President Trump recently announced his intent to combat fraud within the federal health agencies, including Medicare and Medicaid. This is long overdue. As was posted earlier on the Goodman Institute Health Blog, fraud is a function of: 1. the expected penalty for fraud, 2. imperfect reimbursement rates. These are consistent with the opinion of Jacob Elberg, formerly an assistant U.S. attorney. Elberg told KFF Health News:
“In order to reduce health care fraud, you need people both to be afraid of getting in trouble, but also for people to believe in the legitimacy of the system.”
Elberg said considerable fraud in Medicare and Medicaid exists largely because the programs’ “pay-and-chase models” prioritize paying for patient care first and tracking down stolen dollars second. To prevent more fraud, the programs would likely need to be redesigned in ways that would be slower and more cumbersome for all patients, Elberg said.
Elberg suspects Trump’s campaign to root out fraud may be partly a desire to reduce spending the Administration does not favor.
Critics also complain that as President Trump’s first term wound down, some politically connected health care fraudsters got their sentences commuted or were pardoned. These include Philip Esformes, a health care executive convicted of a $1.3 billion Medicare and Medicaid fraud scheme. Also, Salomon Melgen, an eye physician convicted of a $42 million fraud against Medicare and John Estin Davis, pain specialty clinics that bilked federal programs of more than $70 million.
It should come as no surprise that the Trump Administration is not concerned about inconsistencies in past and present agendas. Indeed, Jerry Martin, an attorney who represents whistleblowers, reports his whistleblower clients feel emboldened by Trump’s initiative. Fraudsters who were granted favors at the end of Trump’s first term may find they garner little favor in his second term under the goal of reducing spending.
The promise of tech.
Credit card companies police fraud. Private insurance companies do too. Banks also monitor fraud in real time, often stopping it before it occurs. I recently received multiple notices on a Sunday evening of fraud when someone attempted to use my debit card in another country. Certain types of purchases; certain locations of purchase and numerous other variables signal to a credit card company that a transaction is potentially fraudulent. Whenever I travel abroad, I always contact the credit card company first to let them know I plan to make purchases far from my home. This type of technology could be used for Medicare and Medicaid. For instance, claims charged far from a patient’s home by a doctor who has never treated the patient. Procedures that don’t apply to specific patients or are inconsistent with past conditions. This type of technology is not new. It has been around for a while. As Jacob Elberg mentioned above, Medicare and Medicaid need to convert from “pay and chase” to better policing transactions when they occur and before they are paid. Medicare often pursues fraud charges years after they occur when the perpetrator and money are long gone.
There are other potential benefits to stopping fraud before bogus services are paid. For one thing, stopping payment of fraudulent claims reduces the likelihood the perpetrator will try that exact fraud again. It obviously reduces losses when a significant portion of fraudulent transactions are prevented. Furthermore, some forms of health care fraud are only borderline fraudulent but become the norm if not stopped. For example, upcoding some patient encounters as more serious than they are boosts reimbursements. If not stopped, higher codes spread to other providers and become the norm over time. Clinics performing excessive testing could be flagged for review. John Estin Davis’s pain specialty clinics performed excessive testing of urine, costing federal insurance programs tens of millions. Only 7% of which was medically necessary.
Some types of waste, fraud and abuse are easy to spot, while others are not. Economic theory posits an additional dollar of fraud detection should be done until the dollar spent equals a dollar saved. A bonus will be to perpetuate an environment where potential fraudsters are more cautious about committing fraud and not even try it.
Read more at KFF Health News: Trump Says He’ll Stop Health Care Fraudsters. Last Time, He Let Them Walk