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March 8, 2000

Fairness in Fraud and Abuse Enforcement—Reply

Author Affiliations

Phil B.FontanarosaMD, Deputy EditorIndividualAuthorStephen J.LurieMD, PhD, Fishbein FellowIndividualAuthor

JAMA. 2000;283(10):1289-1290. doi:10.1001/jama.283.10.1287

In Reply: I agree with Mr Jost that Medicare uses fraud and abuse enforcement to achieve what private insurers accomplish through active cost management. Each approach has advantages and disadvantages. Jost applauds the government's antifraud efforts, while I worry that the political seductiveness of blaming fraud for Medicare's failings distracts us from more fundamental reforms. I am also not as confident about HCFA's success. Historically, Medicare costs seesaw with those of employer-based coverage, with cross-subsidies usually running from private sector to public sector but sometimes reversing (as when Medicare was overpaying health maintenance organizations who enrolled healthier-than-average beneficiaries). One can attribute the bulk of Medicare's current comparative advantage neither to the Balanced Budget Act's1 overcorrection of previously generous reimbursement nor to aggressive fraud enforcement but to the fortuitous and lamentable fact that Medicare does not cover outpatient prescription drugs, which have overtaken hospitalization as the largest item of expense for many private insurers.

Jost also overstates my criticisms. With respect to fraud and managed care, I agree that fee-for-service reimbursement continues to dominate Medicare, and that Congress and HCFA have made serious attempts to accommodate the different concerns that arise in prepaid arrangements. As happened with antitrust enforcement, however, it will take time for prosecutors to learn the nuances of new forms of health care financing and delivery. Moreover, an unaddressed problem is that, for the foreseeable future, we will live with a mixed system in which physicians treat patients under both sets of incentives and therefore receive conflicting signals. With respect to oversight of institutional providers, my point is that the ways in which the Office of Inspector General and Department of Justice deal with large corporations and with individual physicians are different, but those differences need to be made explicit.

I am sympathetic to Dr Hieb's predicament, which highlights the administrative burdens borne by individual practitioners and captures the angst of physicians facing accountability without control. Hieb's comparison between physicians and officers on nuclear submarines is particularly apt. Maintaining safety in "high-reliability" industries depends on reporting and responding to errors and near-errors in an expert, supportive, and systematic fashion. Power imbalances, administrative overload, and punitive sanctions—all features of Medicare fraud enforcement—are antithetical to this process.

 The Balanced Budget Act of 1997, Pub L No. 105-33.