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To better understand Medicare fraud, ask better questions


People often ask how much Medicare fraud costs. Fraud drives up to 10 percent of the program's annual spending, the Wall Street Journal reported, and since Medicare benefit payments totaled $583 billion in fiscal 2013, fraud accounted for $58 billion in losses last year.

Experts have relied on that percentage as a yardstick for years. But Richard Kusserow, former Department of Health and Human Services inspector general, wrote recently that he doesn't believe anyone has "the empirical data and evidence to support even a gross estimate of the true amount of Medicare fraud." 

Kusserow emphasized that healthcare fraud, waste and abuse are quite different but frequently lumped together. Calling their combination "fraud" is incorrect because--in Kusserow's terms--fraud is "an intentional deception or misrepresentation of services that an individual knows to be false and could result in an unauthorized reimbursement." And though the Centers for Medicare & Medicaid Services estimated that Medicare and Medicaid made $65 billion in improper payments in fiscal 2011, the government's definition of improper payments "could be interpreted as inclusive of fraud, waste and abuse," Kusserow noted.

A related point is that it's impossible to link dollar losses to fraud schemes running under the radar. So Medicare's actual cost of fraud is slippery and evasive.

I wonder why we insist on putting a hard number to this problem. Maybe it gives us a sense of control over it. Numbers are in our comfort zone of planning and prediction. We think quantifying Medicare fraud loss will help us map the outer limits of the problem.   

Numbers are tremendously important in the payer world. United Healthcare's motto is "strength in numbers." I spent years working for an insurer, and more times than I can count I heard people say that "if you can't measure it, you can't manage it."

Taking the measure of something makes us feel competent in relation to it. The question of exactly how much fraud there is in Medicare speaks to our need to demystify the problem, to draw boundaries around it as if fraud followed fixed rules.

But it doesn't. While it's possible and necessary to track dollar amounts of fraud recoveries, obsessing about the true cost of Medicare fraud reveals the false assumptions we hold. We need a new sensibility that prompts more productive questions.

Better questions flow from an understanding that fraud is opportunistic and adaptive, that it's often characterized by a complex web of relationships and that enforcement actions taken against fraud can sometimes have unintended consequences.

Instead of asking how much fraud costs, we need to ask how we can be more effective in fighting it. We need to ask what conditions and relationships give rise to fraud and what discourages it. We need to ask quick study questions about what criminals are up to in healthcare so we can cut our losses. And we need to ask how to develop new capacities in ourselves, our business relationships and our data management systems to meet the challenges fraud brings. Jane (@HealthPayer)

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