Why the Trump administration can't 'drain the healthcare swamp" by only focusing on healthcare fraudsters

New leadership in Washington offers yet another opportunity to address one of the country's most pressing problems--the upward spiral of healthcare costs.

The Affordable Care Act (ACA) did not achieve hoped for results in solving these problems and is now certain to be at least partially repealed and replaced. One key to containing healthcare costs is controlling fraud, waste and abuse. Although often heralded by politicians as the answer to the growing cost of healthcare, few of the current ACA replacement plans prioritize fraud, waste and abuse and far too often efforts are blocked by self-serving special interests. As the Trump Administration and 115th Congress seek to reform healthcare they should include in their plans a comprehensive solution to address the billions of dollars in improper payments wasted annually that plague our system.

In my medical career, I have experienced multiple views of the healthcare financing system--as a private practice physician, hospital department chair, physician leader at a managed care organization and a physician executive for a payment integrity company. These experiences have led me to conclude that waste and abuse is pervasive in the healthcare system as a result of the complexity of healthcare financing. A common view of physicians, hospitals and other providers is that a small minority of fraudulent providers are responsible for the vast waste in the system. This is simply incorrect as a multitude of data and studies show that a significant portion of improper payments result from payment errors due to incorrect understandings, interpretations and applications of payment rules by large numbers of providers. In an article titled Eliminating Waste in the US Healthcare System published in the Journal of the American Medical Association in March 2012, fraud was estimated to be responsible for just 20% of the waste in healthcare spending in the U.S.

Commitments to combatting intentional and outright fraud can easily gain consensus as everyone agrees that deliberate fraud perpetrated by bad actors in the system should be aggressively targeted. However, the larger problem of improper payments due to errors such as overbilling, up-coding or providing services that are not medically necessary, is difficult to combat because these activities touch many legitimate healthcare providers in the country.

A comprehensive solution to wasteful spending in healthcare should include elements of improved industry consensus that balances oversight with care, provides education to all stakeholders, leverages data driven audit programs and reimburses for value, not volume.

A greater industry consensus around application of payment rules between payers and providers is important. An example is agreeing on an industry standard for the proper payment for short hospital stays, which caused so much controversy in the CMS Recovery Audit program. Continuing education of providers on proper billing and coding is a key component of any overpayment solution, but education alone will not be enough as providers are unlikely to change behaviors without financial incentives. Prevention and recoveries of overpayments through monitoring and audit programs should be acknowledged as an important part of the system and really be an industry standard. Due to the pervasive nature of healthcare overpayments all providers should undergo some level of oversight. Artificial audit limits should not be applied to only providers with a history of pervasive overtreatment or overbilling. Data driven audits that focus on providers and claims types most likely to yield improper payments will limit the impacts of these programs on providers who consistently apply payment rules correctly; and moving this audit process as early in the claims lifecycle (i.e. before a claim is paid) will further minimize disruptions. Legitimate provider appeals rights must be preserved, but the appeals system must discourage spurious appeals designed to tie up the system and create gridlock. And payers and entities with oversight requirements should remove administrative barriers to execution of successful audits, those audits with high improper payment findings and low appeal rates. Instead those audits should be routinely leveraged. Ultimately, a gradual move to value based reimbursement and shared risk models that align payer and provider incentives are part of the long term answer, but difficult to develop.

A comprehensive program to eliminate fraud, waste and abuse will undoubtedly have components that are unpopular with physicians, hospitals and other providers, and will be decried as interfering with the physician-patient relationships. However, when inappropriate treatments and payments are masked behind arguments of physician-patient relationships, healthcare choice and quality of care, it does a disservice to physicians and other healthcare providers who follow the payment rules. In government healthcare programs, it's also a disservice to taxpayers. Every dollar taken out of the system as an improper payment is one less dollar that can be used to provide access to affordable, high quality care. As a physician, taxpayer and insurance premium payer I expect those who are stewards of our healthcare dollars to develop a complete plan to assure that expenditures are appropriate for the services provided. I believe this is the only way we can preserve what is great about the American healthcare system and work to make it even better.

Dr. Gary is Call Chief Medical Officer at HMS, which provides cost containment solutions to government and private healthcare payers, including more than 47 state Medicaid programs and 250 Medicaid managed care programs.

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