License to Steal: How Fraud Bleeds America's Health Care System

By Malcolm K. Sparrow | Go to book overview

2 How Goes the War?

When it came to regulating health care fraud and abuse, the Clinton Administration put aside its customary conciliatory language of "customer service" and "partnerships with industry." They declared war. They pulled in the FBI and a range of other investigative and law enforcement resources. In 1993, Attorney General Janet Reno announced that she was making health care fraud the Department of Justice's number two priority, second only to violent crime. Since 1993, President Clinton and his senior officials have announced repeated "crackdowns" of various kinds.

At the outset, control of fraud and abuse was to be part of the administration's plans for comprehensive health care reform, with structural alterations designed to remove incentives for gaming the system. Following the demise of the centralized reform agenda, the administration pursued fraud and abuse control through a number of other avenues.

In 1995, the administration launched "Operation Restore Trust" as a demonstration project in five states--California, Florida, Illinois, New York, and Texas. The program was designed to demonstrate the value of partnerships in combating fraud and abuse (particularly partnerships between federal and state agencies), and to develop new approaches in identifying and controlling Medicaid and Medicare fraud. Program activities revolved around establishing interagency coordinating mechanisms within each of the five states to share intelligence, select cases, allocate resources, and coordinate investigations. "O.R.T." as it is now known, focused on three particularly fraud-prone industry segments: home health care, durable medical equipment, and nursing homes. The administration claims that the program expended $7.9 million in the pilot phase (the first two years), and identified $188 million in payments due back to the government for a return on investment rate of 23 to 1. Because of that initial success, the administration expanded the program into twelve more states.

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License to Steal: How Fraud Bleeds America's Health Care System
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Preface vii
  • Introduction - Who Steals, and How? 1
  • Part One - The State of the Art 37
  • 1 - Control Failures 39
  • 2 - How Goes the War? 56
  • Part Two - New Frontiers for Control 81
  • 3 - False Claims 83
  • 4 - Managed Care 98
  • Part Three - The Nature of the Fraud-Control Challenge 115
  • 5 - The Pathology of Fraud Control 117
  • 6 - The Importance of Measurement 143
  • 7 - Assessment of Existing Fraud-Control Systems 162
  • 8 - The Antithesis of Modern Claims Processing 183
  • Part Four - Prescription for Progress 201
  • 9 - A Model Fraud-Control Strategy 203
  • 10 - Detection Systems 228
  • Conclusion 253
  • Acronyms and Abbreviations 257
  • Notes 259
  • Index 277
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