Healthcare Fraud Summit

February 9, 2010

U.S. Department of Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder recently convened a “National Summit on Health Care Fraud.” The two-hour event can be viewed at C-SPAN’s website.

There was a lot of talk about protecting taxpayers, and it was clear that HHS is putting a great amount of resources into the problem. The federal lawyers and accountants speaking at the event who are tasked with rooting out abuse seem to a very dedicated and intelligent group. But this is one of the sad things about complex big government programs—they need intelligent people to administrate them, and that saps the private economy of intellectual resources.
HHS Secretary Sebelius mentioned that funding for anti-fraud measures would go up 80 percent under the president’s new budget. HHS intends to spend money on technology that would do a better job of sifting through the data to detect potential fraud and abuse. But that’s the Catch 22: more taxpayer money has to be spent to “save” taxpayer money.
On Thursday, the head of the House Energy and Commerce Committee, John Dingell (D-MI) had a telling exchange with Sebelius. From
“I have wrestled with a number of department agencies over the past [about] their adequacy … to upgrade these matters,” Dingell said. “They’ve had good motivation, noble intentions, but the implementation was also lacking, causing substantial waste and confusion.”
When he asked Sebelius whether the $110 million would be a one-time investment, she said, “This is a multiyear strategy to actually build a 21st century information and data system.”
“Should we anticipate that you will be coming back up here to continue to move toward adequate resources to sustain this project over the years?” Dingell asked.
Sebelius said she would see the project through and later added the department has a new information officer, who is not directly connected to CMS, who is assisting with project supervision. She assured Dingell that HHS would provide proper oversight of vendors and federal employees working on the project.
Dingell’s candor is refreshing, and it serves as a reminder that government officials always promise to “fix” problems if they just get new technology and more money. Instead, the “fix” often ends up getting bogged down in bureaucracy and cost overruns due to poor oversight of contractors.
The fundamental problem with giant government healthcare programs is simple: when you have a giant pot of honey, you attract ants. And when that honey is guarded by someone who didn’t pay for the honey, there’s little incentive for that person to guard it as it were their own.
This difference in incentives was evident when the CEO of a private insurer spoke at the summit. The CEO, James Roosevelt of Tufts Health Plan, pointed out that the chief priority for Medicare/Medicaid is to pay claims as quickly as possible. Public programs lack the capabilities of their private sector counterparts to not only stop improper payments from being made, but also detecting such payments after the fact. Moreover, private insurers aren’t encumbered by the massive bureaucracy and congressional meddling that inhibits the government’s ability to adapt and react to ever evolving fraud schemes.
See this essay for more on fraud and abuse in government programs. See here for recent examples of fraud and abuse in government healthcare programs.  
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