Fraud in health care

Today’s Managing Health Care Costs Indicator is $3239

The Wall Street Journal  has performed an important service by suing the Centers for Medicare and Medicaid Services (CMS), and has obtained a claims paid database showing Medicare physician payments.  Because of a 1977 court ruling, they are prohibited from naming individual physicians who received government payment.

The WSJ did a bit of data diving, and discovered that a single New York physician, a family physician with no specialty training, received an estimated total of over $2 million in payments from Medicare in 2008.  (WSJ extrapolated this from $142,500 in payments for a mere 44 patients, or $3239 per patient. The claims set represents 5% of the total claims paid during 2008).  There were another two dozen physicians who also had suspiciously high claims – and a number of them had already been investigated.

Just for perspective, total care for those over 65 costs around $14,700 per year   This includes hospitalizations, chemotherapy, and all sorts of expensive care.  Primary care would never represent a fifth of the total cost of care of an elderly population.

This physician certainly didn’t make this money through office visits.   Au contraire!  The vast majority of the payments were for very expensive procedures – like sleep studies, ultrasounds, and neurologic tests.  Her billings increased by a factor of 16 from 2006 to 2007 – often a flag for overuse or frank fraud.  Some of the fraud experts called on by the WSJ said that this physician was highly unlikely to have performed all of these procedures.   Her rejoinder in the WSJ:

The New York-area physician, in the interview, denied any wrongdoing and said she only administered tests "recommended by the [medical] literature." She added: "I read a lot of literature."

The physician said that she stopped doing most of these tests since 2008, after an audit by a Medicare contractor.  That’s a sign the system is working at least a bit – this was investigated by the government before the WSJ got its hands on the data, and the physician says she stopped the most egregious billing.  Still, she has not lost her privileges to participate in Medicare, and there has been no restitution for previously billed tests.  We also don’t know for sure that she committed fraud.

Fraud and abuse cost the health care system billions of dollars a year – and while there are some cases that appear egregious and clear, there are many cases where it’s much harder to draw a bright line.  Medicare has a harder time fighting fraud because
-        Physicians don’t need to be credentialed for Medicare, as they are for private health plans.  If a physician has an active license and agrees to participate, she is in.  
-        Medicare has very low administrative costs. That’s good – because the dollars are spent on medical care instead of bureaucrats.  It can be bad, though, since there are fewer administrative people to guard Medicare’s precious resources.   
-        Medicare can ban a physician from participation in the program, but it rarely does so.  CMS represents a large portion of participating physician income, so physicians will usually fight adverse determinations in court.   

Clearly, fraud and abusive billing are damaging
-        Money is wasted
-        Patients are exposed to unnecessary tests, which can themselves be dangerous, and can lead to incidental findings that cause patients more inappropriate discomfort, risk and expense
-        We lose faith in the system.

Systematic approaches to fraud, such as this kind of data mining, are important adjuncts to traditional means of finding fraud, such as patient complaints and tip lines. If we cannot trust a physician not to recommend highly remunerative but unnecessary tests, we cannot trust her to take care of us in illness.