Book Review

License to Steal: Why fraud plagues America's health care system

N Engl J Med 1997; 336:518February 13, 1997

Article

License to Steal: Why fraud plagues America's health care system
By Malcolm K. Sparrow. 240 pp. Boulder, Colo., Westview Press, 1996. $16.95. ISBN: 0-8133-3068-8

This is an important book that is not as good as it ought to be. Malcolm K. Sparrow is probably the only American academic with a serious interest in health care fraud. His topic is timely, and some of his observations and commentary are immensely valuable. It is therefore particularly disappointing that his book is hard to read, confusing even to the fairly knowledgeable reader, and frankly, irritating to a physician. It is still worth reading.

The best way to read this book is to start with part 3, “Prescription for Progress,” which contains two chapters: “A Model Fraud-Control Strategy” and “Detection Systems.” Both are lucid, informative, and well written. Types of fraud are described in a clear conceptual framework; strategies for the detection of fraud are presented within that framework in a manner that clarifies the risks and weaknesses in our current systems of detection. The inclusion of analogies with credit-card fraud helps to make the material quickly understandable. I might never have reached these chapters, however, had I not had a reviewer's obligation to make my way through the whole book.

The first two parts of the book — “Understanding the Fraud-Control Challenge” and “Current Developments” — are based on a series of interviews with people from eight fraud-control units: six connected with Medicare and Medicaid programs and two connected with private insurers. One of the two private insurers is a true anomaly, since it is a small company responsible for only 17,000 policyholders that still handles all claims without full automation.

The book's core problem is that this interview material is not summarized or presented in a way that leads logically to the author's conclusions. In many sections Sparrow seems to have presented interesting details from his interviews regardless of how this material fits with his overall logic. For example, he was clearly very impressed by the quality of the work done at the small, private company. Read by itself, this section appears to be suggesting that all claims should be handled personally by experienced claims examiners and that electronic claims adjudication should be avoided if at all possible. Although the points about the advantages of the human mind over computers are interesting, they clearly do not relate to the later recommendations dealing with the advantages of the use of newer computer techniques in fraud detection.

Another major flaw is that the explanations and descriptions are insufficiently quantitative. Not a single table or graph enlivens this 240-page work; the reader is left to struggle through sentences such as the following without visual aids to comprehension: “By 1998 virtually all Medicare claims and related transactions will be transmitted by standardized electronic means. In 1994 roughly 72 percent of Medicare claims were received electronically (80% of Part A claims and 55% of Part B claims), up from 36 percent in 1990.”

Perhaps the most puzzling aspect of the book is the author's promise to discuss all types of health care fraud when, in fact, the focus of the interviews and commentary is almost exclusively on public programs, particularly Medicare. Medicare fraud is well worth a whole book, but the author's vagueness about the scope of his topic makes comprehension difficult. Discussions of the lack of incentives for good cost–benefit calculations in funding fraud-control units, for example, apply only to public programs, not private insurance, but this point is not made clear.

There are a number of other problems with the presentation of the interview material. At the beginning, the book promises to be about fraud (deliberate efforts to deceive the insurer, often by billing for a service that was not provided), not abuse of the health care system (overuse of various services as well as altered coding of an actual service to increase payment from insurers). Why, then, are we led through a description of practices in a utilization review unit whose main achievement was identifying mammograms that should have been reported during the billing process as “routine” rather than “medically necessary”? At the end of the section, Sparrow notes that only “excessively greedy or stupid fraud perpetrators” would be identified by this process. Then why include this section at all?

Finally, no reviewer who is a physician can avoid noting the persistent and often maddening antidoctor tone of this work. From the front cover with its repeated image of a surgeon in a mask holding up money rather than instruments to multiple references to the profession, the book implies that physicians are somehow the primary source of the problem. In fact, a careful reading makes clear what almost anyone in the fraud-detection business knows: the worst frauds these days involve those removed from the mainstream of medicine, such as independent laboratories, suppliers of durable medical equipment, home health care, and home infusion services.

Fraud ought to be of concern to physicians. Money lost from the health care system to thieves is money not available for services. Attention on the part of the profession is not all that is needed to deter fraud, but it would be an important step. So, despite its defects, this book can be recommended for physicians who are involved in organizing and delivering services or even those who are just interested in finding out why claims are handled the way they are.

Helen L. Smits, M.D.
HealthRight, Meriden, CT 06450