OPINION: Public option would have good tools for rooting out fraud
Pamela Nadash is an assistant professor of gerontology at the University of Massachusetts Boston, and Thomas M. Cassidy is a clinical associate professor at the Stony Brook University's School of Social Welfare.
There's much talk about fraud and abuse in government-run health programs. People seem convinced that the public sector is uniquely subject to being ripped off.
Some argue that all government programs are badly run, ignoring facts about the overall efficiency of public sector programs and the lack of comparative data from the private sector.
The truth is that a lot of progress has been made by government regulators and investigators in combating fraud and overpayments, especially in the largest health insurer in the United States, Medicare. Since 2004, the rate of fraud has been cut from 10.1 percent to 3.6 percent.
The private sector battles fraud, too - we just don't have solid information about it because it's not in the interest of private firms to make such information available. Still, we can hazard some guesses: The FBI estimates that both private and public health insurance plans lose somewhere between 3 and 10 percent of their revenues in fraud.
For the public sector, it's different: Government agencies are charged with rooting out fraud and making the results of these investigations available. We can get upset about waste and fraud in the public sector because the government tells us all about it - information that we lack with respect to the private sector.
One of us spent 20 years as a Medicaid fraud investigator for New York State. He's aware of how far government has come in detecting fraud, and the unique tools it has at its disposal. These tools are needed because exploiters of the health care system are adept at finding new ways to extort money.
Recently, a Florida jury handed down convictions in a $5.3 million Medicare fraud. The defendants had owned and operated HIV treatment clinics set up solely to defraud Medicare, submitting false claims for medically unnecessary treatments. Not only did the owners buy bogus invoices to falsely prove the purchase of large quantities of medications, they even manipulated blood samples to support false Medicare claims. Patients participated in the scam, too, and were paid a $200 kickback per visit. All four defendants received substantial prison sentences.
This case was won because a host of government agencies cooperated successfully: the Department of Health and Human Services, the Office of the Inspector General, the Office of Investigations, and the FBI. What's more, this success wasn't an isolated incident: It was part of an anti-fraud initiative that focused on South Florida and which has convicted 146 defendants and brought in $186 million in criminal fines and civil recoveries. Similar operations are taking place in Detroit and Los Angeles.
Despite these successes, more has to be done. Medicare must set the example as the most effective and efficient health insurer in order for a public sector option to be truly viable. So it needs consistent funding from Congress to defend public health plans from exploitation. But there are also relatively simple steps that must be taken to improve the program now and that should be instituted whatever the outcome of the current debate is.
One of the best things government could do is be choosier about the providers that are allowed to participate in Medicare. Unannounced audits and periodic inspections are needed. The government must also increase the role of competitive bidding, rather than setting fixed prices for all services. That would prevent the practice of Medicare paying more than $17,000 for negative pressure wound therapy pumps for which suppliers pay an average of $3,600.
The financial realities of health care reform are apparent; every cent is needed to fund our health care system. Some say the private sector is more motivated, and therefore better, at providing health services at lower costs. In fact, there's no reason why the public sector can't do just as well - or better, given the tools at its disposal.
