Private System Overseeing Medicare Flawed, San Francisco Chronicle Reports
The San Francisco Chronicle on Jan. 12 examined Medicare fraud cases. Malcolm Sparrow, a Harvard University Kennedy School of Government health care fraud expert, said that Medicare fraud costs between $50 billion and $75 billion each year. The General Accounting Office attributes the problem in part to "fundamental" conflicts of interest in Medicare. For example, physicians and hospitals who participate in Medicare often select the insurance companies that serve as the "watchdogs" for the program and process claims. Many of the insurance companies also administer HMOs, which provide business for the hospitals and physicians that the companies may regulate. Former HHS Inspector General Richard Kusserow, who served from 1982 to 1991, said, "Government contractors policing themselves is not a very healthy situation to have." In addition, the lack of "uniform standards" to review Medicare claims has led to problems. Medicare regulation is divided into 10 regional offices that often "treat private insurers inconsistently," the Chronicle reports. The GAO said that agents at each office determine "what to review, when to review it and how to punish substandard insurers," the Chronicle reports. Private insurance companies said the large number of Medicare claims that they process would make "detailed investigations for fraud prohibitively expensive and time-consuming." Dr. Charlotte Yeh, a medical director for National Heritage Insurance Company, said that the company processes more than 60 million Medicare claims per year in California. Sparrow said, "We are trusting insurance companies to do oversight of the medical profession, and they are riddled with corruption themselves. It is utterly ridiculous" (Holding, San Francisco Chronicle, 1/12).
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