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Op-Ed: Waste, fraud, and abuse the weird sisters of healthcare costs

By John David Powell     Jul 17, 2009 in Health
Here’s a quiz. Your car won’t start because the battery is fried. Do you A) buy a new battery and continue your careless habits; B) buy a new battery and take better care of it; C) buy a new car? Only the very stupid choose C.
The unwillingness to examine three causes for the high cost of health care makes a mockery of the health care overhaul debate. Let’s start with the stipulations that health CARE is not broken and that affordable health care and healthcare COVERAGE are the big bugaboos. That said, let’s look at some reasons for the high costs of health CARE and healthcare COVERAGE.
Waste, fraud, and abuse are the three weird sisters foretelling the troubles that will continue plaguing the nation’s healthcare providers and payors without serious intervention from federal and state governments. Each year, they account for hundreds of billions of dollars stolen by thieves or misspent by bad healthcare administrators. Fraud alone accounts for up to ten percent of the nation’s annual 2-trillion dollar healthcare expenditures, according to the National Health Care Anti-Fraud Association. Medicare and Medicaid fraud make up about $60 billion of that total.
Medicare and Medicaid fall under the Department of Health and Human Services. The HHS Office of the Inspector General’s Annual Report to Congress for the first half of FY 09 shows Bayer HealthCare LLC agreed to pay $97.5 million plus interest to settle allegations it paid kickbacks to durable medical equipment mail order suppliers and diabetic supply distributors. Abbot Laboratories will pay $28 million to Texas and to the federal government to resolve its civil liabilities related to false pricing of intravenous drugs and blood products. Miami physician Ana Alvarez-Jacinto will pay back more than $8.2 million and spend 30 years in prison for her role in an HIV infusion fraud scheme.
The federal Health Care Fraud Prevention and Enforcement Action Team recently obtained indictments in Houston, Miami, Los Angeles, and Detroit totaling at least $285 million in alleged false Medicare billings. Last year, Medicare costs in Miami dropped $334 million after HEAT investigators found an abnormally large number of claims for medical equipment in 2007.
Insurance fraud helps finance the diversion of addictive prescription drugs to the tune of at least $72.5 billion a year, according to the Coalition Against Insurance Fraud. WellPoint, a private health insurer, estimates abuse suspects run up $41 in claims for office visits and outpatient treatments for every $1 in narcotic prescription claims.
Supporters of universal healthcare coverage depict insurance companies as run by heartless villains who charge too much for too few benefits. While it is possible there’s a special room in Hell for some insurance executives and claims reviewers, private insurers often become fraud victims. Blue Cross and Blue Shield companies saved or recovered nearly $350 million last year, an increase of 43 percent from 2007, thanks to anti-fraud investigations.
Sen. John Cornyn (R-Texas) says Medicare fraud must be the priority in any debate over healthcare reform. He’s introduced a bill calling for a real-time surveillance program to monitor claims. That would be money well spent. Every dollar invested on Medicare fraud prevention stops $10 in fraud, according HHS. Taxpayers Against Fraud reports the feds recover $15 for every $1 invested in False Claims Act investigations.
Then there’s waste and abuse, which brings me to a personal experience at a Texas public hospital that paid $750,000 a year to an out-of-state company to produce video profiles of clinic physicians that aired on Sunday mornings on one TV station in Houston. A brief search revealed a Texas company that could produce the same product and guarantee placement in every TV market in the state for $150,000. Further investigation revealed the hospital entered into a sole-source contract and could not get out of it unless the TV station chose not to renew. The result was the waste of $1.2 million over two years.
It’s time to take empty rhetoric and fear mongering out of the healthcare debate and replace them with facts and figures. Think of it like hunger, another social issue, caused in large part by inefficient distribution of food. High healthcare costs and coverage may be due largely to thieves and healthcare administrators who deliberately engage in waste, fraud, and abuse.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
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