Health-care fraud in America; criminals take $272 billion a year

Go Lean Commentary

Healthcare2Wherever there is vibrant economic activity, bad actors will emerge.

This is the claim of the book Go Lean…Caribbean, that the result of successful regional integration would be an elevated Caribbean economy, which consequently could result in increased felonious activities.

There is a lot of economic activity around health-care. According to a US News and World Report story, the US lacks health efficiencies, spending 20, 30, even 100 times as much on medical products and devices as what it would cost, at a typical big-box retailer like Wal-Mart. In a sample year (2012), the country spent over $2.8 trillion on health care, more than twice as much on a per-capita basis as other high-income countries such as England and France. [a]

The Caribbean wants to be a high-income country/region, but not in the model of the United States. We must be better; we must be lean!

The book, Go Lean … Caribbean, serves as a roadmap for the introduction and implementation of the Caribbean Union Trade Federation (CU), the next generation of integration for the region. This roadmap posits the eventual economic success will be quickly followed with the emergence of bad actors seeking to exploit the successes. So security/crime deterrents will not be an after-thought; no, rather the full crime-and-punishment eco-system (investigation, persecution, penology) is in scope for the CU as this technocratic agency will assume responsibility for economic crimes in the region. In effect, this roadmap has the prime directives to elevate the Caribbean’s:

(1) economy,

(2) security apparatus, and

(3) governing engines.

The Economist Magazine (Posted & Retrieved 05/31/2014) –
MEDICAL science is hazy about many things, but doctors agree that if a patient is losing pints of blood all over the carpet, it is a good idea to stanch his wounds. The same is true of a health-care system. If crooks are bleeding it of vast quantities of cash, it is time to tighten the safeguards.

In America the scale of medical embezzlement is extraordinary. According to Donald Berwick, the ex-boss of Medicare and Medicaid (the public health schemes for the old and poor), America lost between $82 billion and $272 billion in 2011 to medical fraud and abuse (see article). The higher figure is 10% of medical spending and a whopping 1.7% of GDP – as if robbers had made off with the entire output of Tennessee or nearly twice the budget of Britain’s National Health Service (NHS).

Crooks love American health care for two reasons. First, as Willie Sutton said of banks, it’s where the money is – no other country spends nearly as much on pills and procedures. Second, unlike a bank, it is barely guarded.

Some scams are simple. Patients claim benefits to which they are not entitled; suppliers charge Medicaid for non-existent services. One doctor was recently accused of fraudulently billing for 1,000 powered wheelchairs, for example. Fancier schemes involve syndicates of health workers and patients. Scammers scour nursing homes for old people willing, for a few hundred dollars, to let pharmacists supply their pills but bill Medicare for much costlier ones. Criminal gangs are switching from cocaine to prescription drugs – the rewards are as juicy, but with less risk of being shot or arrested. One clinic in New York allegedly wrote bogus prescriptions for more than 5m painkillers, which were then sold on the street for $30-90 each. Identity thieves have realised that medical records are more valuable than credit-card numbers. Steal a credit card and the victim quickly notices; photocopy a Medicare card and you can bill Uncle Sam for ages, undetected.

Healthcare1It is hard to make such a vast system secure: Medicare’s contractors process 4.5 [million] claims a day. But pointless complexity makes it even harder. Does Medicare really need 140,000 billing codes, as it will have next year, including ten for injuries that take place in mobile homes and nine for attacks by turtles? A toxic mix of incompetence and political gridlock has made matters worse. Medicare does not check new suppliers for links to firms that have previously been caught embezzling (though a new bill aims to fix this). Fraud experts have long begged the government to remove Social Security numbers from Medicare cards to deter identity thieves – to no avail.

Start by closing the safe door
One piece of the solution is obvious: crack down on the criminals. Obamacare, for all its flaws, includes some useful measures. Suppliers are better screened. And when Medicaid blackballs a dodgy provider, it now shares that information with Medicare – which previously it did not. For every dollar spent on probing health-care fraud, taxpayers recover eight. So the sleuths’ budgets should be boosted, not squeezed, as now.

But the broader point is that American health care needs to be simplified. Whatever its defects, Britain’s single-payer National Health Service is much simpler, much cheaper and relatively difficult to defraud. Doctors are paid to keep people well, not for every extra thing they do, so they don’t make more money by recommending unnecessary tests and operations – let alone billing for non-existent ones.

Too socialist for America? Then simplify what is left, scale back the health tax-perks for the rich and give people health accounts so they watch the dollars that are spent on their treatment. After all, Dr. Berwick’s study found that administrative complexity and unnecessary treatment waste even more health dollars than fraud does. Perhaps that is the real crime.

The Go Lean … Caribbean roadmap commences with the statement that the Caribbean is in crisis, and that this “crisis is a terrible thing to waste”. Later generations of Caribbean parents have had fewer children than their predecessors, 2.1 children per household, as opposed to the previous average of 5 – 6 children. Now, that older generation is aging, and the numbers do not lie, there are fewer children to care for their aging parents. What’s worse, many of the Caribbean labor pool had fled the region and emigrated to the US, Canada and Europe. Actuarially, we have a financial tsunami building and targeting the region. This crisis is identified early in the book, in the opening Declaration of Interdependence (Page 12), with this pronouncement:

ix.  Whereas the realities of healthcare and an aging population cannot be ignored and cannot be afforded without some advanced mitigation, the Federation must arrange for health plans to consolidate premiums of both healthy and sickly people across the wider base of the entire Caribbean population. The mitigation should extend further to disease management, wellness, obesity and smoking cessation programs. The Federation must proactively anticipate the demand and supply of organ transplantation as developing countries are often exploited by richer neighbors for illicit organ trade.

Creating the solution to mitigate health-care fraud (and other economic crimes) is “Step One, Day One” in the Go Lean roadmap. Implementing the appropriate regulatory framework, to marshal against the scenarios depicted in the foregoing news article, will allow for a “value exchange” for the vital investments the CU must make in the delivery of health-care solutions.

Health-care solutions also entail the astute application of information technology (IT). Agile IT systems, mobile and web applications can foster good value to health-care institutions and government payers. The book considers the Healthways model.

The Go Lean roadmap maintains that efficiency in health services delivery is not automatic, but rather must be forged and bred from experience, expertise, attitudes, training, and the quality application of delivery arts and sciences. The book details a series of community ethos, strategies, tactics, implementations and advocacies to foster the proper controls for health-care efficiency in the Caribbean region:

Community   Ethos – Economic Choices Involve Costs Page 21
Community   Ethos – Whistleblower Protection Page 23
Community   Ethos – Intelligence Gathering Page 23
Community   Ethos – Lean Operations Page 24
Community   Ethos – Impacting   Research & Development Page 30
Community   Ethos – Pursue the Greater Good Page 37
Strategic   – Agents of Change – Aging Diaspora Page 57
Tactical –   Fostering a Technocracy Page 64
Tactical –   Repatriation to Grow to a $800 Billion GDP Page 70
Tactical –   Separation of Powers – Medicare Admin. Page 86
Tactical –   Separation of Powers – Licensing/Standards Page 86
Anecdote – “Lean” in Government – Improve Process Page 93
Implementation – Ways to Pay for Change Page 101
Implementation – Security Initiatives at Start-up Page 103
Implementation – Ways to Deliver Page 109
Implementation – Reasons to Repatriate Page 118
Advocacy – Ways to Grow the Economy Page 151
Advocacy – Ways to Improve Healthcare Page 156
Advocacy –   Ways to Impact Entitlements Page 158
Advocacy –   Better Manage the Social Contract Page 170
Advocacy –   Ways to Remediate and Mitigate Crime Page 178
Advocacy –   Ways to Improve Emergency Management Page 196
Advocacy –   Ways to Foster Technology Page 197
Appendix –   Disease Management – Healthways   Model Page 300
Appendix –   Controlling Inflation – Healthcare Realities Page 320
Appendix –   TraumaCenter Realities Page 336

Change has come to the Caribbean. Costs dynamics are unavoidable with this impending change.

Now is the time for all of the Caribbean, the people and governing institutions, to lean-in for the changes described in the book Go Lean … Caribbean. The benefits are too alluring, a better place to live, work, heal and play.

Download the free e-Book of Go Lean … Caribbean – now!

Source Reference:

a. US News & World Report. “The High Cost of Staying Well – the U.S. gets poor bang for its medical buck”. Retrieved May 31, 2014 from:

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