One Third of Health Care Dollars Are Wasted, Study Says

by Admin on October 26, 2009 · 1 comment

in News, Patients, Payers, Providers

We knew it all along. One third of the dollars spent on health care are wasted, and 22% of that waste is outright Medicare fraud. I don’t know if you saw 60 Minutes last night, but there was an incredible segment on Medicare fraud that said it’s now bigger than drug cartels in Miami, because it’s so much easier. No one shoots you; you just have to rent an office, put a sign up, buy some lists of Medicare patients, and start producing invoices.

Medicare is legally bound to pay within 30 days (they reimbursed me for my mammorgram before I even had the results), so these businesses only need to stay in business about 60 days to cheat Medicare out of $20 million. They order prostethic limbs for patients (sometimes they order two arms and a leg on the same invoice) and charge it to a patient who receives an Explanation of Benefits he doesn’t understand. By the time he tells Medicare and they get an inspector out, the office has closed down, the people are gone, and Medicare’s the loser.

I was stunned watching that last night. And then I read this study today. Reported by veteran health and science reporter Maggie Fox, is says that a full one third of our health care expenditures are wasted, and details where and how.

Unsurprisingly, 6% of the waste is due to paper records and the failure of communications that results from health care’s lack of automation. And protection from malpractice, which means overuse of antibiotics and useless testing is another 37% of the waste.

But the most important realization is that these add up to BILLIONS of dollars a year, just as Obama said. We can pay for health care reform by reforming our spending habits.

Here are some more highlights, but go read the entire piece.
Fraud makes up 22 percent of healthcare waste, or up to $200 billion a year in fraudulent Medicare claims, kickbacks for referrals for unnecessary services and other scams.

* Administrative inefficiency and redundant paperwork account for 18 percent of healthcare waste.

* Medical mistakes account for $50 billion to $100 billion in unnecessary spending each year, or 11 percent of the total.

* Preventable conditions such as uncontrolled diabetes cost $30 billion to $50 billion a year.

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