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License to Steal: Why Fraud Plagues America's Health Care System

NCJ Number
Malcolm K. Sparrow
Date Published
256 pages
This volume examines the components and layers of existing systems for detecting and controlling criminal fraud in the health care industry, questions the adequacy of these efforts, and offers recommendations for making fraud controls more effective.
The introduction notes that the conventional estimate that 10 percent of the country's trillion-dollar health care budget is lost to fraud may be too high or too low. It also notes that health care fraud is committed by individuals, networks of individuals, and major corporations. Individual chapters analyze the general nature of the fraud-control effort, five properties of the health care industry that exacerbate the problem of fraud control, the lack of systematic measurement of the scope or nature of the fraud problem, and the practices of a small private health insurer with claims practices that represent the antithesis of modern claims processing. Additional chapters discuss the implications of electronic claims processing for fraud and for fraud control, popular misconceptions about computer fraud, and the belief that electronic data interchange can be made safe through the extensive use of automated, up-front controls. Further chapters consider the advent of managed care and its implications for fraud and fraud control and the reasons that managed care will not provide a structural solution to the fraud problem. Another chapter examines the difficulties that law enforcement will experience in dealing with managed care fraud and suggests that the criminal justice system will become less and less relevant to fraud control. A further chapter presents a model fraud-control strategy, with emphasis on the seven crucial features of such a system. The final chapter focuses on the fraud detection tools currently used within the industry and specifies the most important areas for developing new analytic and technological capabilities. Index and chapter reference notes