While Obamacare may have taken a fatal blow by the repeal of the individual mandate included in the tax bill signed into law on Friday, it is only the beginning of the triage needed to get healthcare on the road to recovery. Many factors are causing the exorbitant rising costs associated with the demise of healthcare in America today.
Fraudulent claims filed with Medicare and Medicaid alone have cost billions of dollars over the past decade. Fines assessed to medical facilities and physicians for remuneration under the Anti-Kickback Law continue to rack up extremely high price tags each year. Even theft by employees due to redundancy and inefficiency of operations resulting in the loss of medical devices and drugs cost billions of dollars each year. The truth is that it is patients and taxpayers who get stuck holding the payment obligation.
On December 18, The Justice Department announced charges in an indictment of three owners of independent diagnostic testing facilities in Brooklyn, New York, for their roles in an allegedly fraudulent scheme that involved submitting over $44 million in claims to Medicare and private insurers. The case was investigated by the FBI, IRS and Health and Human Services under the Medicare Fraud Strike Force, which now operates in nine cities across the country, and has charged nearly 3,500 defendants who have collectively billed the Medicare program for more than $12.5 billion since its inception in 2007.
The Justice Department also announced settlements with two physician groups, EmCare Inc. and Physician’s Alliance Ltd (PAL), for allegedly receiving illegal remuneration in exchange for patient referrals to hospitals owned by Health Management Associates (HMA). According to the DOJ press release:
“Dallas-based EmCare provides physicians to hospitals to staff their Emergency Departments (EDs). Under the settlement with EmCare, the physician group will pay $29.6 million to resolve allegations that, from 2008 through 2012, EmCare received remuneration from HMA to recommend patients be admitted to HMA hospitals on an inpatient basis when the patients should have been treated on an outpatient basis.
In fact, Medicare pays over three times as much as it does for admitting patients as they do for outpatient care…And this leads to some major bonus payments.
Under the qui tam, or whistleblower, provisions of the False Claims Act, private individuals may, if the Justice Department sues on behalf of the government for false claims, they share in any recovery and if they do not, the whistleblower may take over the suit and recover even more than the Fed. This is exemplified by the EmCare matter which resolved a qui tam lawsuit filed by Drs. Thomas Mason and Stephen Folstad, whose medical practice, whom MEMA, had previously supplied ED physicians to two HMA hospitals in North Carolina. Drs. Mason and Folstad will receive $6,222,907.”
Hospitals are facilities for ensuring the health and well-being of their patients and staff, but these organizations can also be major targets for the expensive medical equipment and drugs they hold. For years, bandits focused on hospitals that rarely have adequate or sophisticated security measures in place to prevent stealing. The two most prevalent forms of hospital theft that managers and operation folk miss are medical equipment such as orthopedic implants, IV pumps and cardiac drug-eluting stents. These devices were often state-of-the-art equipment used for minimally invasive surgery and the suture materials used throughout hospitals.
Medical equipment is often very expensive, making it an easy payday for thieves. It is not uncommon that the thefts are coordinated by organized gangs, with some staff members acting as internal coordinators. In many circumstances, hospital managers do not have a clear picture of how equipment is stolen, nor how to prevent it from happening. Some hospitals are tagging devices with microchips that will send off alarms when the equipment leaves the designated area. Nonetheless, go on the internet and see what’s available as the direct result of the incredible pilferage.
Medications are one of the most commonly stolen items within a hospital, and many times, employees are the culprits. Some staff take drugs for their personal use and replace it with a saline solution, preventing patients from getting the care they need. Other employees might use co-worker’s names to bypass security measures or order more of certain types of drugs. According to an article in the Pharmacy Times, drug diversion is the transfer of a prescription drug from a lawful to an unlawful channel of distribution or use. It is a significant problem that has a direct impact on drug spending. The estimated cost of controlled prescription drug diversion and abuse to both public and private medical insurers is approximately $72.5 billion a year.
Fraud is rampant in healthcare, and the items cited in this article are only examples and the tip of the iceberg when assessing the entire carelessness and outright reckless landscape ramped in the healthcare industry. We have not even touched on the theft of data and personal information which healthcare organizations spend billions of dollars annually to protect. Hopefully, the next time we hear about how cavalier the delivery of healthcare is in America; we will have an increased and more in-depth perspective—but don’t be surprised because this truly is a black hole.
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