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Corporate Health Insurance Fraud

January 5th, 2010, 04:01 am admin Leave a comment Go to comments

While the House is almost certain to capitulate to the Senate in the non-conference conference by abandoning the public option, there are some damned good reasons for Pelosi to put up a fight for it.

In a report documenting these alleged abuse . . . researchers from George Washington University claim that the “most serious health care fraud is not the result of small schemes, but instead flows from large-scale misconduct by major industry actors.” Earlier this month, for instance, the American Medical Association was awarded a “50 million settlement in a class-action lawsuit against UnitedHealth Group, having accused the company of using a database that was intentionally rigged to allow insurers to shortchange out-of-network reimbursements to doctors—which would also force patients to pay more in out-of-pocket expenses. The AMA lawsuit was closely linked to New York Attorney General Andrew Cuomo’s yearlong investigation into UnitedHealth, which paid out $50 million in January to settle allegations that it manipulated its Ingenix database….

But while public programs like Medicare and Medicaid are subject to strict reporting requirements—making it easier to detect abuses—private companies aren’t subject to the same oversight. And though the current reform bill imposes new regulations on private insurers, as well as anti-fraud prevention and enforcement measures across the system, private industry still won’t be required to disclose the same data designed to keep public programs honest. (The public insurance option in the House bill is subject to the same anti-fraud and abuse protections as Medicare, but the legislation doesn’t apply these requirements to the private plans inside or outside of the exchange.)

According to GWU Professor Sara Rosenbaum, one of the co-authors of the report, the government would ideally adopt a “uniform approach” toward measuring and combating fraud, imposing the same disclosure requirements on both public and private entities. “It’s the same health-benefits companies that are selling to different markets…whether it’s an employer-sponsored or government-sponsored,” Rosenbaum told TNR. In the absence of such uniform requirements, it’s easy for fraud and abuses within programs like Medicare to capture the most attention, as there’s a disproportionate amount of data that public programs must make available.

So while some industry defenders claim that private companies don’t experience “anywhere near the volume of fraud or waste” as Medicare, such abuses may not be unique to the public sector. Under the current reform bill, corporate actors also stand to expand their reach in an increasingly complex system as millions more people are covered. And their recent track record suggests that greater oversight may be in order.

That oversight would be made significantly easier if the conferees also adopted the House’s national exchange rather than the complicated, bifurcated Senate state-based exchanges, and if they came up with a more effective regulartory scheme than relying upon state insurance commissioners. Mississippi or Idaho isn’t going to have the same resources, or perhaps the political will, to fight UnitedHealth Group as New York has.

The insurance industry and its Congressional lackeys would never agree to having the same disclosure requirements that are imposed on public programs. It’s why they worked so hard to kill the public option–that would have been the most effective check, in the form of competition, on these practices. Cleaning up industry abuses is going to be a long-term project, yet another reason why the likely product of the “conference” won’t actually be reform, just the start of it.


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