The automated national Medicare claims processing system HCFA plans to implement next year may be vulnerable to fraud, a healthcare fraud expert told a congressional advisory panel last week.
Malcolm Sparrow, an associate professor at Harvard University, made the assertion during a meeting of the Prospective Payment Assessment Commission in Washington. The commission advises Congress on Medicare payment issues.
Sparrow said the Medicare Transaction System's large, automated regional sites, with less "human common sense" to oversee claims processing, could make it easier for criminals to bilk Medicare.
Furthermore, it will split fraud control functions from claims processing, making fraud investigations more difficult to coordinate, Sparrow said.
Although he said he has warned top HCFA officials of the dangers, he fears that HCFA's focus is on the savings the transaction system would achieve.
"HCFA's momentum is toward administrative cost savings," Sparrow said in an interview.
HCFA officials could not be reached for comment.
The Medicare Transaction System will consolidate processing of standard electronic claims from 70 sites to a small number of regional centers. Hospitals will be able to file forms directly with HCFA.
Medical intermediaries still would conduct audits and reviews.
HCFA estimates the transaction system will save $200 million a year.
Sparrow, who has researched healthcare fraud while compiling reports and writing a book, said fast, automated billing systems that give providers detailed explanations of why claims are rejected are "dream systems" for Medicare swindlers.
Unpredictable, slower systems with greater human involvement are harder to defraud, he said.