HEALTH CARE

Preventing Fraud, Waste, and Absue in Health care

Preventing Fraud, Waste, and Absue in Health care

Introduction

With government and public scrutiny of healthcare costs becoming more intense, the healthcare industry can learn from the defense industry's response to charges of fraud, waste, and abuse. Ethics-awareness programs, compliance programs, and related training can reduce the risks of such violations and their financial and public relations consequences. In the mid-1980s, an armed forces technician found an invoice for a hammer. Its cost was listed as $450(Bourjolly, Moak, 2004). Shocked by this egregious expense, he reported the invoice to his superiors, and the story leaked to the press. Resulting public outrage increased when subsequent disclosures revealed $600 toilet seats, $7,000 coffee pots, and other high-profile "procurement waste." One senator's staff received media attention by decorating a Christmas tree with scandalously priced repair parts.

Aggressive pursuit, enormous penalties

Comprehensive investigations soon targeted contract pricing, cost allowability, official "corruption," and trading in proprietary or inside information. At one point, government investigators even recruited whistle blowers in communities where Department of Defense contractor layoffs had occurred. (Cozort, 2001)

The government also sought to make each employee an overseer by encouraging qui tam lawsuits, a procedure in which the employee initiates legal action on behalf of the government and keeps a substantial share of the proceeds if the criminal case is successfully prosecuted.

Defense contractors were slow to realize the intensity with which formerly benign regulations were being enforced and prosecuted, and they were slow to react when that realization finally set in. The cost they paid for their lack of preparedness was enormous. At the conclusion of the era's most extensive investigation, Operation Ill Wind, the government had obtained criminal convictions of more than 65 firms and individuals, including an assistant secretary of the Navy, and expected to net more than $260 million in fines and penalties. One fine cost a defense firm a record $110 million. (Frieden, 2004)

While the cost of alleged - and sometimes real - fraud, waste, and abuse never amounted to more than a very small part of the defense budget, the integrity of the defense industry was severely undermined in the public eye. Whether an organization committed violations or not, public scrutiny could call its corporate reputation into question, distract its management, and create legal defense expenses. The industry as a whole continues to live with the legal and regulatory legacies of its inability to anticipate or respond rapidly to the demands of intense public scrutiny. (Krause, 2004)

The healthcare industry under scrutiny

The healthcare reform debate in the 103rd Congress helped focus the public microscope on healthcare costs. In lieu of Federal healthcare reform legislation, this public policy debate will continue on both the state and Federal levels, fueled in part by Medicare and Medicaid's sizable contributions to the Federal budget deficit. As this debate continues, the healthcare industry must expect intensified efforts to eliminate fraud, waste, and abuse from the system. (Frieden, 2004)

The pressing nature of these efforts has been emphasized by public statements such as ...