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

By Malcolm K. Sparrow | Go to book overview

3
False Claims

Patient. "There's a problem with this bill. I never received these services." Provider. "Why should you worry? Medicare is paying."

This chapter focuses on the submission and payment of false claims--an area that crooks seem to understand perfectly well; which the health care industry fails to condemn, and often seems to defend; and against which insurance programs, public and private alike, lack adequate defense.

I use the term "false claims" here in its simplest (i.e., nonlegal) sense. I use it to mean claims that are false (i.e., they contain a material falsehood) and which are nevertheless billed correctly, processed perfectly, and paid. Never mind how the falsehood entered in; whether it was an accidental error or part of a criminal conspiracy. Let us put off, for as long as possible, consideration of how the claim came to be false. Let us put aside judgments about what might have been happening, or not happening, inside the mind of whoever submitted the false claim and subsequently received payment. It is enough, for the purposes of this discussion, that the claim was false: The diagnosis was false, or the services were not provided as billed, or the procedures were inflated or exaggerated (upcoded) to something more expensive.

Payments for such false claims constitute the most basic, central, and obvious form of inappropriate health care payments. Focusing on this rather simple, uncomplicated phenomenon turns out to be quite instructive in advancing the art of fraud control. Why? Because this remarkably commonplace phenomenon--where false claims are billed, processed correctly, and paid--exposes some major holes in existing control systems. The false claims phenomenon shows the principal remaining weakness in the fee-for-service structure; it debunks the administration's claims to have slashed Medicare's improper payment rate; it exposes the subterfuge industry uses to dodge the issue; and it connects directly with

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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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