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Health Care Fraud

Fraudulent health care schemes come in many different forms and are carried out by entities throughout the health care industry....

Accountable Care May Mean Less Fraud Too

The lead story in Friday’s Boston Globe was about a “massive change” coming to the Commonwealth’s Medicaid program, known as MassHealth.  As many of you know, Medicaid is the federal health insurance program for the impoverished that is jointly funded by the states and the federal government but administered by the states.  So there are 50 Medicaid programs, each run a little differently from each other, based upon local conditions.

What was news on Friday was the federal government’s approval of an overhaul of MassHealth, shifting from the traditional “fee for service” mode of payment, where a doctor submits a bill to MassHealth for a service he/she has rendered, to an “accountable care” model, where doctors and hospitals are given a set amount of money to care for a population of patients with complex medical needs.  (Private health insurance companies and Medicare have already taken steps in this direction.)

This overhaul has two aims in mind:  improvement of patient care and cost accountability, both laudable goals.

But there’s another point here that the article missed that I think should be mentioned:  this accountable care model could decrease fraud and abuse in the health care system.

Why so?

Health insurance programs, particularly the Medicaid and Medicare programs, are run on “honor systems” whereby claims are paid before being fully verified.  There are millions of claims per day to the Medicare and Medicaid systems, and the program would break down if every claim had to be fully verified before being paid.  So the programs pay the claims and chase problems later, the so called “Pay and Chase” model.  Well it turns out that the combination of “fee for service” and these honor systems creates a kind of perfect storm for fraud.  It’s just too easy to do.  Pad a claim here, up-code a claim there; pretty soon it’s real money.  Tens of billions per year by the time you add it all up.

By taking out the fee for service component of some of these reimbursement formulae, we remove a lot of the built-in temptation for fraud.  In other words, when it’s easy for providers to over-prescribe and increase their levels of compensation, it will happen.  By providing incentives to avoid over-prescribing, you slow down the temptation to pad bills and engage in self-enrichment behaviors.

This will be interesting to watch.  Health care is complicated.  Thwarting the pernicious creep of fraud and abuse is complicated, too.  But perhaps this notion of “accountable care” will turn out to have another layer of accountability:  a slowdown in health care fraud and abuse.

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