I’ve got a few papers in my virtual pile on health care fraud. The first, which I’ve just completed reading, is “Health Care Fraud and Abuse: Market Change, Social Norms, and the Trust Reposed in the Workmen,” by David Hyman. It’s the most even-handed and thorough analysis (largely qualitative) of fraud in health care that I’ve seen. The conclusion, which I excerpt below, gives a sense of his approach, but only that:
Assessments of the optimal response to health care fraud are necessarily influenced by one’s perceptions of the frequency and severity of the problem and the motivations and likely behavior of providers and regulators. An analyst who begins from the assumption that the problem is mostly inadequate documentation and a few isolated bad apples will come to a quite different conclusion than one who believes that organized crime has forsaken narcotics and targeted Medicare. Similar factors apply when one considers the degree of discretion appropriately reposed in regulators. An analyst who believes fraud enforcers are gun-toting bullies with no understanding of the complexities of medical diagnosis and treatment will approach these issues quite differently than one who believes prosecutors and fraud investigators have too many better things to do than to go after someone who does not deserve it.
These analytical predispositions are greatly influenced by the experiences one has had and the anecdotes one has heard. Despite the power of these anecdotes in framing an assessment of the issues, this type of evidence is an insufficient foundation on which to formulate an effective fraud control strategy. Further research and analysis is necessary to determine how severe these problems really are and the extent to which the problem is raw fraud as opposed to compliance with relational contracts.
Unfortunately, objective analysis of these issues has been made more difficult by the terminology that is employed. Characterizing certain conduct as “fraud and abuse” when much of it is neither fraudulent nor abusive has made it more difficult for regulators, legislators, and providers to dispassionately assess the merits of the underlying statutes and the optimal manner in which to enforce them. Legislators and regulators are understandably reluctant to be viewed as soft on fraud. Yet, as noted previously, a fraud control regime that does not fit the underlying marketplace is no favor to anyone. [...]
It is not necessary for present purposes to settle on a system of optimal fraud control for Medicare and Medicaid. Instead, it is more important to realize that much of the conduct condemned by the existing antifraud regime is neither fraudulent nor abusive, that other conduct that is missed by the existing antifraud regime presents serious concerns, and that a zero tolerance enforcement strategy works better as a slogan than as a policy. Once these facts are appreciated, we can begin the hard work of sorting out what we actually want to accomplish and then design our system for ensuring compliance accordingly.
The paper is much more specific and detailed than these paragraphs from the conclusion would suggest. It’s also long, and a way to summarize it for a post did not occur to me as I read it. However, I will be reading more on this topic and other papers may lend themselves to blogging. If you’re interested in this topic, I recommend reading Hyman’s paper in full. (Sorry, I don’t believe there is an ungated version.)