Cover image for License to steal : how fraud bleeds America's health care system
License to steal : how fraud bleeds America's health care system
Sparrow, Malcolm K.
Personal Author:
Updated edition.
Publication Information:
Boulder, Colo. : Westview Press, 2000.
Physical Description:
xx, 283 pages ; 24 cm
Reading Level:
1440 Lexile.
Format :


Call Number
Material Type
Home Location
Item Holds
RA395.A3 S764 2000 Adult Non-Fiction Non-Fiction Area

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Who steals? An extraordinary range of folk--from low-life hoods who sign on as Medicare or Medicaid providers equipped with nothing more than beepers and mailboxes, to drug trafficking organizations, organized crime syndicates, and even major hospital chains. In License to Steal , Malcolm K. Sparrow shows how the industry's defenses, which focus mostly on finding and correcting billing errors, are no match for such well orchestrated attacks. The maxim for thieves simply becomes "bill your lies correctly." Provided they do that, fraud perpetrators with any degree of sophistication can steal millions of dollars with impunity, testing payment systems carefully, and then spreading fraudulent billings widely enough across patient and provider accounts to escape detection. The kinds of highly automated, quality controlled claims processing systems that pervade the industry present fraud perpetrators with their favorite kind of target: rich, fast paying, transparent, utterly predictable check printing systems, with little threat of human intervention, and with the U.S. Treasury on the end of the electronic line. Sparrow picks apart the industry's response to the government's efforts to control this problem. The provider associations (well heeled and politically influential) have vociferously opposed almost every recent enforcement initiative, creating the unfortunate public impression that the entire health care industry is against effective fraud control. A significant segment of the industry, it seems, regards fraud and abuse not as a problem, but as a lucrative enterprise worth defending. Meanwhile, it remains a perfectly commonplace experience for patients or their relatives to examine a medical bill and discover that half of it never happened, or that; likewise, if patients then complain, they discover that no one seems to care, or that no one has the resources to do anything about it.Sparrow's research suggests that the growth of capitated managed care systems does not solve the problem, as many in the industry had assumed, but merely changes its form. The managed care environment produces scams involving underutilization , and the withholding of medical care schemes that are harder to uncover and investigate, and much more dangerous to human health. Having worked extensively with federal and state officials since the appearance of his first book on this subject, Sparrow is in a unique position to evaluate recent law enforcement initiatives. He admits the "war on fraud" is at least now engaged, but it is far from won.

Author Notes

Malcolm K. Sparrow teaches at Harvard's John F. Kennedy School of Government.

Reviews 2

Booklist Review

One of the sidelights to the debate over health-care reform is the media attention, often sensational, devoted to fraud. Sparrow, a public-policy lecturer at Harvard's Kennedy School of Government and coauthor of a book about community policing entitled Beyond 911 (1990), contends that fraud in our health-care system is rampant. Despite his tabloidlike title, Sparrow takes a serious, often technocratic look at the industry's efforts at fraud control--and the lack thereof. He focuses on provider fraud as opposed to patient fraud, arguing that the former outpaces the latter by exponential proportions. He shows that most safeguards are designed to detect the abuse of overbilling rather than criminal fraud by those who "correctly" bill for procedures not even performed on patients who may not even exist. Sparrow also warns that electronic claims processing will worsen the problem because it will enable fraud to be committed faster, long before it can be detected. License to Steal adds an important dimension to the issue of health-care reform. (Reviewed July 1996)081333067XDavid Rouse

Choice Review

In this updated version of the same title published a few years ago (CH, Jun'97), Sparrow, formerly a detective chief inspector with the British Police, believes that fraud control could substantially cut health care costs without reducing benefits to any individuals. Fraud control is the capacity to distinguish between legitimate and illegitimate claims. Sparrow believes that the US health care industry has never understood that large-scale fraud exists, and so the nation has never developed satisfactory mechanisms to detect it. Defenses currently in place, the author believes, may provide some protection against incorrect billing or overutilization, but they are completely inadequate to detect intentional fraudulent billing. Some progress has been made--e.g., criminal background checks for providers and visits to ascertain that the business actually exists--but these are viewed as woefully inadequate to stop the mountain of real fraud Sparrow believes is perpetrated daily against the US health care system, and he believes that provider associations and lobbyists have dissuaded the government from developing serious antifraud measures. General readers; undergraduate and graduate students; professionals; two-year technical program students. J. E. Allen; University of North Carolina at Chapel Hill

Table of Contents

Prefacep. vii
Acknowledgmentsp. xix
Introductionp. 1
Part 1 The State of the Art
1 Control Failuresp. 39
2 How Goes the War?p. 56
Part 2 New Frontiers for Control
3 False Claimsp. 83
4 Managed Carep. 98
Part 3 The Nature of the Fraud-Control Challenge
5 The Pathology of Fraud Controlp. 117
6 The Importance of Measurementp. 143
7 Assessment of Existing Fraud-Control Systemsp. 162
8 The Antithesis of Modern Claims Processingp. 183
Part 4 Prescription for Progress
9 A Model Fraud-Control Strategyp. 203
10 Detection Systemsp. 228
Conclusionp. 253
Acronyms and Abbreviationsp. 257
Notesp. 259
Indexp. 277