[extropy-chat] Medical expenditure, medical fraud, - Definitions???

BillK pharos at gmail.com
Sun Mar 19 12:37:26 UTC 2006

On 3/19/06, Rafal Smigrodzki wrote:
> ### There is no "huge scale" of medical fraud. Most treatments offered
> by allopathic physicians today actually are not worthless, since the
> majority of them are supported by RCTs.

Well, the DOJ and FDA certainly think there is a huge problem.

The US DOJ publishes an annual report on medical fraud actions that
they have been involved in. This is a small part of the total, of
The 2004 figure for recoveries/ fines was $1,756,327,135.

In 1996, the GAO Report to the Banking Minority Member, Subcommittee
on National Security, International Affairs and Criminal Justice,
House Committee on Government Reform and Oversight said:
Health care fraud burdens the nation with enormous financial costs,
while threatening the quality of health care. Estimates of annual
losses due to health care fraud range from 3 to 10 percent of all
health care expenditures--between $30 billion and $100 billion based
on estimated 1995 expenditures of over $1 trillion. In late 1993, the
Attorney General designated health care fraud as the Department of
Justice's number two enforcement priority, second only to violent
crime initiatives.

In the DOJ Health Care Fraud Report, Fiscal Year 1997, they said:

The Severity of the Problem

Fraud in the United States' health care system is a serious problem
that has an impact on all health care payers, and affects every person
in this country. Health care fraud cheats taxpayers out of billions of
dollars every year. Tax dollars alone, however, do not tell the full
story about the impact of health care fraud on the American people.
Beneficiaries must pay the price for health care fraud in their
copayments and contributions. Fraudulent billing practices may also
disguise inadequate or improper treatment for patients, posing a
threat to the health and safety of countless Americans, including many
of the most vulnerable members of our society.

Fraudulent schemes are changing and growing more sophisticated.
Unscrupulous persons and companies can be found in every health care
profession and industry, and fraudulent schemes targeting health care
patients, providers, and plans have occurred in every part of the
country and involve a wide array of medical services and products.

While the vast majority of health care providers are law-abiding, some
providers are taking advantage of federal health benefits programs.
The Inspector General of the Department of Health and Human Services
recently found that in FY 97, the Medicare program alone overpaid
hospitals, doctors, and other health care providers more than $20
billion, or 11% of Medicare payments to providers. While not all of
this involves outright fraud, we are losing billions of taxpayer
dollars each year to fraud and abuse. In 1997, U.S. taxpayers lost the
equivalent of more than $500 in improper payments for every one of the
38.5 million Medicare beneficiaries.

Who Commits Health Care Fraud?

Every type of provider commits health care fraud. Fraud has been
perpetrated by individual physicians and large publicly traded
companies, medical equipment dealers, ambulance companies,
laboratories, hospitals, nursing homes, and home health care agencies.
Individual scam artists who provide no health care at all prey upon
the nation's health care programs, as well. Fraudulent schemes put
billions of dollars in the pockets of individuals and providers who
cheat the system, while we struggle to pay for life-saving drugs to
fight AIDS or provide more frequent screening to detect and prevent
cancer and other life-threatening illnesses.

How Do Perpetrators Commit Health Care Fraud?

Health care fraud schemes are diverse and vary in complexity, with
unscrupulous providers targeting both public and private health
insurance plans. Such schemes include:

    *      billing for services not rendered
    *      billing for services not medically necessary
    *      double billing for services provided
    *      upcoding (e.g. billing for a more highly reimbursed service
or product than the one provided)
    *      unbundling ( e.g. billing separately for groups of
laboratory tests performed together in order to get a higher
    *      fraudulent cost reporting by institutional providers

Kickbacks in return for referring patients or influencing the
provision of health care are another common scheme. The anti-kickback
statute prohibits the payment of kickbacks for the purpose of inducing
the referral of services which are paid for by federal health care
programs. Kickbacks corrupt medical providers' decision making,
placing profit above patient welfare. They can lead to grossly
inappropriate medical care, including unnecessary hospitalization,
surgery, tests, and equipment.

Other types of schemes include providing services by untrained
personnel, failing to supervise unlicensed personnel, distributing
unapproved devices or drugs, and creating phony health insurance
companies or employee benefit plans.

Rafal, naturally, is concentrating on hospitals and doctors, who are
probably a smaller part of the total 'medical' and health care fraud

The FDA issued a list of the Top Health Frauds in 1989.

A wider definition of medical fraud would include:
'Alternative' medicine. Acupuncture, homeopathy, crystal healing, etc.
'Miracle' diets followed by millions and useless 'diet' drugs.
Dietary supplements, a huge industry.
Counterfeit drugs.
'Off-label' marketing of drugs for uses never tested for.
Baldness 'cures'.
Impotence cures and sex aids.

But whatever problem you think you have, there are hundreds of
companies eager to sell you products as a treatment.

I think a large part of the difficulties in this discussion is that
people are using different definitions of 'medical' when related to
expenditure or fraud.
So it might clear the air a bit if we specify exactly what 'medical'
expenditure we are considering.


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