Each year, health-care professionals are faced with the myriad of auditors, inspectors and regulators.

Other than landfills, hospitals and health professionals rate as some of the most highly scrutinized organizations and businesses in the United States. Even as lead-based paint on children’s toys, uninspected airplanes and tainted peanut products were negatively touching the lives of American citizens, hospitals and physicians’ offices, durable medical equipment companies and home-health agencies were under the magnifying glass of federal, state and local government inspectors.

Some would say this was with good reason as we scrutinize the numbers behind the analysis.

Annual health-care costs continue to ascend toward a projected $2.4 trillion

(16.6 percent of the gross domestic product) and health coverage represents a major political issue this year.

Meanwhile, the potential of a $72 billion to $240 billion annual loss (3 percent to 10 percent of the total health-care outlay) to health-care fraud, abuse and mistakes remains a major issue for private citizens, corporations and government agencies.

The pendulum swings both ways in this scenario, however, as these issues occur on both sides of the provider and health-care user coin.

The Centers for Medicare and Medicaid began RAC audits utilizing Medicare Recovery Audit Contractors (RACs) to recoup $980 million from providers in demonstration projects in California, Florida and New York. To say that this system is fair, equitable and was well conceived would be an exaggeration because the auditors are paid a percentage of their findings.

That inherent conflict alone stresses the validity of this arrangement on many levels.

A few specialty health-care finance-based organizations concentrate in preparing hospitals for these inevitable visits by the RAC auditors. When these specialty companies do their work appropriately, there is no reason for the RAC auditors to recreate the destructive Capital One viking commercials as they move through the billing and medical records departments of each hospital.

In order to put this in perspective, the overall numbers at play relative to the $2.4 trillion health-care budget are significant. The money estimated to be consumed inappropriately reaches a staggering $236 to $787 loss per capita, or enough money to insure up to 30.5 million Americans, or 65 percent of today’s total uninsured population of 47 million.

The very essence of the problem is that no matter what the intent, any time federal dollars are involved, these investigating authorities appear to already have made a determination that the problem or mistake was a purposefully fraudulent act whereas, in fact, it is quite possible that it was an oversight, an honest mistake or an inappropriate key stroke.

To determine the validity of these situations in which fraud, abuse and overpayment are suggested, research can be completed through organizations such as HealthCare Insight (HCI), which specializes in identifying, preventing and investigating both provider and patient fraud in health-care claims.

Companies such as this typically provide private and public sector health-care claims payors (health plans, MCOs, insurance carriers, TPAs, Medicaid, Medicare, etc.) with a comprehensive suite of clinically validated fraud and abuse surveillance solutions designed to maximize claims administration accuracy and minimize payment waste.

Interestingly, with the bailout bills from both the Bush and the Obama administrations being activated on an ongoing basis, one must stop and ask how much each one of those nearly trillion dollar initiatives will cost to audit, investigate and qualify.

It’s obvious that the hands-off theories did not work, and now we will see the pendulum swing back as far as it will to attempt to overcorrect the sins of the past.



Nick Jacobs, international director for SunStone Consulting LLC, is known as an innovator and advocate for patient-centered care. With 22 years in health-care management, he is author of the book “Taking the Hell out of Healthcare” and the blog AskaHospitalPresident.com.