The question this book set out to answer was why health care fraud has not been brought under control, despite the unprecedented degree of attention the subject has received over the last eight years.
The answer is clear enough. Health care fraud has not been brought under control because the health care industry has underestimated the complexity of the fraud-control business and has never developed reasonable defenses against fraud. The defenses currently in place may protect against incorrect billing and certain forms of overutilization, but they offer little protection against criminal fraud. Insurers have no way of knowing how much they lose to fraud and have little incentive to find out. Unable to see the magnitude of the problem, public and private programs massively underinvest in control resources. Insurers rely upon fraud-detection and referral mechanisms that barely work. The majority of them lack a coordinated fraud-control strategy, or the organizational infrastructure to carry it out.
The scale of the government's interventions, so far, does not match up to the potential scale of the problem. Many of the legislative provisions of the last few years--granting the right to conduct criminal background checks on would-be-providers, to make sure that excluded entities actually stop billing, to visit companies' premises to make sure they really exist--are remedial and twenty years overdue. According to the Health Care Financing Administration (HCFA), the agency "is now working to develop a substantive testing process to help determine not only whether claims are paid properly but also whether services are actually rendered and medically necessary."1 That's good, although it's happening slowly. Like so many other initiatives, this one has been held up or put off because of HCFA's need to pay attention to its Y2K problem.
Meanwhile, fraud in the health care system has been, and remains, out of control. Electronic claims processing has introduced alarming new threats, to which the industry has paid insufficient attention. Managed care will not eliminate fraud as many believe; rather it will make fraud more dangerous for patients, and much more difficult to control.