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Fraud Prevention Program Axed in Health Reform Plan

 |  By cclark@healthleadersmedia.com  
   January 15, 2010

A Senate plan to create a system in which government agencies can inform private health insurers about fraudulent providers and their schemes—and vice versa—was a victim of the lawmaking sausage factory, although advocates say that it could prevent millions if not billions of dollars lost in scams.

The federal Healthcare Integrity and Protection Data Bank Web site reports that healthcare fraud losses range from 3% to 10% of all healthcare expenditures.

The provision, which was written in the Senate Health, Education, Labor and Pensions (HELP) committee's bill this summer, would have established a structure for sharing suspicious information in hopes of reducing healthcare fraud.

For example, a health plan might tell the feds about a fraudulent wheelchair sales operation. Conversely, investigators for the Centers for Medicare and Medicaid Services could let a health plan know a provider was engaged in a pattern of diagnostic upcoding.

Health plans and government agencies now share information, but on a voluntary, informal basis, often through conferences or occasional meetings through the National Health Care Anti-Fraud Association, says Louis Saccoccio, the group's executive director. The group has 85 health insurance companies who are members, and already share information with each other and the federal government on a regular basis.

Saccoccio says that so far, such cooperative discussions have uprooted scams that would have otherwise cost payers "in the millions."

Robert Zirkelbach, spokesman for America's Health Insurance Plans, expressed a similar view, saying "government has a very poor track record of uncovering fraud and abuse," but health plans are regularly sharing what they know through the Healthcare Integrity and Protection Databank.

It couldn't be determined why the Senate HELP Committee's proposal wasn't incorporated anywhere in the 2,409-page Senate reform bill, except to suggest that the bill was already too massive.

Specifically, the HELP bill would have established a "Health Care Program Coordinating Council," which would "develop a strategic plan for improving the coordination and information sharing among Federal agencies, State agencies, and private health insurance coverage with respect to the prevention, detection and control of fraud waste and abuse, including fraud and abuse of consumers of the health care program or private health insurance issuers," according to the legislation.

The effort should recognize "that fraudulent activity in the health care system can affect both public and private sector health insurance coverage and that the prevention, detection, investigation and prosecution of fraud against private health insurance coverage is integral to the overall effort to combat health care fraud," the proposed legislation said.

The council would have evaluated "ways to ensure that private health insurance coverage is included in investigative and data sharing programs, to the maximum extent feasible" with protections for sensitive information about criminal subjects or targets and law enforcement efforts. "The information sharing should be one that recognizes that private coverage may be responsible for fraud, waste and abuse of public and policyholder funds."

Most of the time today, Saccoccio says, it's the private plans that tell federal agencies about suspicious or proven fraud. "That's not to say the public side doesn't share information too, but they're more restrictive. Sometimes they'll come to us and say we're investigating a particular provider and we want to see if any of their providers are committing fraud against a private insurer."

For example, Saccoccio says at an association meeting several years ago, private health plans relayed to federal officials a Southern California "Rent-A-Patient" scheme. Federal officials prosecuted several surgical centers that recruited patients to undergo unnecessary gynecologic, nasal surgeries or "sweaty palm" surgical procedures in exchange for money so the doctors could bill health plans over $1 billion, according to federal officials.

"Quite frankly, when the federal government goes after this stuff with strike forces, they're going to win," Saccoccio says.

In other examples, government and private payers came together to share information about fraudulent home infusion in South Florida, in which providers set up clinics that obtained patient identifications to file false claims, a scheme that led to many convictions, Saccoccio says.

Saccoccio's group wants a more formal structure of cooperation "incorporated into healthcare fraud efforts and reform legislation, so it's clear what is expected, and so each payer is alerted as soon as possible to new fraudulent activity."

Of course, questions would remain, such as when during the course of an investigation the disclosure is appropriate, and whether health plans would want to share information that could potentially benefit a competitor.

"A coordinating council is something we've always supported and pushed, and we will continue to do so," Saccoccio says. But he adds that in the end, for private and public payers to tell each other about fraud, even at the stage when activity is merely suspicious, does not require legislation.

"It's the reason this organization exists, to have private and public sectors sit down side-by-side and share."

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