Health insurance: fighting fraudsters
The Harvest of Hippocrates
Egor Nizamov, Money magazine No. 24-2009
Published on the Insurance Today portalIn the United States, the fight against medical fraud has entered a new stage.
The government of Barack Obama announced the creation of a special commission that will track down offenses in the national health system Medicare. The authorities believe that this will help them recover at least some of the billions of dollars they lose every year due to fraud in this area. And the Americans themselves hope that they will no longer have to pay for unnecessary procedures and useless medicines. Nevertheless, due to the fact that not everything in medicine is amenable to accurate measurements and accessible explanations, it has always remained a refuge for deceivers.
Imaginary benefits Until the XVII-XVIII centuries, medicine was one of the most attractive areas for fraudsters.
A scientific understanding of the causes of diseases has not yet been developed, which was used by numerous charlatans who sold laxatives under the guise of a panacea. However, their stories about frogs trapped inside the body were believed, as a rule, only by commoners at fairs. Professional doctors who served wealthy clients adhered to more reasonable treatment methods. But they also could not avoid some misconceptions. Perhaps the most common misconception was the belief that bloodletting should be used immediately in almost any disease. By that time, this practice had been going on for many centuries, and getting rid of excess blood from the body was universally recognized as useful.
Doctors were guided by the basics of anatomy laid down by the Roman physician Claudius Galen. According to his ideas, human blood is formed from the food that he consumes. First, food turns into liquid inside the stomach, and then enters the liver, where it is converted into blood and enters other human organs through blood vessels. This is how the idea was formed that the body is constantly producing new blood – and sometimes in larger volumes than required. When there is an excess of it, the blood stagnates and spoils; in the place where this happens, inflammation and swelling appear. So, in order to return a person to a healthy state, it is necessary to rid him of excess blood.
Even after Galen's theory was refuted, the mass practice of bloodletting did not stop. It was not easy for doctors to refuse this procedure, the benefits of which were rarely in doubt among patients and for which they always willingly laid out money. For example, when on February 2, 1685, King Charles II of England had a seizure caused, as is now believed, by kidney failure, his veins were opened first. According to one of the surviving documents, the treatment took place as follows: "Dr. Edmund King approached the king, who slumped in his chair with his head thrown back and uttered the most terrible screams. The doctor immediately pulled up the sleeve of his nightgown (the king was not dressed yet), felt a vein with his thumb and opened it. But the blood did not flow, and then Dr. King took out a bottle of liquid from his pocket and dropped it into the king's nose. Then he took him by the head and shook him. After that, the king came out of the seizure state, and 510 g of blood flowed freely."
Later, Edmund King, who happened to be next to the king by chance, was joined by several more doctors who put cans on the patient's shoulders and continued to pump blood out of him. But, despite all efforts, the king died four days later. For participating in the rescue of Charles II, Edmund King was supposed to receive £ 1,000 – a very good reward at that time, but they did not pay him money, but elevated him to knighthood.
Almost a hundred years later, another European monarch, King Louis XV of France, went through the same procedure shortly before his death. On April 27, 1774, he woke up feeling unwell: his body ached, he felt dizzy and chills. Over the next week, his skin became covered with purulent wounds, which soon appeared in the oral cavity. These were symptoms of smallpox, a disease that claimed the lives of many people both in Europe and in the New World. When the court doctors examined him, they decided that the only way to treat him would be bloodletting. Louis XV's veins remained open until he lost consciousness, which, however, was provided for by the procedure. Four bowls were needed for his blood, but even bloodletting did not save the king from death on May 10.
Despite such unpleasant cases, bloodletting treatment has become widespread on the American continent. Historian Philip Van Ingen compiled a list of diseases that were fought by bloodletting: seizures, contusions, hernias, impotence, inflammation of the small intestine, smallpox and pneumonia. The cost of the procedures was not so low: in 1798, $ 1 (about $ 18 at the current exchange rate) was demanded for letting blood from a vein on the arm, $3 – from a vein on the foot, and finally, $5 was taken for opening an artery. But the positive outcome of treatment, of course, was not guaranteed. The famous physician of that time Gilles Hempstead wrote in one of his works: "I knew a doctor in the neighborhood who treated malaria with bloodletting alone. He pumped the blood out of the patient until he could not move. Following this, the disease and the patient together passed into the light of another. I mention this to show with what recklessness doctors use the lancet, and patients agree to it. It is difficult to imagine how widespread this fascination with the lancet is; in rare cases, the treatment of any disease takes place without its use."
Perhaps the most famous case of bloodletting to harm is the story of the last days of the life of the first American President George Washington. On December 12, 1799, he rode out on horseback to inspect his plantation, and caught a cold due to strong wind and rain. The next day he went for a walk again, despite feeling unwell and sore throat and chest. At night he woke up from a fever, it was difficult for him to breathe and swallow. In the morning, a local doctor "seized" about 400 g of blood from George Washington. Soon the president's personal physician, James Craik, arrived. He also decided to conduct bloodletting. Then two doctors came to the patient, who were called by Crake, and more blood was taken from Washington. In total, the bloodletting procedure lasted about 12 hours, and George Washington lost at least 2.5 liters of blood. In addition to this, he was also forced to breathe vinegar vapors that burned the mucous membrane of the mouth and pharynx, and drink medicine with dissolved mercury. The patient was getting worse every hour, although several first-class doctors were watching him at once. By the beginning of the eleventh hour on the evening of December 14, George Washington died.
Imaginary harm
During the XIX century, medicine made several important steps forward. The foundations of microbiology were born, which made it possible to better understand the causes of diseases. The general level of hygiene has increased – obstetricians, for example, began to wash their hands before giving birth. However, in parallel with traditional medicine, more original approaches to treatment have also developed. At various times, homeopathy, physiognomy, hydropathy (treatment based on the principle of "wash up and be healthy"), phrenology and other near- and pseudoscientific theories were widely used. Their adherents, as a rule, were considered charlatans, which was often not far from the truth. With the formation of public health systems in Europe and the United States, a new way of dealing with non–traditional healers has appeared - medical insurance. The scheme by which clinics served workers affected by accidents took away most of their clients from charlatans. However, it soon became clear that the insurance activity itself is fertile ground for fraud.
Injury insurance appeared primarily in those areas where work was particularly dangerous (for example, in the navy, in the mining industry or on the railway), and companies that valued their reputation were interested in providing medical care to victims quickly and free of charge. However, employees and customers of these companies have not always used the service in good faith.
At the end of the XIX century, a mysterious disease, which was called "railway spinal injury", became widespread in the United States. On October 15, 1866, The New York Times published an article describing this new and mysterious disease: "Often a passenger who has survived a railway accident remains seemingly unharmed, feeling only general weakness and confusion. However, over time, he begins to feel that his vitality is leaving him, his mind becomes clouded, his character becomes irritable and his memory disappears. His sleep is disturbed, his skin takes on a deathly pale hue, and the passenger eventually shows all the symptoms of paralysis." Doctors believed that the reason for the deplorable condition of such patients lies in hidden spinal injuries that led to disruption of the nervous system. They diagnosed a "railway back injury", and the unfortunate patient received a decent amount for treatment from the insurance company. In fact, it was about the most banal simulation, with the help of which the scammers fooled both doctors and insurance companies.
Of course, this deception could not be eternal. News about insurance fraud appeared more and more often. On October 1, 1903, The New York Times published a note that the Supreme Court of Louisiana recognized a man named Patterson as healthy, despite the fact that he had all the signs of damage to the nervous system, which was confirmed by his doctors. But the court invited other specialists. "Medical experts have ruled that Patterson's problems turned out to be imaginary," the note said. "This accident victim did not suffer from paralysis, but only imagined that she was suffering." Two years later, the newspaper already reported on the creation of a special organization that "will protect locomotive companies from wrongful claims. It will be called the Alliance against Fraud in Accident Insurance«. Just below was an eloquent story about how a New Yorker fell off a train when it suddenly started moving. She, as some doctors confirmed, injured her back and demanded a payment of $ 4 thousand from the New York City Railway company (that is, almost $ 100 thousand at the current exchange rate). In the end, she only managed to sue for $400, which was also not bad, considering that her injury turned out to be fictitious.
Despite the creation of alliances that tried to uncover cases of fraud, fabricated medical cases began to appear more often. Interested doctors and lawyers worked in conjunction, which allowed them to easily identify serious injuries and illnesses received at work from clients. Then they issued impressive bills to insurance companies, and the money earned was shared with the client. It wasn't until 1937 that the Manhattan Medical Society officially recognized the existence of such a practice. Its chairman stated that he became aware of "some members of society – fortunately, there are not so many of them – who contacted unscrupulous lawyers and insurance agents to illegally extract thousands of dollars from insurance companies." "There must be an end to this!" he concluded. Over the next year, the society conducted a series of investigations, as a result of which about 50 doctors ended up behind bars.
At the same time, the New York Prosecutor's office was also engaged in tracking down scammers. For this purpose, a special bureau was created with a budget of $ 50 thousand per year. For several years of its existence, the bureau has managed to bring forward more than 200 charges of falsifying medical reports. One of the most high-profile cases was the disclosure of a criminal group led by 31-year-old lawyer Jacob Harvitz. In a team with doctors and numerous complicit patients, Harvitz pulled at least $500 thousand from insurance companies over three years. However, he did not have time to use them, having moved to a prison on Hart Island for a long time.
An imaginary necessity
In the 20th century, treatment, especially surgical, became much less risky, as doctors began to widely use anesthesia and antibiotics. Operations began to be carried out in sterile conditions, which dramatically increased their safety. In the second half of the century, the treatment of heart diseases experienced a revolution thanks to the development of cardiac surgery. In the United States, where, as in many other countries, people died most often from heart diseases, operations became more and more accessible. New technologies made it possible to perform heart surgery in relatively small clinics. However, the necessary equipment was still quite expensive.
"Since clinics had to spend from $1.5 million to $2 million on equipment before accepting patients with heart defects, they, of course, sought to recoup their costs as quickly as possible," says Dr. Donald Carrow, a surgeon at one of the major health centers in Florida. "In other words, the clinics needed a constant influx of patients to pay off the loan."
In the 1970s, Carrow was engaged in coronary bypass surgery - he transplanted healthy vessels into the heart of patients, taken, for example, from the leg, so that blood could circulate through them bypassing damaged vessels. And although in 45% of cases such an operation is optional, and it is possible to cure with medicines, clients were persuaded to go for bypass surgery. "We had a real team trained to handle doubting patients, which included nurses, family doctors and even patients who had already gone through such an operation," Carrow explained.
The client's preparation took place in several stages. At first, he was asked to go through many tests, including an X-ray examination of the heart. Then the nurse cautiously informed the client that he had found some problems and he should consult with a cardiologist. If the patient then went home, his family doctor came to him, who also expressed concerns. In the end, the terrified client ended up with a cardiologist, who, however, only intensified his experiences. The doctor showed him a picture of the heart and pointed to some point, which allegedly said that the patient did not have to live that long. "If a client asked about how dangerous the operation was, each member of our team knew what to answer: "We would say this: six years ago the chance of success did not exceed 6%, but now it reaches 96%," says Carrow. – Any patient will take this as a guarantee. The nurses will promise him that they will hold his hand throughout the operation. Then the pastor will come in and say a few words. It was a well-rehearsed scene."
Probably, such performances were played out in many clinics around the world and brought a good income. By the 1980s, more than 400,000 coronary bypass surgeries were performed in the United States. once a year, each cost about $25 thousand, of which $4 thousand were paid directly to the surgeon. Some doctors earned a fortune convincing patients to go for risky and often useless surgery.
As the example of two talented cardiac surgeons Richard Schwartz and Philip Rice shows, rapid enrichment in this way sometimes led to not entirely pleasant consequences. Since the early 1980s, these doctors have been working in the small town of Canton, Ohio. The management of the local Aultman polyclinic, who hired them, gave young doctors with good recommendations complete freedom of action to create a cardiac surgery department.
Since its discovery, Rice and Schwartz, using a proven method of persuading patients, have not felt a lack of them. By 1986, each of them was earning $1 million a year. For two, they bought a house in Florida worth $ 1.7 million and, although they rarely visited the mansion, spent another $ 500 thousand on its design. They luxuriously furnished their office, hanging oriental carpets and expensive paintings everywhere. Little by little, Rice and Schwartz became part of Canton's elite and hosted parties for 200 of their friends every year. They easily spent at least $20 thousand at a time on this.
Both Richard Schwartz and Philip Rice were professionals in their field – the mortality rate as a result of their operations did not exceed 3%, that is, it was below the national average. But at some point, a failure occurred in the debugged system. The fellow doctors who supplied them with patients decided that their cardiologist friends were earning too much and sharing their incomes with them too sparingly, and in the late 1980s conflicts began between them, which led to the fact that the flow of patients to famous surgeons noticeably weakened.
Following this, relations between the surgeons themselves deteriorated, which could not but affect the quality of operations – the death rate doubled. Finally, in 1991, it turned out that Philip Rice had serious problems with alcohol. Even during working hours, he began to be noticed in a drunken state. The reputation of the Aultman clinic has fallen, and she began to lose clients.
Once the closest friends, Rice and Schwartz moved from cooperation to the usual division of property in such cases. They challenged each other not only about the shared house in Florida, but also about the chairs in their offices. Over time, Rice began to contact alcoholics support services more and more often, but did not escape arrest for drunk driving. His medical license was taken away from him, however, according to his own words, he was not going to part with the profession of a surgeon. As one of his colleagues remarked, "if his hands were shaking, it was always in the right direction."
Imaginary honesty
At a time when doctors rob their clients, the companies they work for are engaged in a much more profitable business – they steal from the country's budget. So, for example, the American company HCA did. The history of one of the largest medical networks in the USA began in 1987, when Richard Scott, a 34-year-old employee of the law firm Johnson & Swanson, decided to go into business in the healthcare sector. Prior to that, Scott had never run a clinic or any other medical facility. But as a lawyer, he specialized in mergers and acquisitions of medical companies, and at some point it occurred to him that in this area you can make good money.
However, his first attempt to acquire Hospital Corporation of America (HCA) failed. The board of directors rejected the offer of Scott and two of his partners to buy the company for $3.8 billion. A year later, Scott decided to start his own company, Columbia Hospital Corporation. The multimillionaire Richard Rainwater helped him in this. Together they acquired two small clinics for $60 million, and a year later expanded their network to four institutions.
In the 1990s, Scott and Rainwater made several mergers with other corporations. They finally managed to reach an agreement with the board of HCA, and this corporation came under their control. Due to the fact that Scott was not only a good lawyer, but also an entrepreneur, all transactions were successful. By 1997, Columbia/HCA had become a giant. She supervised 340 clinics in the United States, 130 surgical centers and 550 home health care facilities. Scott's company has grown to become the world's largest medical corporation with annual revenue of $23 billion. And at this peak, the company's rapid growth came to an end.
In the summer of 1997, agents of US federal law enforcement agencies arrived at Columbia/HCA offices in seven states. They collected hundreds of boxes of documentation and began investigating the largest scandal in the American health care system in recent decades. Of course, they were interested in the activities of Scott's company for a reason.
The fact is that in the United States there is a law that allows anyone to file a lawsuit on behalf of the state. It was adopted during the Civil War of 1861-1865 to fight corruption in the ranks of the army. In those years, a soldier who noticed that the commander of his battalion was selling state-owned horses or donkeys could report this to the authorities. The commander was put on trial, and about a quarter of the money that was returned was transferred to a conscious private.
Despite the fact that this law has been repeatedly changed and supplemented over the past century and a half, its essence has remained the same. Several laid-off Columbia/HCA employees apparently decided to make money with his help and began secretly cooperating with the authorities. By 1997, it became known from their testimony that the company had been providing the government with incorrect information about its financial activities for several years, inflating costs. In the USA, the state pays private medical institutions for the costs associated with insurance services, and it turned out that Columbia/HCA appropriates part of this money. The company even kept two accounting records – one for the government and the other for internal use, where all expenses and income were indicated correctly. In this second report, it was prudently indicated what losses should be expected if the company was suddenly subjected to an audit. However, in the end, the state anti-corruption authorities used their own calculations.
The authorities found that numerous financial violations on the part of Columbia/HCA (which was already called simply HCA by that time) took at least $1.7 billion from the state, which the corporations offered to return. Almost half of this amount – $840 million – was paid in 1999 by the company's subsidiaries in the form of fines for providing fake accounts. Some time later, HCA itself had to return $376 million received on unfounded accounts. Another $225 million, which returned to the treasury, was obtained illegally – HCA bribed doctors who referred patients to its clinics for treatment. The remaining part of the fine was dispersed in small things: $5 million for incorrect pricing of transportation of patients from one clinic to another, $1 million for the repair of offices at the expense of the state, etc. As a result, eight people who filed lawsuits against the company received more than $150 million in support of their civic position.
"Medical institutions enjoy the trust of the population. And American healthcare suffers when that trust is undermined by fraud and the illegal use of public funds, as well as the bribery of doctors on whom patients rely," said Assistant Attorney General Robert McCallum.
Immediately after the start of the proceedings, the HCA board of directors dismissed Richard Scott from the board. However, he was compensated in the amount of $ 10 million and left in his ownership shares of the company for $ 300 million. According to Scott himself, the prosecutors never questioned him, because sufficient evidence of his involvement in the case was not found. Nevertheless, Scott admitted that parting with his own company "obviously wasn't easy to get over": "I built it from scratch." During the trial, HCA's board of directors decided to conduct a major reorganization of the company in order to "change its entire culture."
The departure of the main organizer of the fraud from punishment only spurred many heads of medical and insurance institutions to risky financial transactions, and new revelations were not long in coming. Therefore, after Barack Obama came to the White House, the presidential administration announced its intention to completely revise the American medical system. If nothing is changed in it, then in a few years it will simply go bankrupt. According to the calculations of the authorities, by 2017, some funds (for example, intended to pay for services to the elderly) may be empty. Moreover, widespread fraud will also play a role in this.
At the end of May this year, it became known about the creation in the United States of a special commission to combat offenses in medicine. "When individuals or corporations break the law, we must hold them accountable for it," said U.S. Attorney General Eric Holden. Rough estimates suggest that American medicine loses from $77 billion to $270 billion every year as a result of fraud. This is 3-10% of the total government spending on healthcare, which annually reaches $2.2 trillion. "What we are concerned about now is theft, plain and simple," admitted Health Minister Kathleen Sibelius. Nevertheless, it is hardly possible to track where every dollar of the allocated trillions goes. The bigger the pie, the more willing there will be to share it. And this human trait, as experience shows, is almost untreatable.
Portal "Eternal youth" http://vechnayamolodost.ru/22.06.2009