Question

Opinion on reducing health waste

Answer 1

Waste, fraud, and abuse increase the cost of health care and may harm patients, either by giving them unneeded care or by withholding needed care. Enhancing already extensive enforcement activities and strengthening conflict-of-interest rules could reduce inappropriate spending while yielding net savings. Reducing waste, fraud, and abuse would save money for Medicare, Medicaid and private payers, improve the efficiency of the health care system, and savings could contribute to funding for health reform. How extensive are waste, fraud, and abuse? What can be done about them? This Fact Sheet describes the problems and highlights some solutions. 

Waste, fraud, and abuse appear in all segments of the health care system and in all areas of the country. Fraudulent and abusive practices include overcharging or double-billing health insurance companies or the government for services provided, charging for services not provided, and rendering inappropriate or unnecessary care.

Our current health care system makes detection and pursuit of wrongdoers extremely difficult. Experts have identified structural features of the U.S. health care system that make it particularly vulnerable to fraud and difficult for enforcement activities to control it. Some of these features include the fee-for-service payment system, the fragmented nature of the private health care insurance and delivery system, and the highly automated claims processing system. The fact that there are more than 1,000 payers and billions of annual claims paid to hundreds of thousands of providers illustrates the immensity of the task.

In the past, inadequate funding has also frustrated government efforts to detect and prosecute fraud. Federal health care enforcement efforts are funded by recovery of funds from inappropriate Medicare and Medicaid reimbursement, together with related fines and penalties.

Private-sector payers have met with less success in combating fraud and abuse because they lack the legal and administrative tools available to the federal government.



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