WEEDING OUT MEDICARE FRAUD: THE BEST OF TWO WORLDS
by Inderpal Bhandari, executive editor at large
According to federal estimates, fraud and waste cost the Medicare and Medicaid system $57 billion in 1997 alone. Independent estimates have put the number as high as $94 billion. The concern, of course, is that the lost amounts will eventually translate into cutback of services and quality of care for our venerable seniors. In this column, I describe two approaches to address the problems of fraud and waste in Medicare.
The first approach involves the use of statistical analyses and data mining techniques to uncover fraud in claims data. The basic scheme works as follows: A data store is maintained of all claims that are filed. Sophisticated mathematical techniques are used to identify claims that go over pre-specified thresholds for measures that are designed to capture fraudulent practices. Those claims are then brought to the attention of investigators who determine if fraud has occurred.
The use of an automated monitoring technique as described above to focus the attention of investigators on questionable areas of the data store has several advantages. Perhaps most significantly, it has the potential that fraud can be detected before payment is made. There is an old Danish proverb that says that it is hard to pay for bread that has been eaten.
Similarly, if money is to be saved on fraud, it is best saved before it is paid out. The main challenge for this approach is that it must keep up with the evolution of fraud. Tricksters share experiences, especially those that send their kind to jail. They come up to speed very quickly on the latest monitoring rules and change their methods. The automated rules must be adjusted in response. And, the game goes on and on and on.
Last week, I became aware of another interesting approach to address fraud and waste in Medicare. Westchester County, in New York, has a program called Operation Restore Trust. The objective of the program is to educate the elderly to spot fraud and waste. The program tries to capitalize on the fact that when a doctor or a health care provider bills Medicare, Medicare sends the beneficiary a statement describing particulars of that bill. Since the patient has knowledge of what actually happened, they are in a position to detect fraud by simply comparing the statement with their recollection.
This approach also has several advantages. Perhaps, most significantly, it taps into the knowledge of what actually occurred. Furthermore, a by-product of making the elderly aware of fraudulent practices is that many kinds of fraud may be prevented altogether. While the elderly are not the intended victims of Medicare fraud, they are often targeted by con men to obtain information that facilitates fraud, e.g., Medicare numbers. A higher degree of awareness will help them to spot such situations as well, making fraud more difficult.
As was the case with automatic monitoring, this approach is also not without challenge. First, a patient who reports a suspicious claim runs the risk of antagonizing their doctor. Clearly, this is not a good situation for a patient to be in. Second, the provider has a year to bill for their services. A patient may have little recollection of the specifics of a particular visit to their doctor after a year.
So, what do we have here? We have two approaches to address the same problem. One approach is completely automated while the other is completely manual. Note that their strengths and weaknesses are complementary. The automated approach lacks the knowledge of what actually occurred, which is exactly what the patient has. On the other hand, the consistency and impartiality of automatic monitoring are exactly the qualities that are missing from the manual monitoring by patients. Consequently, I think both approaches are potentially useful and are here to stay.
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Inderpal Bhandari can be reached via http://www.virtualgold.com