As Medicare funding hangs in the balance, the July 28 episode of Federal Spending, an online analysis show, examined costs and waste, options for keeping the program viable, and government initiatives aimed at driving the health care budget down.

Guest analyst Michael Haisten, Principal Consultant at Real Intelligence, said the government needs to stop creating legislative complexity around health care and start looking at economic principles to reduce the real cost.

“The two real things that make supply and demand work – perfect information and no market constraints – do not exist in our health care today,” said Haisten. Instead, he said, we’re facing an economic nightmare: excess demand and excess supply.

As if that weren’t enough, the Medicare system is also plagued with waste and fraud, two thorns that could be prevented by employing better data collection and fraud detection software. “Without good tools for sharing information, you’re never going to get a good handle on costs,” said Gary Baldwin, Editorial Director or Health Data Management.

“Going after fraud is one of the best investments our government can make.” – David Wiggin

With over 47 million people enrolled in the program – and an annual bill of $528 billion and growing – it behooves the government to keep Medicare afloat. When disaggregated from the total amount health care expenditures, Medicare consumes 14% of the federal budget. By most accounts, it is expected to be solvent until at least 2029; however, because of the baby boom bulge, the decrease in overall workforce and the escalating costs of health care, we may not have 18 years to play with.

A host of solutions have been proposed: increase the percentage of contributions, reduce benefits, raise the age of enrollment, or constrain payments. Aside from being met with resistance from Medicare recipients, none of these is a viable, long-term solution.

The Meaningful Use bill was designed to staunch the flow of fraudulent and wasteful federal dollars by incentivizing the use of electronic health records, making it possible for health care providers to access patient information across the network. “By putting in information technology tools and promoting the sharing of data instead of hoarding it, doctors and hospitals will be on the same page,” said Baldwin.

The numbers vary, but the FBI estimates that up to 10% of annual Medicare expenditures go to fraud. That’s roughly $50 billion per year. “Going after fraud is one of the best investments our government can make,” said David Wiggin, Life Sciences Director at Teradata. Unfortunately, existing methods only detect fraud after it occurs.

Wiggin explained that the best way to prevent fraudulent claim payments is to look not just at claims, but at public records databases, network/relationship analysis and clinical intelligence. “We need to integrate data form other data sources to be able to triangulate, to be able to get smarter about who these providers and who these recipients are,” said Wiggin.

Jaime Fitzgerald of Fitzgerald Analytics said that for Medicare spending to be well-invested, it must not be fraudulent or wasteful. He echoed the sentiment that information technology tools are necessary to keep unnecessary spending at bay.

“If Medicare wants to run itself like a business, ” said Fitzgerald, “it needs to use data analysis for greater efficiency.”

Following are the major insights, information and quotes from the show:

The entire show can be seen at: http://www.insideanalysis.com

Guests:

Michael Haisten, Principal Consultant, Real Intelligence

Gary Baldwin, Editorial Director, Health Data Management Keep reading →