The U.S. health care system ranks as one of the most costly systems to operate in terms of per capita health care spending. A significant portion of these costs can be attributed to the high incidence of chronic illness among Americans, yet a significant portion of health care spending will never reach health care consumers due to fraud.
Public funding systems, such as Medicare and Medicaid, represent a major target of health care fraud due to overall scale of money spent on health care. State Medicaid systems spend a total of $415 billion a year, according to the Department of Health and Human Services. For Medicare, the total is nearly $600 billion. However, tracking the proportion attributed to fraudulent billing is an imprecise art, partially because sophisticated models that estimate fraudulent billing are relatively new in health care. The Centers for Medicare & Medicaid Services estimated that in 2010 these two programs made more than $65 billion in “improper federal payments,” defined as payments that should not have been made or were made in an incorrect amount. When state Medicaid programs are added, the total becomes about $10 billion annually, according to the CMS. [1]
In addition to the direct cost of health care fraud, there is also an economic burden of investigation and prevention. In a recent interview with the Economist Donald Berwick, former CMS administrator, and Andrew Hackbarth, RAND Corporation assistant policy analyst, say that the economic burden of health care fraud prevention and investigation is as high as $98 billion, or roughly 10 percent of annual Medicare and Medicaid spending—and up to $272 billion across the entire health system. [2]
In 2011, CMS, the Justice Department, and HHS’s Office of Inspector General made a significant impact on healthcare fraud. Criminal charges were filed against 1,430 defendants, and there were 743 criminal convictions. The effort resulted in 977 new investigations of civil health care fraud and the recovery of $4.1 billion — the highest annual amount recovered in a single year, though still woefully short of the estimated annual loss. CMS officials said that during the same period, the agency revoked the Medicare billing privileges of 4,850 providers and suppliers and deactivated an additional 56,733 billing numbers. [3]
In the home health care sector, the economic burden of fraud has been just as burdensome. Some estimates place the level of unlawful payments, including billing errors, at 10 to 25 percent of total spending, or in excess of $7 billion per year.
The advent of more sophisticated mobile technologies offers significant promise in defraying some of the economic burden associated with fraudulent billing. In the home health care sector, the use of technology can play an even more significant role given the mobility of home health care providers and the need for accurate documentation of services-mobile technology can offer an effective platform for billing and documentation. For example, Electronic Visit Verification systems (EVV) offer mobile technology based real-time monitoring of home health care service delivery. This technology can utilize the GPS function on mobile devices to track the location of services, provide a platform to document services, and generate records of care that can be shared and are interoperable. The fraud protection value rests in the fact that provider agencies can verify homecare workers electronically check in when they arrive at a client’s home and check out when they exit. If discrepancies arise in the records, the problem can be addressed proactively. EVV data can also be used to create claims and to provide oversight measures and reports.
The promise of this technology rests not only in its ability to effect cost savings, through the reduction of fraudulent or erroneous billing, it also holds the potential to provide more responsive recordkeeping that allows the service provider to enter accurate treatment records through a user-friendly platform that can be transmitted and stored instantly. Further, this technology will allow for the reduction of costly post hoc fraud investigations, by addressing potential problems in real time or virtually close to real time. The overall gain will likely result in the reduction of waste and fraud and, potentially, cost reductions for consumers in the future.
[1] https://www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id=72
[3] https://www.hhs.gov/news/press/2012pres/02/20120214a.html