From testimony before the Senate Judiciary Committee, 5/20/09, by Malcolm K. Sparrow, professor at Harvard’s Kennedy School of Government:
The units of measure for losses due to health care fraud and abuse in this country are hundreds of billions of dollars per year. We just don't know the first digit. It might be as low as one hundred billion. More likely two or three. Possibly four or five. But whatever that first digit is, it has eleven zeroes after it. These are staggering sums of money to waste. . . .
The rule for criminals is simple: if you want to steal from Medicare, or Medicaid, or any other health care insurance program, learn to bill your lies correctly. Then, for the most part, your claims will be paid in full and on time, without a hiccup, by a computer, and with no human involvement at all. . . .
For any invisible problem, effective control begins with valid measurement. For health care fraud, control breaks down at this very first hurdle. No-one knows quite how bad the situation has become, and industry practices seem to reflect a broad reluctance to find out. . . .
One fundamental truth of the fraud-control business is this: fraud works best when claims-processing works perfectly.
The health care industry still acts as if it imagines that process-accuracy is the cornerstone of effective fraud control. In fact, process-accuracy (with the transparency and predictability it produces) is a large part of what makes health care payment systems such attractive targets for fraud.