Medical Fraud

In late September​ , AmerisourceBergen, one of the world’s biggest pharmaceutical distribution companies with revenue of $150 billion, was fined $260 million by the US Food and Drug Administration for emptying pre-filled glass syringes of expensive cancer drugs and reloading the drugs, in slightly smaller doses, into cheap plastic syringes before distributing them to oncology centres. For years, the company allegedly pocketed the profits obtained by creating and selling 10 per cent more pre-dosed syringes in this manner. Prosecutors claimed that because the refilling process was not conducted under sterile conditions, it led to ‘floaters’ and bacterial contamination, putting at risk the health of thousands of cancer patients with compromised immune systems.

Earlier this year, the Justice Department filed a lawsuit, based on evidence from a whistleblower, against UnitedHealth Group, the largest provider of subsidised private medical insurance for the elderly, accusing it of overcharging the government by more than $1 billion, by claiming patients were sicker than they actually were.

The FBI estimates that fraud, both private and public, accounts for up to 10 per cent of total US healthcare expenditure, or about $350 billion, of the annual $3.54 trillion that Americans spend on healthcare. The scale of medical fraud in the UK is still small by comparison, but some of the companies that have paid huge fraud fines in the US – including UnitedHealth, McKesson, Celgene and the Hospital Corporation of America – are becoming increasingly involved in NHS privatisation schemes, in accordance with the government’s wishes.

The Health and Social Care Act pushed through by Andrew Lansley as health secretary in 2012 was intended to increase privatisation, outsourcing, inter-regional competition and ‘marketisation’ in an already strained system. There is little sign that it is improving services or reducing costs, but private firms see profits to be made.

My wife and I flew to the UK last summer to see our daughter receive her DPhil at Oxford. On arriving, I found myself increasingly short of breath. Within a few days I was having difficulty, for the first time in my life, walking up gentle slopes or climbing a flight of stairs. A private doctor whom I consulted found my blood oxygen level to be only 91 per cent – a reading one might expect of a person suffering from pneumonia. He also detected fluid in my right lung and swelling in my ankles. He referred me to the John Radcliffe Hospital’s ambulatory assessment unit the next day. For the time being, he said, I could forget flying home.

After years of negative articles in the US media about overworked doctors, cursory exams and brusque support staff, I wasn’t expecting wonders from the NHS. But my experience was quite the opposite. Doctors, nurses and other staff displayed care and patience and answered my many questions, even at the end of long, busy workdays. My first shock, however, was the lack of an admissions gatekeeper to demand my insurance card, co-pay etc. Such ‘wallet biopsies’ are the first ‘procedure’ conducted in any US doctor’s office or hospital – even in the ER. Instead, I was simply directed to the fifth-floor AAU.

I was given innumerable blood tests, diuretics administered by IV-drip to dry out my lung, an X-ray, CT scan and echocardiogram, not to mention a hot lunch. In addition to staff doctors I was seen by both a cardiologist and a pulmonologist, who together delivered the verdict that I was suffering probable congestive heart failure. They said I could stay there for treatment, but suggested the better plan (to avoid a huge hotel bill) would be to get me stabilised so I could safely fly home to Philadelphia to be seen by specialists there. In five days they brought my blood oxygen level back up to 98 per cent.

The only mention of payment came when an administrator arrived in the waiting room on the second day and politely asked for my passport number and insurance card, ‘if you have insurance’. I said I was covered by Blue Cross through my wife’s job as a university professor. ‘Oh, Blue Cross,’ he said. ‘Well, we’ll bill them, but they won’t pay us anything.’ I asked why not. ‘We don’t have codes for the tests run or the doctors involved. We just bill by the day, and they don’t accept that.’ But he said I shouldn’t worry as the cost of my NHS care ‘won’t be that much’. In the US, every procedure, every medicine – even an aspirin – is separately logged and billed, at exorbitant rates.

I shudder to think what would happen to a British tourist without excellent travel insurance suffering a similar health crisis in the US. Steffie Woolhandler, a professor of public health at the City University of New York and co-founder of Physicians for a National Health Program, says an uninsured person arriving at a private US hospital ER with a similar blood oxygen level and complaining of shortness of breath ‘would probably be turned away since it would not be considered a life-threatening condition’. In some states, she said, they might be advised to go to a public hospital – found these days only in the largest cities. Even then, someone with no insurance might only be stabilised and sent away.

The cost of my NHS care, if provided in the US, would easily have topped £10,000, I’m told, assuming it could have even been provided on an outpatient basis as in Oxford. For inpatient treatment the bill could easily be treble that.

Allyson Pollock, the director of the Institute of Health and Society at Newcastle University, a fierce critic of the privatisation of the NHS and the adoption of US-style business practices, says the idea of free and equal care at point of delivery for all patients ‘still exists because it is provided by the doctors, nurses and staff, if only because of the survival among them of an NHS culture that says people have a right to healthcare, even as that right is being undermined by the government’. NHS hospitals can now generate up to 49 per cent of their revenue from private patients (it used to be 2 per cent): diverting, potentially, almost half their beds and staff.

A huge problem with market-driven medicine is colossal bureaucratic waste. According to a recent paper in the Annals of Internal Medicine, the US will this year devote a whopping $1.1 trillion – 31 per cent of total healthcare spending – to administrative costs. The study estimates that half of that amount – more than $500 billion – could be eliminated simply by switching to a Canadian-style single-payer system, and even more with an NHS-style government-run system.

Most of the $1.1 trillion is spent on billing patients, seeking reimbursement from insurers and supplying paperwork required by insurers and the government to determine the suitability of procedures and to prevent fraud. And yet that anti-fraud paperwork doesn’t help much: remember the $700 billion a year wasted on fraudulent claims, most of which go undetected. Much of the fraud is committed by insurance companies.

Mark Button at the University of Portsmouth says that fraud in the NHS is growing apace with privatisation. ‘If you give organisations and individuals a situation where there are opportunities to increase fees and revenues through fraud, you’ll get more fraud,’ he says. ‘The other problem is that a government that has an interest in promoting marketisation isn’t interested in exposing that fraud.’

As the US demonstrates, when the profit motive is introduced into a health delivery system, ways of gaming the system and outright fraud schemes are easier to devise, and they are a far more profitable business to engage in than treating patients. ‘The capitalist market model doesn’t really work in healthcare,’ Button says, ‘because the consumer has real difficulty making rational decisions based on quality and costs.’

Inequality of care based on assets and insurance coverage is the norm in a market-driven health system. The UK spends $4000 per person to provide care for every single citizen (and people like me). Americans currently spend more than $10,000 per person on healthcare annually, but even with the implementation of the Obama administration’s controversial Affordable Care Act, 27 million people, or about 9 per cent of Americans, remain uninsured and can’t usually afford to see a doctor. And because of the high cost of the care provided through Medicare and Medicaid (taxpayer-funded but heavily privatised) and the high premiums for mandatory private insurance, a majority of US voters last year elected politicians who vowed to eliminate the ACA, cut back on Medicaid funding, and take subsidised health insurance away from between 20 and 30 million more of their fellow citizens.

Healthcare systems don’t work like a free market; the profit motive sucks out money that should be spent on healing people; and the social consequences of privatising healthcare, in terms of inequality of access and treatment, are things no decent society should tolerate. The US has the highest priced and least equitable healthcare of any developed nation. And we don’t even have the best statistics on life expectancy or infant mortality rates to show for it. We’re not even close.