Facts on the Cost of Health Insurance and Health Care Part 1

August 26th, 2009 by admin

By several measures, health care spending continues to rise at a rapid rate and forcing businesses and families to cut back on operations and household expenses respectively.

In 2008, total national health expenditures were expected to rise 6.9 percent — two times the rate of inflation.1 Total spending was $2.4 TRILLION in 2007, or $7900 per person1. Total health care spending represented 17 percent of the gross domestic product (GDP).

U.S. health care spending is expected to increase at similar levels for the next decade reaching $4.3 TRILLION in 2017, or 20 percent of GDP.1

In 2008, employer health insurance premiums increased by 5.0 percent – two times the rate of inflation. The annual premium for an employer health plan covering a family of four averaged nearly $12,700. The annual premium for single coverage averaged over $4,700.2

Experts agree that our health care system is riddled with inefficiencies, excessive administrative expenses, inflated prices, poor management, and inappropriate care, waste and fraud. These problems significantly increase the cost of medical care and health insurance for employers and workers and affect the security of families.

National Health Care Spending

  • In 2008, health care spending in the United States reached $2.4 trillion, and was projected to reach $3.1 trillion in 2012.1 Health care spending is projected to reach $4.3 trillion by 2016.1
  • Health care spending is 4.3 times the amount spent on national defense.3
  • In 2008, the United States will spend 17 percent of its gross domestic product (GDP) on health care. It is projected that the percentage will reach 20 percent by 2017.1
  • Although nearly 46 million Americans are uninsured, the United States spends more on health care than other industrialized nations, and those countries provide health insurance to all their citizens.3
  • Health care spending accounted for 10.9 percent of the GDP in Switzerland, 10.7 percent in Germany, 9.7 percent in Canada and 9.5 percent in France, according to the Organization for Economic Cooperation and Development.4

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Fraud and Abuse in Healthcare

May 14th, 2009 by admin

Kathleen Sebelius, the new head of HHS, recently bragged that at HHS “We estimate that for every $1 we spend to stop fraud in the system, we save $1.55.” The False Claims Act cases return $15 for ever $1 invested in investigations and prosecutions.

For every dollar spent to investigate fraud, recover funds obtained through illegal billings or improper billings, and prosecute these civil cases, fifteen dollars are received in return for every $1.00 spent.

As a result of the higher stakes for the health care industry, many companies have

become more vigilant about their internal operations in an effort to comply

with the law, by creating their own internal compliance department. Hopefully, medical companies are less likely to threaten or intimidate employees who detect apparent fraudulent billing practices now that they are aware that such employees could become whistleblowers.

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New Bill That Passed the Senate on Fraud

May 1st, 2009 by admin

U.S. Fraud Recovery Bill Addresses Healthcare 

The Senate on Tuesday approved the Fraud Enforcement and Recovery Act of 2009, which would give additional resources to law enforcement for fighting fraud and abuse, and strengthens fraud laws and statutes.

The bill’s primary intent is to prevent the growing number of mortgage fraud cases. It also broadens the scope of claims that fall under the False Claims Act. Specifically, the bill would extend the reach of the False Claims Act to include any false or fraudulent claim for government money or property, regardless of whether:

  • Was the claim is presented to a government official or employee?
  • Does the U.S. government has physical custody of the money?
  • Did the defendant specifically intended to defraud the U.S. government?

If the bill does becomes law, it will be easier for the government and whistleblowers to succeed in false claims act cases.

The bill redefines terms in the False Claims Act to more accurately reflect the intent of the law. In particular, the term “knowingly” has been redefined which no longer requires prosecutors to prove specific intent to defraud the government.

The new language specifically states intent is not a requirement of the False Claims Act and the prosecution only needs to show the violator did one of the following, in regards to information:

  • Had actual knowledge of the information
  • Acted in deliberate ignorance of the truth or falsity of the information
  • Acted in reckless disregard of the truth or falsity of the information.

Now the government would not be burdened with the difficult task of proving intent of fraud or abuse.  How can an medical facility show that it acted without “deliberate ignorance” or “reckless disregard” will depend on their complance plan and how they are carried out. Are the medical facilities following the minimal recommendations listed in the compliance plan suggestions listed on the OIG website?

The government has said they are looking more closely at whether an organization has a strong compliance program, and based on the severity of the violation what is the medical facility doing to correct the problem so that it does not happen again. The government can offer some leniency to a medical facility that can prove it properly educated employees on claim submissions.  


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Reviewing your auditing and monitoring functions

March 20th, 2009 by admin

The OIG recommends considering the following questions when reviewing the effectiveness of hospital and physician  auditing and monitoring. Is your facility performing the following functions?
Is the audit plan reevaluated semi-annual or annually?
Does it address the appropriate areas of concern, such as the findings from the previous years’ audits, risk areas identified as part of the annual risk assessment, and high-volume service?
Does the audit plan include an assessment of billing systems and billing personnel in addition to claims accuracy?
Are coding and audit personnel independent and qualified with the certifications?
Is the auditor or audit department available to conduct unscheduled reviews?
Is the compliance department able to request additional audits or monitoring?
If the error rates are not decreasing, have further investigations into other aspects of the medical facility compliance program to determine hidden weaknesses and deficiencies?
Does the audit include a review of all billing documentation, including clinical documentation, in support of the claim?

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