License to Steal: How Fraud Bleeds America's Health Care System

Licensed to Steal - 2nd Edition (2000)

(2nd edition, 2000)

License to Steal - 1st edition (1996)

(1st edition, 1996)

Westview Press, Basic Books, Denver. Colorado, USA, 2000 (2nd edition).

Publisher's Description

Who steals? An extraordinary range of folkā€”from low-life hoods who sign on as Medicare or Medicaid providers equipped with nothing more than beepers and mailboxes, to drug trafficking organizations, organized crime syndicates, and even major hospital chains. In License to Steal, Malcolm K. Sparrow shows how the industry's defenses, which focus mostly on finding and correcting billing errors, are no match for such well orchestrated attacks. The maxim for thieves simply becomes "bill your lies correctly." Provided they do that, fraud perpetrators with any degree of sophistication can steal millions of dollars with impunity, testing payment systems carefully, and then spreading fraudulent billings widely enough across patient and provider accounts to escape detection. The kinds of highly automated, quality controlled claims processing systems that pervade the industry present fraud perpetrators with their favorite kind of target: rich, fast paying, transparent, utterly predictable check printing systems, with little threat of human intervention, and with the U.S. Treasury on the end of the electronic line. Sparrow picks apart the industry's response to the government's efforts to control this problem. The provider associations (well heeled and politically influential) have vociferously opposed almost every recent enforcement initiative, creating the unfortunate public impression that the entire health care industry is against effective fraud control. A significant segment of the industry, it seems, regards fraud and abuse not as a problem, but as a lucrative enterprise worth defending. Meanwhile, it remains a perfectly commonplace experience for patients or their relatives to examine a medical bill and discover that half of it never happened, or that; likewise, if patients then complain, they discover that no one seems to care, or that no one has the resources to do anything about it.Sparrow's research suggests that the growth of capitated managed care systems does not solve the problem, as many in the industry had assumed, but merely changes its form. The managed care environment produces scams involving underutilization, and the withholding of medical care schemes that are harder to uncover and investigate, and much more dangerous to human health. Having worked extensively with federal and state officials since the appearance of his first book on this subject, Sparrow is in a unique position to evaluate recent law enforcement initiatives. He admits the "war on fraud" is at least now engaged, but it is far from won.

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Online Commentary by Nader.Org

Online Review on

Published Reviews

In "Health Affairs," by Thomas H. Stanton: Review

In "Journal of the American Medical Association (JAMA)'", by Dr. Bradford Kirkman-Liff: Review

In "FBI Law Enforcement Bulletin," (2002) by James A. Robertson: Review

Table of Contents (2000 edition)

  • Preface
  • Introduction: Who Steals, and How?
  • Part I: The State of the Art
    1. Control Failures
    2. How goes the war?

  • Part II: New Frontiers for Control
    3. False Claims
    4. Managed Care

  • Part III: The Nature of the Fraud-Control Challenge
    5. The Pathology of Fraud Control
    6. The Importance of Measurement
    7. Assessment of Existing Fraud Control Systems
    8. The Antithesis of Modern Claims Processing

  • Part IV: Prescription for Progress
    9 A Model Fraud Control Strategy
    10 Detection Systems

  • Conclusion


'There are some economists who dismiss health care fraud as relatively trivial and irremediable in any case. License to Steal should be required reading both for them as well as for those who want to make changes in the health care system.'
Judith Randal, Washington Post

'Sparrow's book should be STAT reading for everyone interested in the future of health care in America... His book is the only comprehensive blueprint I've seen on how to...fight this cancer in the system.'
Congressman Peter Stark, ranking member, House Ways and Means Health Committee

'As always, [Sparrow's] plain English and common sense approach to discussing...effective fraud controls is refreshing and undoubtedly will lead readers to action.'
J.J.Pickle, former chair, House Ways and Means Oversight Subcommittee

'License to Steal not only gives us the war stories (and humdingers they are!) but also a strategy to contain and maybe ultimately even win the battle against health care fraud and abuse.'
Edward J. Kuriansky, former president, National Association of Medicaid Fraud Control Units

'When the first edition of License to Steal was published, Malcolm Sparrow's was a voice crying in a wilderness of denial. The second edition finds Sparrow again in the perilous role of naysayer, facing both the health care industry, which continues to downplay fraud as a serious issue, and some administration officials who claim that the problem is now under control.'
Miles F. Shore, Harvard Medical School

'Malcolm Sparrow has just identified and helped fill the single biggest information gap in the whole national health care reform debate--the crucial role of waste, fraud, and abuse in health cost inflation.'
Hale Champion, John F. Kennedy School of Government, Harvard University

'Fraud in the health care system is out of control... This provocative and stimulating book will shape the debate about health care fraud control for years to come.'
Barbara L. Zelner, counsel, National Association of Medicaid Fraud Control Units

'Fraud in the Medicare system has been much more prominent in the news than in the writings of health policy analysts. Sparrow's excellent book starts to redress the balance.'
Joseph P. Newhouse, director, Division of Health Policy Research and Education, Harvard University.