Fixing health care (fraud) reform

Health Care Fraud ReportThe latest issue of BNA’s Health Care Fraud Report contains an opinion piece I wrote about the anti-fraud provisions in the House and Senate health reform bills. The article is an analysis of those provisions and also includes ideas on how to strengthen anti-fraud firewalls for both the private and public sectors. While the provisions are a good start in attacking this $100-billion crime spree, lawmakers really need to get more serious about fighting fraud. You can read the article on the coalition’s website or download it.

And by the way, if you’re involved in combating health care fraud, you should subscribe to this publication. It’s not cheap, but it’s well edited and contains information not found elsewhere.

Interstate sales is a terrible idea

doctorA group opposed to comprehensive health-care reform has distributed talking points to town-hall participants that include a list of tweaks to health care in lieu of an overhaul. Its list of tweaks includes:

1) Cracking down on fraud, and

2) Allowing consumers to buy coverage across state lines.

Problem is, #2 would negate any savings from #1. In that sense, these “tweaks” are contradictory. Opening markets where any insurer could sell in any state would open the floodgates to fraud. The crooks would launch bogus insurance operations faster than you can say “unauthorized entity,” the legal term for this fraud.

Bogus health insurers stole premiums from more than 15,000 small business in a two-year period, according to a 2004 report by the Government Accountability Office. Hundreds of millions of dollars in claims went unpaid, financially crippling both businesses and individuals. Even with tighter state regulation today, fake insurance operations are still defrauding consumers at a frightening clip.

To deregulate markets in this way would end up costing consumers billions of dollars in fraud. State regulators have neither the resources or authority to make sure out-of-state insurers are legitimate. A national regulatory mechanism would be needed — and the cost of that would be prohibitive. I doubt the people pushing this idea would favor creating a huge bureaucracy to oversee interstate sales of insurance.

Insurance isn’t like cars or computers or anything else you buy across state lines. It must be tightly regulated to insure the companies offering coverage are legitimate and are financially solvent to make good on the promise of paying future claims.

Tweaks to health care are fine, but this one is a real loser.

EOBs for WC? Let’s study it.

Injured workerAn article in the Los Angeles Times yesterday bemoaned the death of a bill in California that would have required workers comp insurers to send claimants notices of medical services billed to verify they were actually performed. So-called explanation of benefits (EOBs) are routinely used in health insurance to help catch bogus billing by medical providers. So why not extend the practice to workers compensation?

Well, insurers in the state hated the idea and successfully sought to kill the bill. They feared the cost of the added paperwork and postage would be greater than any savings from fraud.

On the other side of the argument are a handful of employers and local prosecutors — led by our friend, Al MacKenzie of the Los Angeles DA’s office — who say the insurers’ argument is nonsense. “(As a medical provider), if I know you’re an injured worker, and you don’t get a copy of the bill, then I basically have a license to steal,” MacKenzie was quoted in the article.

Insurers say that if sending EOBs is such a good idea, they don’t need legislation to initiate this anti-fraud procedure.

But here’s the rub: no one really knows if this is a good idea. To our knowledge, the EOB experience has never been researched to determine whether the savings is worth the cost.

In theory it sounds like a no-brainer. But I suspect many EOBs are viewed by recipients as junk mail, are ignored or not well-understood. Even if they find discrepancies on the notices, what’s the incentive for a comp claimant to report them?

I could be wrong. But we just don’t know. Here’s an idea: let’s test EOBs on a sample of comp claimants and determine whether the fraud savings justify the cost. A scientific study could determine not only whether comp claimants report discrepancies, but could also gauge whether sending EOBs has a deterrent effect as well, as some proponents believe.

If there’s any prosecutor, insurer, employer or researcher in the Golden State that wishes to pursue this idea, please contact me. The Coalition would be a willing partner in helping to conduct this research project.

And here’s another idea: To reduce costs, why not send EOBs electronically. Insurers gather detailed personal information when a worker is injured. Why not include an e-mail address and automatically send them an EOB whenever a claim is received from a provider? The only cost would be a programming change to the insurer’s claims system.

And with the money saved, why not offer an incentive to claimants to report discrepancies. Perhaps a small portion of the savings? Could this work? What do you think?

Stop the Medicare scams

Miami HeraldThe Miami Herald is one news operation that truly understands the scope, breadth and nuances of Medicare fraud. The newspaper not only covers fraud issues, but does cutting-edge investigations and publishes thoughtful editorials. Like this one from yesterday titled Stop the Medicare Scams.

Focusing on the ridiculously corrupt home health system in South Florida — where average care costs $19,230 per patient compared to $635 in Chicago — the Herald says:

“It’s way past time to get serious about Medicare fraud, particularly as Congress considers healthcare reform. If Medicare is an example of how a public option for insurance might work, then the federal government must first clean up Miami-Dade, which has become ground zero for fraud.”

The editorial commends Medicare for instituting a 10 percent cap on home healthcare costs per patient. For diabetes patients alone, this will save $340 million in a year in Miami-Dade.

The editorial also touches on how the new fraud controls might impact honest providers and patients:

“Tougher scrutiny is warranted. The up-and-up providers that follow the rules and treat real patients will survive. For the others, good riddance.”

Mitigating homeowners fraud in Florida

hurricaneImagine you own a home near the coast in Florida and pay some of the highest homeowners’ insurance rates in the nation. You hear from a neighbor that you can save 16 percent on your insurance by hiring a shady home inspector who will vouch that you’ve taken steps to better secure your house against a hurricane. Just send the inspection report to your insurer — and save a bundle on your insurance.

Would you do it?

According to a new report, that’s exactly what many homeowners are doing. In collusion with inspectors, and sometimes insurance agents, homeowners are duping a system set up to lessen home damage during future hurricanes and reduce deaths and injuries. Sometimes the homeowners themselves are duped by inspectors who falsify reports just to keep the inspection business and give the homeowner a break on insurance.

The report by the Florida Association of Insurance Agents says up to 80 percent of re-inspections done by insurers find inspectors’ reports don’t jibe with the work done on the house.

The result of all of this is that honest homeowners end up subsidizing rates for those who are cheating. Plus, when the next hurricane hits, there will be greater economic damage and even more injury and loss of life. The report hints that this rampant fraud is discouraging insurers from writing more homeowners coverage in the state.

Florida’s insurance regulators are mostly to blame for their “singular focus on cutting premiums at any cost” that has “mortgaged Florida’s future,”  according to the report. Recommended solutions include regulating inspectors, prohibiting kickbacks from inspectors to insurance agents and funding a state bureau to investigate this type of fraud.

Sounds like good advice. The Florida Association of Insurance Agents is commended for bringing this issue to light. Fixing the homeowner premium credit system is in the public interest and will boost the integrity of the state’s homeowners insurance market.

Attend a town hall and voice your support

town hallIf you have an opportunity to attend a town hall meeting sponsored by your congressman or senator, do so. If you’re a member of the fraud-fighting community, you have a stake in health care reform and should add your voice. You also have credibility as a fraud fighter.

For town halls sponsored by U.S. Senators:

Voice your support for the anti-fraud provisions in the health committee bill that will help coordinate fraud-fighting between the federal government and private insurers. That’s a big step that will help to better detect fraud rings.

Voice support for the creation of offices of senior adviser for health care fraud within the Department of Health & Human Services and the Justice Department. These positions will give anti-fraud efforts a higher profile and a point of contact for private insurers to coordinate efforts.

Ask why the Senate bills so far contain no new resources to combat fraud. Fighting fraud on the cheap is no way to counter a multi-billion-dollar crime problem.

Before attending review the anti-fraud provisions in the Senate bill.

For town halls sponsored by your Congressman:

Ask for their support for provisions similar to what’s in the Senate bill that will coordinate anti-fraud activities among government agencies and private insurers. The House bills lack such provisions.

Also ask why the House bill only addresses Medicare fraud. That leaves a huge gap in combating health care fraud in the private sector.

• And while the House bill does contain $100 million extra to combat health care fraud, that amount is a pittance for a problem estimated at over 1,000 times that amount each year. Tell them to fund anti-fraud efforts commensurate with the size of this problem.

Legislators are being pulled in a lot of directions right now on health care reform, and unfortunately fraud issues are being drowned out. View of list of scheduled town hall meetings and get information on how to contact your members of Congress.

Make your voice heard.

P.S. While the news reports are playing up a few protests and near-riot situations at some town halls, I suspect most are civil affairs where legislators genuinely want to hear what reasonable people have to say on the issue.

Clunkers and giveup scams

clunkerThe U.S. Senate likely will spend another $2 billion by the end of the week to entice owners of gas guzzlers to trade up to more efficient models. Could the “Cash for Clunkers” program give desperate car owners a way to get rid of unwanted vehicles rather than dumping them, essentially selling them to the insurance company?

Go back 12 months when the auto giveup trend first got hot. It wasn’t the economy that was the driving force as much as high gas prices. Fuel costs are nowhere near mid-2008 levels, but they are creeping up again and perhaps making some low-mileage vehicles too expensive to operate for people on the edge.

Plus, those vehicles likely have higher-price car loans — if they are still financed — since rates have fallen greatly in the last few years. This could provide further incentives for people to trade in their vehicle rather than dump them.

In any event, the “Cash for Clunkers” program gives people another option instead of committing insurance fraud.

Then again, the program may get a lot of people into pricey new cars that they won’t be able to afford in the next year or two if the economy fails to recover — and we might get a “double-dip” giveup trend.

Time will tell.