Fraud and Abuse Law

Ask medical professionals to choose a statement from the list above regarding federal efforts to root out health care fraud and abuse, and it is more likely that they will select responses from the end of the list than from the beginning. The article by Kalb¹ in this issue of THE JOURNAL reveals the scope of the government's antifraud enterprise, but the question remains: what exactly is government doing?

The story of fraud and abuse law is a tale of path dependence. The enactment of Medicare and Medicaid legislation 35 years ago was hailed as a step toward completing the New Deal and creating the Great Society. Indeed, these programs have proved a tremendous boon to the nation's elderly and indigent; to health facilities, suppliers, and professionals; and to innovation in medical science. Yet any sizable government program inevitably creates incentives for overspending. In 1964, however, achieving political consensus required replicating within Medicare the unthreatening, familiar landscape of private indemnity insurance: separate hospital and professional components; private contractors as fiscal intermediaries and carriers; payment based on usual and customary fees; and a pledge of noninterference with physician decision making. These constituted the medical profession's price, which President Lyndon Johnson was happy to pay. "Five hundred million [dollars]," he reportedly exclaimed when told the supposed cost of these concessions, "Is that all? Do it. Move that damn bill out now before we lose it."² Absent, unfortunately, was the private marketplace's sensitivity to premium increases.