Fraud and Abuse in Managed Care in America: An Introduction
The American government significantly knows more about health care reforms, and what requires to be put into practice to resolve the poor health care system. The major trouble the government is trying to deal with the considerable rise in health care expenditures that are creating a large number of patients that are registered all over the USA. There exist various factors that are linked to the rise in health care expenditures. This research paper focuses on health care fraud and abuse, and more particularly health care fraud and abuse in Managed care in America.
The health care fraud is considered as a vital and observable aspect related to growing health care expenditures, since there is no affirmative characteristic of it. Many other factors that help in increasing the health care costs, for example better technology has affirmative consequences, though health care fraud is only thought to be a burden on the health care industry. The health care fraud and abuse expenditures the USA stands at about US $100 billion per annum (Caldwell, 1997). In view of the fact that health care fraud has contributed significantly in raising the cost of health care it has acquired much focus from the US government as well as by the people. In 1990 era the American government started a health care reform movement and spent a lot of money on preventing health care fraud in the Managed health care programs. As such this research paper will study those health care reforms, and assess how successful they are in reducing the health care fraud and abuse.
Health Care Fraud: Its Implications
Ever since the 1960’s the health care expenditures have constantly increased from US $28 billion annually to about 2 trillion dollars in 2004 (California Health Care Foundation, 2006). That increase in the costs consists of an average of about US $6,500 dollars per person annually spent on health care all over the country, in comparing to US $3,600 each person annually in 1994. This considerable rise in the Medical costs caused various problems for the majority of Americans since median income has not risen correspondingly with health care expenditures that have made a lot of Americans incapable to bear the health care. The health care related inflation constantly surpassed the economic growth in the country (Sage, 1999). A number of rationales have led to this remarkable rise in health care expenditures like a cultural tendency to motivate on costlier treatment rather than the preventative steps, technological progress, medical malpractices, as well as healthcare fraud and abuse.
Issues in Health Care Costs
The main factor of increasing healthcare expenditure is concerned with cultural principles and patients’ tendencies. When it is related to health care, it appears that the people are always considered for a quick solution of their health problems. With the rise of obesity rates, the Americans now focus on easy methods to shed their weights quickly, like gastro bypass surgery, rather than to focus on modifying their dietary and activity habits. The people do support anti-cancer programs; however, rarely try to prevent their lifestyle tendencies that have led to the rise of this fatal disease. People do not opt for cancer, though in many instances, like the majority of diseases, lifestyle options play a crucial point. They do not view the prospects that costly treatments of the disease, and possibly the whole disease itself may have been avoided had they taken precautionary steps. Rather than discarding unhealthy lifestyles and concentrating on preventing the disease, the Americans continued to seek new and generally costly methods to resolve the malady. Since American society continued to appreciate costly treatments of preventative medicines, health care expenditure would continue to rise.
The necessity to fight and have more modern medical technologies is also an underlying factor to the remarkable increase in health care expenditure. In the USA the healthcare is addressed like any other multi-billion dollar enterprise, and each enterprise tries to offer the best of health care. With the aim to offer the best medical care each organization invests a large sum of money yearly to buy new advanced equipments. As well, the health care organizations invest much money to buy and advertise their modern equipments as to win the clients. Consequently, for the new equipment the companies charge the customers more to fund their new technology. If the healthcare centers would team up more, the health costs would be considerably less for the patients. Such collaboration would reduce the need for medical centers to acquire single new modern equipment, focusing more on the patient, rather than on the competition, and reduce the expenditures for all concerned.
With the rise of uninsured or underinsured Americans, there is a corresponding increase of the health care costs for all Americans. Although, the uninsured and underinsured people are unable to afford health care, they still look for the treatment in the hospital emergency rooms, where the US Federal law necessitates their treatment under EMTALA. The expenditure under this treatment is quite costly; since being treated in the emergency room generally is generally more costly, and their medical syndrome may be more critical since they were incapable to afford to call the physician earlier with the aim preventing their health syndromes from deterioration. Since the uninsured and underinsured patients are unable to pay for their treatment in the emergency room, the cost of their treatment is borne by the insured people, which further raise the expenditure of health care for the society.
Yet, another cause for the rise in health care expenditures is that medical malpractice insurance for physicians are soaring. In order for physicians to practice their professions they should hold medical malpractice insurance. The insurance is utilized to pay for medical negligence or other claims against the professionals. When people claim for more medical malpractice money, the insurance rates increase which consequently leads rising in physicians’ fees for the patients. A number of US States have approved laws restraining insurance malpractice claims to decrease the load of court cases on medical practice. These laws have assisted; however, some doctors were afraid being sued for malpractices. To defend themselves from likely claims, they try to use other health care methods. This leads to needless procedures that cause a rise in health care expenditures.
Like the health care malpractices above-mentioned, the health care fraud also leads to the rise in health care expenditures. The health care fraud can be perpetrated by several distinct methods by any person engaged with the health care system. As most people are constantly engaged with the health care system, whether they are being offered health care, or utilizing health care, the people have the prospect of manipulating the health care system and to commit fraud. In 2003, a survey released showed that out of $1.7 trillion invested in health care by the Government, an amount of $85 billion was lost in various health care frauds (Congress Daily, 2004). In fact, this huge sum of money was stolen. Health care fraud at present is the most extensive disturbing factor that has led to rise in health care expenditures.
Preventing Health Care Fraud
A number of programs and laws by the federal government are in place to reduce fraud and abuse, encourage education, applying suitable tools for analysis and prosecution of cases, and greater penalties for counterfeit activities in the medical field. It appears that these steps have proved quite useful in the recovery of fraudulent money with a reasonable cost recovery ratio. Nevertheless, the recovery of fraudulent money has not met the desired results. Just about 4% of counterfeit claims have been identified before the payment of money (Allmon, 2005). It is notable to foresee weak points in the health care system where fraud is expected to happen and continue to examine and create in new methods to deal successfully in preventing fraud and abuse cases happening in the future. One method for preventing fraud is to apply more human resources and scrutiny in the scrutiny of payment records and the claims procedures.
Advanced detection technology can also be applied for fraud identification, coding, etc. and use more human resources to examine cost reports, payment data, and claims procedures (Grayson, 1998). Advanced software can help with scanning a million of data in few seconds, in contrast to every deal or claim with distinct models, outlooks, and billing standards (Allmon, 2005). The software is able to identify if there exists any atypical operation in payment pattern in a particular place. It is capable to show if the physicians charge the patients extraordinarily from the patients.
The compliance programs are another method to combat health care frauds. The programs help the organizations in the detection and fixing health care fraud internally. The organizations use this by generating a string of internal controls and steps to make sure they conform to federal, state and local laws of government-funded health care programs (McKessy & Saner, 1998). In various instances the compliance programs create new positions for business compliance officers to train the human resources, delineate code of conduct, and examine “high- risk” fields. Normally, these programs consist of an unknown hotline to help the workers to state potential troubles, and together with there are various policies to promote reporting (Shane, 2000). Since a compliance program compels the organizations to record their activities to obey the laws, it may be helpful in avoiding criminal suit and omission from the federal health care programs. In general, the compliance programs are quite useful to prevent health care frauds.
Health Care Fraud: An Analysis
The Americans consider that health care fraud is the most critical cause for the increase in health care expenditures (Morrisey & Jensen, 1997). It is rather noteworthy, why the Americans view this the main reason, when health care fraud ranges between $100-$250 billion annually in 1998 (Liberman & Rolle, 1998). It is estimated that 25c of each US dollar being invested cause fraudulent practices in the managed care, and that a family of 4 has to pay about US $1,400 dollars annually on health care fraud related expenditures (Liberman & Rolle, 1998).
The health care fraud in managed care has been termed as one of the top US criminal activities all over the last few decades. A lot of delinquents seek other criminal activities in the safe, profitable field of health care fraud in the USA (Allmon, 2005; Coccia, 1997; FBI, 1995). In view of the rise in health care expenses, it is not remarkable to see a surge in the number and intricacy of plans to embezzle from the health care system (Morris, 1993). With large sum of money in this field, it is important for the people as well as the government to study the motives why the health care industry is threatened for fraud, how the occurrences of fraud can be minimized, and taking up of positive steps to prevent fraud cases.
As regards the extensive cases in health care fraud (Kalb, 1999), the US government has invested heavily during the last few decades focusing on studying health care fraud with the aim of reducing such cases, and to launch new stringent policies, and inquiries to deal with health care fraud. Health care fraud is an important issue for the government for a number of reasons. Firstly, the government is the major payer of health care. The elimination of fraud and abuse in managed care is one of the few activities on which different political bodies agree (Sage, 1999). Secondly, the government is responsible for managing the health care system. Lastly, it is duty-bound to protect the people from the criminal activities in the health care. As a result of these rationales the US government has invested large sum of money in research relating to fraudulent activities, and to identify new methods to resolve the various intricacies.
Much progress has been made to minimize health care fraud and abuse as a result of government laws and programs, as well as better education. Nevertheless, with the continuous rise in money for health care more criminals are likely to be attracted, hence more frauds and abuses are expected to be committed. The methods mentioned above to prevent healthcare fraud should be applied rigorously. The Medicare and Medicaid must invest the money in the modern fraud detection technology together with hiring and training more fraud examiners. The health organizations must research all features of health care fraud, education of providers, and medical practitioners in the professional ways.
With the aim of preventing fraud, it is vital for the government and the people to play a dynamic part together to identify and stop fraud in Managed care in America. If these measures are taken, it is possible to manage the growing health care expenditures as well as fighting fraud.
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