy at the University of Oklahoma's College of Public Health.

'Even though there are a lot more resources going in now, it is still grossly inadequate compared to the amount of fraud,' Budetti said.

Fighting fraud effectively can seem expensive, especially in economic hard times when state governments are scrambling to plug gaping budget holes.

But Budetti said the benefits far outweigh the costs of detection services such as data mining to root out fake billing scams and forms of fraud.

'Every study that looks at what the return on investment is for fighting fraud shows anywhere from US$5 to US$7 (S$6.89 to S$9.65) to as much as US$15 to US$17 returned for every dollar spent,' said Budetti, who formerly headed Taxpayers Against Fraud, a non-profit public interest watchdog group.

Without adequate investment, at the state and federal level, criminals will continue to gorge on healthcare at the expense of taxpayers, Budetti and other experts say.

In the past, the Health Department's Office of Inspector General has documented significant numbers of paid Medicare and Medicaid claims for patients who were already dead at the time when they were supposedly being treated.

Public healthcare officials were embarrassed recently by renewed focus on a report from the Senate's Permanent Subcommittee on Investigations about millions of dollars paid for medical services and equipment prescribed by dead doctors.

In congressional testimony in May, Malcolm Sparrow of Harvard's Kennedy School of Management cited the dead as a glaring example of how much more needs to be done 'to properly excise the cancer of fraud' from healthcare.

The healthcare industry does 'a terrible job of crime control,' Sparrow told a Senate panel, with almost no procedures to routinely verify that medical claims presented were true, or that services provided were medically necessary.

'Criminals, who are intent on stealing as much as they can and as fast as possible, and who are prepared to fabricate diagnoses, treatments, even entire medical episodes, have a relatively easy time breaking through all the industry defenses,' he said.

Senator Jay Rockefeller, the West Virginia Democrat who chairs the Senate Commerce, Science and Transportation Committee, is among lawmakers preparing to champion new anti-fraud measures in Congress.

'Fraud is a crime against the American people, imposing billions in hidden costs to consumers and law-abiding (healthcare) providers,' Rockefeller told Reuters.

'Congress needs to put the resources and teeth behind the effort to crack down on fraud,' he added. -- REUTERS