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.
When you think about the billions of dollars health insurers lose each year, preventing such losses from fraud could have a huge impact on health costs—especially at a time when insurers are streamlining programs to reduce spending.
BCBSA's news is buffered by a George Washington University School of Public Health and Health Services report last week that found as much as 10% of healthcare spending is lost to fraud. That means the healthcare system loses more than $200 billion annually to fraud.
Employers are also involved in their own fraud prevention programs, which experts say could reduce employee healthcare costs by 2%-5% annually. The ineligible dependent problem is one major type of fraud that comes about because most human resources and benefits departments do not perform checks or require tax returns, birth certificates, and marriage certificates at the time of enrollment. This leaves them open to fraud.
As health insurers, employers, and healthcare organizations struggle during a difficult economy, anti-fraud efforts have gained popularity as a way to cut costs without reducing health programs. For insurers, which are faced with dropping enrollment because employers are cutting health coverage, anti-fraud could play a key role in reducing costs without passing more costs onto employers and ultimately individuals.
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A nationally widespread insurance scam has been shut down in California after hundreds of victims were duped into paying premiums for a Kaiser Permanente health plan through a phony labor union, state officials said. Kaiser never received a large portion of the money the enrollees paid.
The Ponzi-like scheme, operated by Raymond, Thomas and Jean Palombo of Riverside, CA under the name Contractors and Merchants Association or CMA, also has been shut down in at least six other states including Texas, Georgia, Oklahoma, Nebraska, Florida, and North Carolina in recent years.
The Palombos also operated the scam under the name "Progressive Health Alliance" in some of those states and involved other health insurance companies such as Aetna and Healthnet, according to state documents.
A previous Palombo operation was shut down by another California state agency in 1999, but personally, the Palombos were not named in that order. This time, the Palombos and CMA have been permanently barred from selling HMO or PPO plans in California.
"It is critical that we protect healthcare consumers from phony, Madoff-like scams that take their scarce dollars and leave them without insurance coverage," said a statement from Cindy Ehnes, director of the state Department of Managed Health Care, which issued the order to stop the fraudulent plan.
"We shut down this particular operation before Californians were severely harmed, and with Kaiser's support, got them into secure coverage. Our action sends the message that fraudulent health coverage rip-offs will not be tolerated by this Administration."
In California, about 200 people and another 300 of their dependents were wooed through the Internet to join CMA, says Michael McClelland, lead counsel for the DMHC.
Additionally they were required to join a phony labor union, International Union of Industrial and Independent Workers, to buy the plan, he says. Most of those recruited were older or had pre-existing conditions such as diabetes that made them ineligible for most private insurance plans, McClellan says.
Labor unions can legally purchase and organize health insurance plans for their members, however this labor union did not represent any workers or engage in collective bargaining, and thus was not legally entitled to purchase health insurance from Kaiser, he says.
"It's not lawful to use a labor union to sell health insurance to the general public without a license" McClellan says.
Across the country, McClelland says, the Palombo operations paid health plans in "spits and spurts to keep delaying the inevitable, which is to default paying the premium entirely." McClelland characterizes the operation as "a Ponzi-like" fraud.
The DMHC negotiated with Kaiser to enable CMA's victims to continue to be enrolled under a Kaiser individual rather than a Kaiser group plan without having to apply for medical underwriting, which would have disqualified most if not all of them, McClelland says. Their premiums did undergo adjustment based on their age and residence, and while some rates rose a bit, most went down or remained the same, he says.
"Kaiser also continued CMA coverage throughout the DMHC's investigation, despite not receiving the premium payments for months at a time," the agency said in a statement.
McClelland says that CMA and the labor union paid some money to Kaiser from the enrollees' premiums, but for various periods of time, "were a couple hundred thousand dollars behind in payment. Kaiser could have cut them off, but they did not."
McClelland says that as long as there were "tons of people buying the plans, there was enough money to pay the premiums and skim money off the top. The average enrollee was paying roughly $500 to $600 a month and the actual premiums Kaiser was charging was half of that. Half of the money was going into the pockets of Palombos and the union."
He says the deal went sour when, "for whatever reason—greed, falling membership, the union stopped paying on the contract."
McClellan said that according to the U.S. Department of Labor, when the labor union was shut down, health plans across the country had provided $4 million in care for enrollees who paid their premiums to the Palombo operations, but those operations never forwarded that money to the health plans during that period of time.
The state first got wind of the CMA two years ago when an enrollee objected to being required to join a labor union to obtain health coverage. After a lengthy investigation, the state agency discovered that enrollees were solicited through the Internet and by licensed brokers. The state also has suspended the license of one of those brokers who sold the union contract to Kaiser.
State officials said they were aware that Polombo had been under scrutiny and was involved in disciplinary action in other states, "but we didn't think he was operating in California," McClellan says.
The California department is the only one of its kind in the country overseeing health plans that enroll more than 21 million Californians. Amy Dobberteen, Chief of the agency's Office of Enforcement, said several other sham health insurance operations are currently under investigation in the state.
Deals with a broad consortium of health industry groups promised to slow the growth of medical spending by 1.5%. Then, it was a deal with big drug makers, promising savings of $80 billion over 10 years, by lowering the cost of medicine for the elderly. Now major hospital associations are pledging to save more than $150 billion over a decade. But what has been little discussed is what the industry groups will be getting in return for their cooperation, whether or not the promised savings ever materialize.
The query is emerging as the ultimate challenge in reining in healthcare costs that now consume $2.5 trillion per year, or 16% of the economy: How will tough decisions be made about what to spend money on? The question permeates all levels of medicine, according to the Washington Post: the use of tests that many argue are unnecessary; how early to intervene with common conditions such as heart disease and prostate cancer; how aggressively to treat patients nearing their life's end.
After working with multiple professional and trade organizations on the common and proper use of sterilization using steam, the Joint Commission has decided to refocus its survey efforts on all critical processes, including sterilization, according to a recent announcement by The Joint Commission. The accrediting body will consider an effective sterilization method if a complete and effective process of sterilization is used.
Three issues arose during The Joint Commission's discussion: the terminology used to describe the sterilization process, the indication-related issues that involve the selection of the sterilization cycle or method, and the process-related issues involving the way that a given sterilization method is executed.
In addition, Joint Commission surveyors will focus on the critical steps of reprocessing. These steps include the cleaning and decontamination of all visible soil, because steam cannot remove these compounds. Any sterilization must meet the parameters by the manufacturer of the sterilizer and the surgical instrument, and the maker of any packaging. Also, each sterilized instrument must be carefully protected and stored in a sterile field.
Joint Commission surveyors are also being asked to perform other activities, which include observing instruments from the time they leave one operating room to when they are returned to the next, observing the cleaning of the instruments, and reviewing the sterilization logs.
Marsha Barnden, MSN, RNC, director of standards and infection control at Adventist Health in Roseville, CA, praises The Joint Commission's updated position on steam sterilization.
"I am delighted with The Joint Commission's direction related to interpreting and surveying specific infection control standards in the operating room," says Barnden. "The issue of sterilization is a guaranteed survey topic and over the past several years, flash sterilization has been particularly problematic for many hospitals."
Oftentimes the reason for the increased incidence of flash sterilization is directly related to insufficient instrument trays, most commonly trays used for specialty cases such as eye or ortho surgeries, explains Barnden.
"The mere fact that The Joint Commission has formally recognized the critical steps in the multi-faceted sterilization process and are focusing on all three [cleaning/decontamination, sterilization, and packaging/storage with return to the sterile field] is further evidence of the paradigm shift we have been experiencing with Joint Commission surveys: it is all about process and the details therein-drilling down to get the entire picture rather than piecemeal," says Barnden. "Complicated processes involving multiple steps are processes begging for short-cuts which can be ill-afforded in the infection control arena."
Senators are cooling to a proposal that would impose a tax on employer-provided health insurance and are giving renewed attention to taxes on the wealthy to pay for a healthcare overhaul. Senate negotiators are considering a wider range of ways to pay for expanding health coverage, including President Barack Obama's proposal to limit tax deductions for the wealthy and another proposal to impose an income surtax on the wealthy.
Hartford, CT-based St. Francis Hospital and Medical Center officials said they hope they will be able to resume all heart surgeries soon but are waiting for a "final decision" from state regulators. The hospital suspended all non-emergency cardiac surgeries July 2 at the recommendation of the Connecticut Department of Public Health. In a statement, hospital officials said they have given the health department "all the documentation requested and necessary to verify the quality of our cardiac surgery programs."
A management shakeup in the Louisiana State University hospital system has left the state's public hospital in New Orleans without a permanent leader for the third time in a year. Roxane Townsend, MD, who has served as interim chief executive of the Interim LSU Public Hospital in New Orleans since January, has been named head of LSU's Health Care Services Division in Baton Rouge. The division oversees the seven state-run charity hospitals in South Louisiana. She replaces Michael Butler, MD, who has run the hospitals' division since 2007.
Blue Cross and Blue Shield of Florida is offering a low-cost health plan in counties in south and central Florida. The program, BlueSelect, is designed for uninsured workers or those at risk of becoming uninsured. It was tested on a pilot basis in the Tampa area earlier this year and is now being introduced in Broward, Charlotte, Hernando, Pasco, and Polk counties.
The Shriners organization has "overwhelmingly" rejected a recommendation by its corporate board to close the Shriners Hospital for Children in Erie, PA, and five other hospitals, according to Erie Shriners spokesman Bob Howden. The Shriners' corporate board had recommended the closures after the national economic downturn cut into the endowment that helps fund the hospitals. But the Shriners delegates have to approve any decision to close a hospital and, while another vote could come up later this week, Howden described that possibility as "very remote."
