Solving Medicare Fraud
By Haroon Alvi, CEO Southlake Medical Supplies, Inc.
Health care reform, aka health insurance reform, is a broad and complex issue with many “moving parts” in need of repair. With this in mind, I would like to look at one area of health care that has received some attention in the press — Medicare fraud.
It’s been estimated that 10% of Medicare’s spend is waste due to fraud. In 2009, the Congressional Budget Office (CBO) reported that Medicare was paying $504 billion annually in health care benefits (see pie chart below). This would imply that there is $50 billion in Medicare fraud.
Note: Does not include administrative expenses such as spending to administer the Medicare drug benefit and the Medicare Advantage Program. SOURCE: CBO Medicare Baseline, March 2009
The problem with detecting or even measuring Medicare fraud is that the existing tools are limited in their scope and capabilities. They typically look for patterns in billing, and to be effective, the patterns tend to be specific to a narrow segment of the pie above. Yet, Medicare fraud is a broad problem that spans many types of providers who bill for a vast variety of services and goods. The pie chart above highlights the major types of providers as well as the four Medicare programs (Part A, B, C and D).
The process is further complicated by Medicare’s complex fee schedules and billing requirements that are unique to each type of provider such as a hospital, a pharmacy, a physician, a home health agency or a durable medical equipment supplier. And fraud is not just committed by providers, but is also committed by beneficiaries.
And finally, throw in a critical requirement to minimize “false positives” to avoid damaging Medicare’s credibility and its relationship to the community of providers and population of beneficiaries. Given the vast complexity of this issue, it’s clear that solving Medicare fraud will require a systematic approach that utilizes multiple tools versus a “one size fits all” or a brute force attack of the problem.
Identity resolution is a tool that is relatively new to the Medicare fraud space. Identity resolution adds another dimension to current pattern matching tools, and should improve our ability to find Medicare fraud.
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