A passive approach to healthcare fraud? That's nothing new

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It was the word everyone latched onto last week: Passive. As in, "lacking energy or will" or "not participating readily or actively."

That was the word the Government Accountability Office (GAO) chose to describe the Obama administration's approach to fraud detection and prevention within the federal Affordable Care Act marketplace.

In its report, the GAO effectively chewed out the Centers for Medicare & Medicaid Services (CMS), noting that in 2014, 431,000 marketplace applicants with $1.7 billion in federal subsidies at stake still had "unresolved inconsistencies" a year later. Furthermore, the government's "data hub," which allows CMS to verify information with other relevant government entities, such as the Internal Revenue Service, the Social Security Administration, and the Department of Homeland Security, appears largely ineffective.

Here's the problem: CMS tracks responses to enrollment queries, but does not parse out what information was generated or whether that information matches that provided by the applicant. In other words, the mere response to a request is good enough, regardless of the answer.

"Overall, although the data hub plays a key role in the eligibility and enrollment process, CMS officials said the agency does not track the extent to which the federal agencies deliver responsive information to a request, or, alternatively, whether they report that information was not available," the report stated. "From the standpoint of data hub operations, either outcome is valid, CMS officials told us, and the agency does not focus on the distinction."

Of course, that "distinction" is the whole point of verifying applicant information. Instead, CMS employs a process akin to ordering a hamburger at the drive-thru, and then shrugging it off when you're handed a stale chicken sandwich. It doesn't matter what you got, just that you got something, right?

The GAO characterized this process as "passive," which is probably the kindest word it could have selected. And while many quickly latched on to this characterization as an opportunity to discredit the president's landmark healthcare legislation, this submissive approach to fraud prevention seems to reflect a widespread systemic issue among government-run programs. The ACA marketplace just represents another notch in the belt.

Take Medicare Part D for example, a program that is barely a decade old. Since 2009, the Office of Inspector General has recommended that Medicare Drug Integrity Contractors (MEDIC) report fraud and abuse activity to CMS, including inquiries and corrective actions related to fraud. Previous reports have shown that less than half of MEDICs voluntarily report this information. Making this reporting mandatory is just one solution to the many problems that have plagued Part D over the years, which has made it an enticing target for fraudsters. And yet, requring bare bones fraud reporting remains elusive.

Removing Social Security numbers from Medicare ID cards--recommended by various experts since 1973--is another shockingly simple way to prevent fraud. On four different occasions, the GAO has called for CMS to remove Social Security numbers from Medicare cards, including a recent Senate hearing in which a GAO senior official testified that merely removing the identifying numbers could help alleviate nearly $75 billion in improper payments made by Medicare and Medicaid. CMS is just now getting around to that, but it's going to take three more years.

You can go all the way back to the inception of Medicare and Medicaid in 1965--before the ACA was even a twinkle in the president's eye--and find a passive approach to fraud. A decade after the programs were in place, investigators found as much as $70 million in overpayments to New York City nursing homes. For the first 12 years of the Lyndon B. Johnson's landmark program--until Congress passed the first fraud and abuse amendments in 1977--fraud prevention amounted to a meager plea not to do it. Talk about passive.

Since then, healthcare fraud experts and investigators have routinely described fraud detection efforts as a never-ending game of "Whac-A-Mole." One scheme pops up, and the government knocks it down, readying its hammer for the next one. Although predictive analytics has emerged as a potential way to actively prevent fraudulent payments, some have said Big Data still isn't putting a dent in fraudulent payments. Active fraud prevention is still in its infancy.

The GAO's characterization of CMS' approach to fraud on the federal exchange appears entirely accurate, but it's certainly not the first program to take a passive approach. Historically, even the simplest forms of fraud prevention and detection are viewed as a secondary concern, often pushed to the backburner, unnoticed and untouched.

Until it begins boiling over. Then we all start pointing and yelling. - Evan (@HealthPayer)