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Comment by lxm | Hacker News Reader

> a DS tool to the government or insurance companies

Insurance companies have actual fraud departments with investigators clinging onto every hint of over-prescribing, over-billing, over-testing or repeat visit inflation.

Medicare, on the other hand, has low administrative expense that's constantly touted as some kind of incredible achievement when compared to those "bloated" private insurers.

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Health insurers are among the most inept, bloated bureaucratic institutions in the United States. Even without the built in inefficiency that comes with having your program-level capability micromanaged by Congress, they suck at fraud protection and spend a lot of time on subrogation and dependent audits. Their incentive is to deny, disqualify, and delay to defer expense, preferably into the next plan year.

Medicare has some of the power of government procurement and enforcement behind it. They pay for outcomes, not procedures, which addresses many common frauds and provides a strong discouragement for unnecessary procedures. The holes are usually around equipment and prescriptions... and the issue there is a governance issue at the congressional level.

In fact fradulent spending increase the total spend so it lowers the administrative expense.

Isnt the 80/20 rule is a disincentive for insurance companies to go after fraud?

Theoretically, a competing insurance company that reduces fraud can offer lower premiums. In reality, this is thwarted by having significant portions of the population locked up in employer provided health insurance so they can’t shop around, although the employer is sort of shopping around for them. It would be much better if everyone was dropped onto healthcare.gov.

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