Waste, fraud, and abuse in Medicare are serious problems . . . but so are the federal government’s efforts to combat them.
Of course, egregious cases of fraud take place, and those engaged in criminal activities should be stopped and prosecuted. But the big dragnet for “health care criminals” is catching innocent doctors as well, creating an unhealthy climate of fear and defensiveness that hurts the medical profession badly.
An examination of the current controversy over waste, fraud, and abuse in the health care system reveals an enforcement system as troublesome as the problems it’s intended to correct.
Criminalizing Health Care
In its zeal to rid the nation’s health care system of waste, fraud, and abuse, Congress has passed a blizzard of new federal criminal statutes targeting the health care industry, including those contained in the Health Insurance Portability and Accountability Act of 1996.
The statutes are being enforced by hundreds of federal agents armed with hundreds of millions of dollars in investigatory funds. This new army of law enforcement agents is sweeping through hospitals and doctors’ offices throughout the country to investigate a new class of “health care offenders.”
Mark L. Bennett Jr., a Topeka, Kansas, attorney with the firm of Bennett & Dillon, LLP, says health care has become the prosecution of choice for many U.S. attorneys.
“At one point, drugs and drug offenders got the most attention from the authorities, then it was banking and savings and loan violations. Now . . . one of the prosecutions of choice is fraud relating to the provision of medical services.” The reason, Bennett observes: “That’s where the money is.”
Arbitrary and Excessive
The federal government is using the threat of prosecution to collect excessive settlements from doctors “guilty” of clerical errors. Federal officials have developed a “system” to identify which doctors and hospitals might be subject to fines. Any billing practice that establishes a physician as a financial outlier on a computer statistical analysis can lead to a payment audit. The audit may look at a fraction of the doctor’s medical records, identify a percentage that have coding or billing errors, then extrapolate fines to the whole practice based on the sample. The fines can be as high of three times the amount of the error.
Many of the nation’s 650,000 physicians fear they could face armed federal agents, prosecution, and even jail time. “Demonizing the entire medical community with the broad brush of ‘fraud, waste, and abuse’ trivializes real fraud and sets up an adversarial tension in every patient-physician encounter,” according to Nancy Dickey, M.D., former president of the American Medical Association.
Federal prosecutions for fraud are at an all-time high. The current backlog began building when enforcement agents started levying much larger penalties than in the past.
Nursing home operators who violate patient health and safety rules, for example, have felt the crunch. The old penalties were generally $100 and were routinely paid, not challenged. But under the more aggressive policies, fines range as high as $10,000 for each day a home is out of compliance, with some penalties reaching more than $600,000.
Too Complex to Comply
Federal health care regulations now take up over 132,000 pages of regulation. Medicare alone accounts for more than 111,000 pages. The General Accounting Office acknowledged in a 1998 letter to House Budget Chairman John Kasich that Medicare’s “size, complexity, and rapid growth make it an attractive target for fraud and abuse.” The rules can be inconsistent and contradictory; it is virtually impossible for the average doctor to have a working knowledge of the mountain of regulation.
Legislating in the Dark
Instead of leading on the issue of health policy, members of Congress follow uninformed popular opinion. Congressional policy toward health care fraud and abuse has been fueled by political polls, which were in turn fueled by misinformation and a crude political expediency.
Rather than tackle the tough problems of structural reform of Medicare, politicians reacted to national polling data showing the majority of Americans erroneously believe high health care costs are almost exclusively the result of fraud and abuse.
The energy and discipline of the marketplace must be injected into this cumbersome, antiquated, centrally managed Medicare system to save it from bankruptcy. Federal agents chasing harried doctors is not a solution.
Disagreements over medical necessity or clerical errors do not constitute fraud, and neither law nor regulation should effectively “criminalize” the practice of American medicine. Congress and the administration should work to stop this trend before it does further damage to what has, until now, been the best health care system in the world.
Most importantly, Congress should take bold steps to restructure the Medicare system, and the health care system in general, to minimize opportunities for fraud.
Excerpted from a paper presented by Grace-Marie Turner, president of The Galen Institute and a contributing editor to Health Care News, at a July 31 Cato Institute confernce, “Making a Federal Case out of Health Care: Five Years of HIPAA.” The full text of Turner’s paper is available on the Internat at http://www.galen.org/news/080201.html.
|Judgments, settlements, fines||$1.2 billion||$480 million||$524 million||$1.2 billion|
|Criminal indictments filed||282||322||371||457|
|Civil cases pending||4,010||3,471||2,278||1,995|
|Civil cases filed||89||107||91||233|
|Exclusions from Medicare/Medicaid||+1,000||3,021||2,976||3,350|
|Source: Department of Health and Human Services and Department of Justice, Health Care Fraud and Abuse Control Program, Annual Reports for FY 1997, 1998, 1999, 2000.|