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Fraud Prevention as a Way to Finance Healthcare

Les Masterson, for HealthLeaders Media, July 8, 2009

Everywhere you look nowadays someone is talking about preventing fraud in healthcare.

Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius announced The Health Care Fraud Prevention and Enforcement Action Team (HEAT) in May. The team, which consists of senior Department of Justice and HHS employees, was created to strengthen existing fraud prevention tools and investigate new ways to root out and prevent fraud. Lewis Morris, chief counsel for the Office of Inspector General, suggested that 3% of the government's annual healthcare investment—a whopping $60 billion—is lost to healthcare fraud annually.

HEAT is already making its presence felt with the arrest of 53 physicians, healthcare executives, and Medicare beneficiaries in New York City, Miami, and Detroit last month.

Those arrested were charged with submitting more than $50 million in Medicare claims related to unnecessary or fraudulent procedures. But it's not only the feds who are creating programs to prevent fraud. The BlueCross BlueShield Association announced last week that some of its Blues plans saved a total of $350 million in 2008 through anti-fraud investigations. From 2007 to 2008, the number of fraud cases investigated by BCBSA rose by nearly 34%, and the number of closed cases increased by about 43%.

Blues' investigators were able to recover money that was lost through:

  • Improper billing
  • Cooking the books by submitting false claims and fabricating medical records
  • Non-covered procedures
  • Over-prescribing narcotics to patients
  • Phantom durable medical equipment and labs
  • Questionable manipulation under anesthesia

BCBSA estimated that the Blues' Special Investigation Units have recovered $7 for every $1 spent on investigating the cases (anti-fraud efforts on the federal level reportedly return $4 for every $1 spent on the investigations). These are both amazing ROIs that any health company would enjoy.

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