Stop the Bleeding

May 11, 2011 | The Nation |

An Interview With Medicare Fraud Expert Malcolm Sparrow

Malcolm Sparrow, a professor of public management at Harvard’s Kennedy School and the author, most recently, of License to Steal: How Fraud Bleeds America’s Health Care System, has long argued that government agencies underestimate the scale of a fraud epidemic that he believes costs taxpayers hundreds of billions of dollars annually. His work suggests that better fraud control systems can help significantly trim government budgets without impacting services. Such ideas are of peculiar importance in this era of public-sector austerity.

I recently spoke with Sparrow by phone about prospects for improving audits, the value of transparency in stimulus spending and what investigators can learn from chess strategy. Below is an edited transcript of our conversation. —Sasha Abramsky

Do you have a sense of the exact scale of Medicare fraud and, more generally, healthcare fraud today?

No, we don’t. It’s not because we don’t know how—we absolutely do. Basically, the audits they’re using on a random sample are nothing like fraud audits. The difference between a fraud audit and a medical review audit—a medical review audit, you’re taking all the information as if it’s true and testing whether the medical judgment seems appropriate. You can use these techniques to see where judgments are unorthodox or payment rules have not been followed, but almost nothing in these methods tests whether the information you have is true.