Dyman Associates Insurance Group of Companies

Enabling or blocking health insurance fraud

When the subject of health insurance is discussed someone raises the argument that because Medicare or Medicaid is government programs, they are subject to fraud. This is usually an objection from politicians who support Free Enterprise and fear Big Government.

Let’s be honest with ourselves, any human event that involves something of value attracts fraudsters. A bank robber, a hacker, a big company submitting false claims; all fall into the category of fraud. Any googling of Medicare fraud brings up some infuriating examples. For example, health care industry giant HCA (which the New York Times notes was bought by Bain Capital in 2006) eventually settled a Medicare fraud scandal (overcharging) for more than $1.7 billion. Or, last May the feds arrested 107 health care providers, including doctors and nurses, in several cities and charged them with cheating Medicare out of $452 million. In 2010, 94 people were charged with submitting $251 million in phony claims. Fraud isn’t the product of scheming low-income beneficiaries – Mitt Romney’s 47 percent – it is most often committed by big companies and rich doctors, not a patient seeking a second colonoscopy.

We should admit that fraud is endemic to the insurance business, whether public or private. The Coalition Against Insurance Fraud estimates that in 2006 a total of about $80 billion was lost in the United States due to insurance fraud. According to estimates by the Insurance Information Institute, insurance fraud accounts for about 10 percent of the property/casualty insurance industry’s incurred losses and loss adjustment expenses.

So, how to tackle any fraud. Putting more police on the streets is an acceptable way of reducing crime. Private industry is free to hire as many investigators and accountants as it takes to catch fraudsters.

While research has shown that the typical anti-Medicaid-fraud worker recovers, on average, $200,000 per year, it is unpopular in some quarters to admit that hiring more government workers saves taxpayers money. But unlike private industry, the government is not free to hire the staff and solve problems. A major block in Congress argues that each and every new accountant is Big Government.

Currently, major government departments are even without an Inspector General to head waste, fraud and abuse programs. The Department of the Interior has been without an IG for over 1,800 days; AID, no IG for over 900 days.

So, Congress provides neither anti-fraud heads nor anti-fraud bodies. The knee-jerk response of “no money” and “no appointees” rather than being a deterrent, empowers fraudsters.

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