Medicare Fraud in the United States

1.0 Introduction
1.1 Background of the Study
The enactment and enforcement of the affordable care act in 2010 expanded Medicare, particularly to vulnerable individuals in the country. Medicare refers to the federal health insurance that covers the elderly who are past 65 years, people with disabilities and those who are suffering from End-Stage Renal Disease. It is subdivided into different parts depending on the main things that are being covered. Part A refers to hospital insurance for the recipients (Medicare, 2018). This covers any inpatient stays, care in a nursing facility, home healthcare to some extent and hospice care. Part B refers to medical insurance that covers doctor services, medical suppliers, outpatient care and preventive care. Part D refers to prescription drug coverage where pharmaceutical costs are covered (Medicare, 2018). The American government does not directly provide this cover to patients. Instead, it approves insurance companies that can provide health insurance to patients.

Healthcare is one of the largest government expenditure in the US. In 2017, the government sent 3.65 trillion dollars on healthcare expenditure. This is roughly 18 percent of the national GDP. This is a substantial amount of money spent each year with the aim of providing healthcare to millions of Americans (Sherman, 2019). The OECD considers this the highest medical spending by any country around the world. The article further highlights that this is a substantial increase from the 2017 expenditure. The CAGR is roughly 4.4 percent per annum. This represents the average annual spending of $11,212 per person (Sherman, 2019). As time goes on, more people are worried that the cost of healthcare is continuing to increase.

1.2 Problem Statement
Despite the huge expenditure, there are some who try and make money fraudulently through Medicare. Health fraud refers to health insurance, medical or drug fraud perpetrated by an individual or company to steal from the government health program or defrauding an individual. There are numerous cases of fraud each year (Chokshi & Jacobs, 2019). A recent New York Times article highlighted substantial fraud in the Medicare program. The case involved 24 doctors who were charged with defrauding the Medicare scheme of 1.2 billion dollars. The fraud involves doctors prescribing patients with knee, shoulder, wrist and back braces that the patients did not need. The doctors received kickbacks from the medical companies that provided these braces (Chokshi & Jacobs, 2019). This is a clear example of how the Medicare system can be taken advantage by unscrupulous individuals for personal gain.

Information from the NHCAA (2018) suggests that there has been over $3 trillion in taxpayer funds lost through fraud. Estimates suggest that $700 billion has been lost in the past five years. The NHCAA also suggests that Medicare fraud seems to be on the rise. The last checks revealed that 10-20 percent of the Medicare budget is lost to people who defraud the government. Some of the common Medicare fraud techniques used include phantom billing, up-coding, bill padding, and duplicate billing. In some cases, there is outright fraud where the prescriptions are made without any actual benefit to the patient. Thornton, Brinkhuis, Amrit, and Aly (2015) suggest that $2 trillion was lost through fraud. As such, this is a serious problem. The main issue is that many patients are not aware of possible Medicare fraud due to their trust in health professionals. They are also unaware of the measures in place to prevent Medicare fraud.

1.3 Purpose Statement
The aim of the research is to ascertain the financial impact that Medicare fraud has on the healthcare system. This involves reviewing issues of Medicare fraud involving phantom billing, duplicate billing, bill padding, and up-coding. The purpose of the assignment is to also determine the awareness in patients and physician of the possible Medicare fraud and the measures in place to stop Medicare fraud. Stakeholder awareness will help in determining whether the government can create measures that can help patients and physicians identify fraud.

1.4 Research Questions
The purpose of the research can be changed to a general research question that can help guide the research. The general research question is:

What is the financial impact of Medicare fraud and is there awareness among stakeholders on how to identify and the measures in place to stop Medicare fraud?
The general research question needs to be subdivided into more specific research questions that can be answered individually. The specific research questions can also be used to create hypotheses that will be tested in the data analysis section. The specific research questions include:

a. What is the financial impact of Medicare fraud on the healthcare system?
b. Are patients aware of the different ways Medicare fraud can occur?
c. Are patients aware of any measures that can help reduce Medicare fraud?
d. What role can physicians play in curbing Medicare fraud?

1.5 Hypotheses
As highlighted, the specific research questions can be converted into null and hypothesis that can be tested using empirical means. The hypotheses in the test include:

H0a: Medicare fraud does not have a substantial impact on the healthcare system
H1a: Medicare fraud has a substantial impact on the healthcare system
H0b: The general public is not aware of the different ways that Medicare fraud occurs
H1b: The general public is aware of the different form of Medicare fraud
H0c: The general public is not aware of the different measures in place to stop Medicare fraud
H1c: The general public is aware of the different measures in place to stop Medicare fraud
H0d: Health professionals do not play a role in curbing Medicare fraud
H1d: Health professionals play an important role in curbing Medicare fraud
The H0 hypotheses are the null hypothesis for each of the specific research questions while the H1 are the alternative hypotheses.

1.6 Theoretical Framework
The theoretical framework in the proposed study is the Fraud Triangle Theory. The theory was postulated by Donald Cressey, a criminologist who wanted to examine the factors that influence individuals to turn to fraud (Mansor, 2015). The theory was postulated in 1953 and it has three main factors that influence fraud.

The first factor in the theory is pressure. Cressey postulated that individuals need some form of pressure that will push them to commit fraud. The most common pressure is greed. The individual wants to earn more money and is willing to use fraud to meet these goals. Other pressures include gambling debts, money problems, addictions and some unexpected financial obligations that the individual needs to meet (Mansor, 2015). The second factor in the theory is the opportunity. There must be an opportunity to commit the crime before the individual commits the crime. The opportunity may be a loophole or a temporary situation that makes it possible for the individuals to commit fraud. The final factor is rationalization. The pressure and the opportunity may be present but not everyone is willing to commit fraud (Mansor, 2015). Rationalization involves the individual or group of individuals rationalizing the fraud. People justify to themselves why they should commit an unethical act. Personal ethics play an important role in rationalizing a crime.

The theoretical framework helps explain Medicare fraud and the different ways that the government can prevent future cases. Pressure does substantially influence the likelihood of individuals committing fraud. One way of preventing Medicare fraud is ensuring that the needs of the doctors are catered for. Organizational justice is important. The remuneration should be competitive to ensure that they do not feel that they deserve to earn more when comparing themselves with other professions. The stakeholders need to be reviewed regularly to ensure none of them have drug and gambling issues that will push them to commit fraud (Joudaki, et al., 2015). The most effective approach to stopping fraud is by limiting opportunities. The government should implement measures to ensure there are no opportunities or loopholes that could be exploited by unscrupulous individuals to defraud patients, insurance firms or the government. Amendments to the law are the most effective. Finally, measures should be in place to help prevent individuals from rationalizing Medicare fraud. The most effective approach, in this case, involves deterring criminals by making an example of those caught. Harsher sentences will make it difficult for individuals to rationalize crime.

2.0 Methodology
The proposed methodology provides justification for the decisions make in the design of the study to ensure that the hypotheses are tested. It starts with the approach, methodology, and design of the proposed study. Then the data collection and analysis will be highlighted.

2.1 Design
Determining the approach to data analysis is important. A study can be a primary or secondary study. In this case, a primary study is preferred. The justification for this is that the unique research questions and hypotheses created from these questions make it difficult to use already pre-existing data. Instead, a primary study will allow a questionnaire to be tailored for the study.

The next step is determining the research method that will be used. It can be either quantitative, mixed methods or qualitative research. In the proposed study, a quantitative approach is selected. The justification for using a quantitative research approach is that the data collected can be analyzed by empirical methods to help answer the hypothesis. Any study with hypotheses has to rely on quantitative analysis to some extent (Bryman & Bell, 2015). Another benefit for using a quantitative approach is that the data collection process is easier than in a qualitative study and the analysis is also straight forward. Given the budgetary and time limitations of the academic study, the researcher believes that a quantitative approach will be more effective.

There are different ways that a primarily quantitative study can be conducted. The approach used in this case involves a survey approach. The design is an experimental design. The justification for choosing a survey design in the study includes the convenience of data gathering. Surveys are easy to conduct and they require low costs. The data collected will also provide good statistical significance (Bryman & Bell, 2015). The examination will also provide precise results that can help in choosing to take the null or alternative hypothesis. Finally, surveys can be representative of the general population is the sampling process is done effectively.

2.2 Data Collection Plan
The first step involves the selection of the tools that will be used in the study. In this case, two questionnaires will be used. The first will be a questionnaire for the general public and the second will be a questionnaire for health professionals. The research questions involve these two stakeholders and having two questionnaires will help collect data from the two different groups. The questionnaires will be structured. All the questions will be closed-ended (Bryman & Bell, 2015). A pilot program will be conducted by the researcher on the classmates and friends to ensure that the questions are not biased. Closed-ended questions will allow coding to ensure that all the questions can be empirically represented and examined using data analysis techniques.

The next step is sampling. A survey requires a set number of respondents to be included in the study. Typically, a study will require using a formula to determine the number of participants in the study. However, monetary constraints make it difficult to achieve. Instead, sampling will be done with parametric requirements in mind. The parametric minimum is 30 for a normal sample. In this case, the respondents from the general population will be 200 people covered by Medicare. The second sample will include 40 health professionals who will provide their views on Medicare fraud. The sampling process will be completely randomized (Saunders, Lewis, & Thornhill, 2015). The researcher will visit a health facility and seek individuals willing to participate in the study. Coding will make data analysis easier since Excel can be used for data collection.

Since the study involves human participants, it is important for the researcher to ensure that ethical considerations are in place. First, all participants will give verbal consent for being included in the study. They will be informed forehand that there will be no remuneration and the aim of the study. The second step involves ensuring that their confidentiality and anonymity are maintained. No names will be taken to make sure that the study is effective. Finally, the study should not harm the respondents in any way.

2.3 Data Analysis
Once the data has been collected, it will be important into SPSS software where labels and values will be added to properly code the information. Thereafter, an analysis will be conducted. First, descriptive statistics will be done where the mode will be used as the measure of central tendency. Frequency tables will be created in SPSS that highlight the choice selected by most respondents. Inferential statistics will be conducted where the demographic characteristics of the samples will be reviewed for their perception. It will reveal whether differences in demographic characteristics influence the awareness of Medicare fraud among the general public. After the analysis, the discussion will review the results and compare them with the literature review.

3.0 Literature Review
An article by Cotton et al. (2016) reviewed the effectiveness of Medicare under the ACA. The study found that reliance on Medicare increased by at least 30 percent since the ACA was enacted. As such, more people are being covered by Medicare. They also suggested that Medicare plays a crucial role in the American healthcare system. As such, any fraud tends to reduce the effectiveness of Medicare and leaves those who use the program vulnerable to exploitation. Stowell, Scmidt, and Wadlinger (2018) highlighted that the US government has consistently increasing prosecution efforts and funding for legal measures to reducing healthcare fraud. However, it has still not been eradicated. In fact, fraud is becoming more intricate and complex.

A study by Joudaki et al. (2015) examined the most effective approach to detecting healthcare fraud. The article found that traditional methods of detecting healthcare fraud are inefficient and time-consuming. As such, they suggest that a data mining approach should be used. data mining allows individuals to make connections that influence fraud more effectively and faster. This is one of the most promising tools when it comes to solving problems of fraud in healthcare.

Conversely, the study by Hill, Hunter, Johnson, and Coustasse (2014) paints a darker picture. The article found that yearly, Medicare fraud results in losses of $54 billion. Each year, there are thousands of cases involving Medicare fraud with around 7848 individuals being charged with fraud-related crimes. The article suggests that Medicare fraud has become a persistent problem that legislation alone cannot solve. Instead, the study suggests that new systems and approaches will have to be developed to stop fraud. Similarly, McGee, Sandrigde, Treadway, Vance, and Coustasse (2018) also decried the high rate of fraud in the Medicare program. They highlighted that out of the annual $544 billion spent in 2014 in the Medicare program, $60 billion was fraudulently lost. They suggested that new methods of fraud detection and prevention should be used because the existing methods are inefficient.

A study by Grant-Kels, Kim, and Graff (2016) examined the underlying reason for frequent billing and upcoding. One of the unforeseen reasons was the reduced claims, delays and declined claims even after the physician has rendered services by some insurance firms. As a result, there has been a conflict between physicians and insurance agencies. This affects the fraud triangle’s rationalization and pressure factors creating the environment for fraud.

A data mining study by Joudaki et al. (2016) examined fraud among general physicians. The study revealed that over half of the general physicians involved in the study, 54 percent, were engaged in some form of fraudulent behavior. From these physicians, two percent were found to be involved in direct fraud while the other 98 percent were complicit in some crime. Similarly, Soleymani et al. (2018) also acknowledged also suggested that data mining algorithms should be used to detect fraud. In specific, the study found that data mining helps detect and prevent medical prescriptions.

Conversely, a study by Flynn (2016) suggested that fraud can be managed by increasing technological advancements and by improving staff ethics to deter them from engaging in fraudulent activity. Raghupathi and Raghupathi (2014) recommended that big data analytics should be used in the healthcare sector. In specific, they suggested that it would be able to help in identifying and responding to the case of fraud. Similarly, it can help reduce the costs that governments are spending to fight against fraud. A similar study by Islam, Hasan, Wang, Germack, and Noor-E-Alam (2018) found that health analytics could be the key to helping deal with fraud in the healthcare sector. In specific, the study suggested that data mining should be used as the main approach to reviewing prescriptions and medical records to ensure that fraud is minimized.

Alternatively, a study by Ramanathan (2016) suggested a legal approach to dealing with issues in the healthcare sector. When it comes to fraud, they state that the legal duty of the government is to find ways to ensure that any of those involves in such crimes are punished. The article argued that harsher punishment served as a deterrent for future problems. The article by Black, Goad, and Attaway (2018) reviewed the patient perceptions in fighting against fraud and medical errors. The study found that 39.4 percent of patients are active patients while the remaining 60.6 percent are passive patients. Active patients are more likely to notice errors like double billing and phantom billing while the latter are not. As such, educating patients to be more active can help prevent Medicare fraud.

4.0 Conclusion
Medicare is quite important considering its role in providing coverage for the vulnerable in the society. However, Medicare has been the target of fraud for decades. Even before the ACA was enacted, Medicare still had numerous problems. After the ACA, Medicare was expanded and the plethora of problems becomes compounded. Each year close to $60 billion is lost in Medicare-related fraud. The proposed study aims to examine the awareness in the general population about Medicare fraud and the measures to prevent. It also assesses the physician likelihood to be involved in fraud. The theoretical framework, in this case, is the Fraud Triangle. The literature review seems to suggest that technology; legal and social measures should be employed to curb Medicare fraud. Technologically, Big Data analytics and data mining can help detect cases of fraud more efficiently. Legally, more serious sentences can help deter stakeholders from rationalizing fraud while instilling ethics can also help prevent cases of fraud.

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