Household Budget: Mortgage, Groceries, Health Care Fraud...

Over at DC Metro Moms today, Lawyer Mama started a discussion about health care. She correctly points out that for the average working class family (even those of us with “good” insurance) a single major illness or accident could prove financially catastrophic. And while it’s easy to point the finger at employers for not providing better (or in some cases, any) coverage or taking on bigger a bigger share of the premiums, the reality is that their costs for employee health care are also a financial burden, particularly for small businesses. Like Lawyer Mama, I want to see the candidates go after this issue in earnest. Also like Lawyer Mama, I don’t pretend to have all the answers. But let me offer a modest proposal.

The major barrier to more comprehensive and far-reaching health care coverage we hear about is cost. Nobody wants to pay for the oft-cited "skyrocketing healthcare costs" whether that's private employers or the government through socialized medicine. The irony of this is that health plans/payers/government agencies are missing MAJOR opportunities to cut those costs (and thereby making coverage more affordable/available) through comprehensive anti-fraud programs.

I work for a company whose primary line of business is as a Program Safeguard Contractor, or PSC for the Centers for Medicare and Medicaid Services. Broken down into simplest terms, we detect, investigate, and hopefully try to prevent Medicare fraud and abuse. Truthfully, CMS is really the only bright spot, in that their anti-fraud endeavors through the PSCs have been amazingly effective. The one little company I work for (180 employees total) typically gives the government an 11/1 ROI. Yes, that's right- we return about $11 to the Medicare trust fund for every $1 they spend on our operations. Last year, we identified about $220 million in fraud and abuse just in Medicare claims alone. Bottom line is what we do WORKS. And works well.

But most private insurers don't have any kind of decent anti-fraud measures in place. In many states, they are required to have some specific controls, but nothing nearly so comprehensive as the Medicare PSCs. Most of them have an SIU (special investigations unit- Medicare Part D providers are required to have these) that responds to complaints of fraud, but do little or no proactive data analysis, much less trying to "connect the dots" so to speak and go after more than isolated incidents. Some have started buying into automated anti-fraud technology in the form of software (IBM is one of the major players). But without a more comprehensive program and personnel to pursue the leads, it's like turning your garden hose on a California wildfire. PSCs like our company combine data analysis with investigative services and medical review functions for a comprehensive product. Periodically-updated software that spits out reports to be analyzed by senior management with no fraud-detection experience? That's not a substitute for what we do.

There are a lot of reasons insurers don’t have better anti-fraud programs in place. Lots of payers don’t quite comprehend the worth of the investment. Some of them don’t want to risk alienating large providers with investigations. “Prompt payment” laws in most states limit the amount of time a company can spend researching claims before they’re paid. Anti-fraud detection isn’t a standard part of claims payment software or processes. Lots of reasons. But in my not-so-humble opinion, it often comes down to cost. Fraud investigation is, by the nature of the work, a slow process that doesn’t yield profits over night. Long-term savings and better health for American families take a back seat when the noisy voices of investors come calling.

The NHCAA has estimated that about 3% (about $39 billion in 2000) of what this country pays for healthcare is lost to blatant fraud, which doesn’t even account for erroneous payments and abuse. (Some of the other government agencies have put that estimate as high as 10%.) Can you imagine what recovering/preventing even a fraction of that would do for making healthcare more affordable for working class families and their employers? I would hope that the candidates would give some thought to doing a better job of mandating the level of fraud detection and prevention mechanisms that private health plans have in place. I think socialized or government-funded healthcare is a long way off in this country, but bringing down the costs of our current system would go a long way to make life a little easier for the average family.