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January 28, 2021

States Must Focus on Healthcare Fraud

Summary:

Not pursuing fraud detection means losing insights that can help detect other problems and may increase the risk of negative health outcomes.

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Fraud in social benefit programs causes much more than economic damage. It can lead to patient deaths and harm from poor-quality healthcare. Fraud also facilitates and masks deeper issues such as substance abuse disorders (SUD), domestic violence and elder abuse. States should invest more resources in detecting and investigating social benefits fraud to limit these negative effects.

Not surprisingly, a state’s or agency’s commitment to fighting fraud can vary. Some have a zero tolerance for fraud, while others see fighting fraud as simply bashing the poor. I argue that not pursuing fraud detection means losing insights that can help detect other problems and may increase the risk of negative outcomes. Here is why:

One of the most tragic repercussions of Medicaid fraud is the poor quality of care and lack of concern for patient safety that can come as an unintended byproduct. In Ohio, three nurses billed for services they did not provide for months, resulting in the death of a 14-year-old girl with cerebral palsy. At the time of her death, Mikayla Norman was covered in bedsores and weighed only 28 pounds. Care coordinators often do not see patients; they rely on the medical records and billed services to track care delivery and assess further service authorizations. They believe services are being provided because services were billed, even if billed fraudulently. The system failed Mikayla Norman, and the Medicaid fraud helped mask what was happening.

Another example comes from Dr. Farid Fata, a Michigan oncologist, who was found guilty of $34 million of healthcare fraud. He billed Medicare and other payers for services not rendered and diagnosed healthy patients with cancer. His medically unnecessary treatments caused severe harm to his patients, including death.

Examining information and data around family behaviors can provide insights to help discover families in crisis. As a case manager, after looking at a report card, I once asked a recipient why her kindergartner was absent or tardy dozens of times. The conversation started with “I have trouble getting up in the morning” and finished with “I need some help. Can you get me into a treatment facility?” This person completed treatment, earned an education, entered a training plan and got a job. That one odd data point changed the trajectory of this person’s life and the family, but only because the data was examined.

During my government service working in social benefits fraud, we noticed law enforcement officers talking about drug dealers found with Supplemental Nutritional Assistance Program (SNAP) electronic benefit transaction (EBT) cards. Maine is one of several states working to address this issue, but trafficking and abuse occur in every state. State investigators monitoring SNAP retailers also reported shop owners trafficking SNAP EBT benefits for alcohol, drugs and even guns. By not examining SNAP EBT fraud closely, states may be turning a blind eye to these other behaviors.

See also: COVID-19 Risk and Buyers’ Psychology

SNAP retailers who traffic EBT benefits prey on recipients. If a recipient sells his or her monthly benefit once, it is often for an urgent need. Did the state or county office tell SNAP recipients there are programs to help with emergency needs like a car battery or rent assistance? Does the program operate quickly enough to actually meet emergency needs? For recipients who consistently traffic SNAP EBT benefits, is intervention and treatment needed? Are there children in this home who are now at further risk of going hungry or being neglected?

Government coffers are just the first “victims” of healthcare and benefits fraud. Maybe fraudsters don’t consider the patients and citizens who are collateral damage in their schemes. Maybe they don’t care. But states must.

Governments need to make fraud detection a greater priority. States must identify and remove more SNAP retailers who traffic benefits and take advantage of recipients. Government fraud fighters must punish more providers that put patients at risk — not just to end their financial schemes but to improve population health and patient outcomes.

Combatting fraud is usually talked about as a way to reduce costs. And it is! Billions of dollars of spending are avoided or recovered every year through government fraud fighters. But, too often, fraud leads to some people paying the greatest price of all.

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About the Author

John Maynard is an expert in fraud and risk, specializing in healthcare and government. Serving in government for nearly 25 years, he has a broad background in federal, state and local programs.

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