Digitize Health Data to Address Medicare Waste, Fraud

In a speech to the City Club of Cleveland in 2004, Peter Orszag, head of the Office of Management and Budget, warned attendees that the long-term financial threat to the United States is Medicare.

Six years later, Orszag's influence permeates the White House's approach to health reform. Orszag's boss, the President, also puts as job No. 1 getting the uninsured, insured.

How to reconcile cost containment and the nation's primary deficit threat without alienating one of the most powerful political forces in America -- seniors?

The answer is in clearly explaining that we're wasting money in Medicare: not so much in the good care that American senior citizens receive (when they receive good care), but in the program's wasteful processes. Wasteful processes lead to wasteful spending of tax dollars, something that concerns every American taxpayer.

That waste is the opportunity to conserve costs in several areas, which can all be addressed through a digital health information platform. Health information exchange enables data liquidity: the ability for key bits and bytes of information to move through the health system that can track a patient's care, health resource use, and payments to providers. Three areas of waste in Medicare can be addressed through electronic information:

1. Make the big, bulky, program more efficient. The U.S. Healthcare Efficiency Index estimates that $23 billion could be saved annually just by moving health care billing and payment transactions from paper to electronic format.

2. Drive out fraud. Digitized data on Medicare enrollees' use of care services, by provider site, can help zero in on those physicians and other providers who are bilking the system. On paper, fraud is much more difficult to trace and track.

3. Reward effective, efficient providers. Once a Medicare enrollees health care encounters are recorded in digital format, her provider's performance can be tracked along with her outcomes. If the doctor delivers value, he can be rewarded. If not, that inefficient provider could, over time, be eliminated from providing services to Medicare enrollees if his performance doesn't improve.

All three of these strategies are enabled through digital health information exchange. Paper-based medical record, claims, and payment processes are cost-creating. Fraud is easier to perpetrate when paper files are the state-of-the-art in record keeping. And, the best providers to Medicare beneficiaries can't be paid for their excellent performance if that performance and the patient's outcomes can't be quantified.

Seniors all agree on one area: the need for value when living on a fixed income. That's the analog on the return on investment for digitizing health data to address waste in the ever-cost-increasing Medicare system.

By Jane Sarasohn-Kahn  |  August 11, 2009; 10:55 AM ET  | Category:  Health Care Reform Save & Share:                 
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