Most accepted government and private studies placed the cost of health-care fraud, waste, and abuse (FWA) at up to 10% of annual expenditures. But new studies have been re-evaluating these assumptions and projecting a much higher cost for FWA. An abstract by the Journal of the American Medical Association notes several prior studies that estimate as much as 30% of health-care spending may be FWA. The conclusion is that despite recent government crackdowns and health plans’ efforts, the percentage attributable to FWA likely remains the same as historic trends.
The authors of the Jama Network abstract, “Waste in the US Health Care System,” (https://jamanetwork.com/journals/jama/article-abstract/2752664) looked at literature from January 2012 through May 2019 that looked at six accepted FWA domains. The authors looked at FWA estimates and savings associated with FWA reduction interventions. The data was aggregated to annual estimates in 2019 dollars. The authors found 71 estimates from 54 unique peer-reviewed publications, government reports, and reports from gray literature.
- Failure of care delivery — $102.4 to $165.7 billion annually
- Failure of care coordination — $27.2 to $78.2 billion annually
- Over-treatment or low-value care — $75.7 to $101.2 billion annually
- Pricing failure — $230.7 to $240.5 billion annually
- Fraud and abuse — $58.5 to $83.9 billion annually
- Administrative complexity — $265.6 billion
Total: $760.1 to $935.1 billion This is up to 25% of 2017 U.S. health-care expenditures.
Calculated potential savings from interventions were the following:
- Failure of care delivery — $44.4 to $93.3 billion annually
- Failure of care coordination — $29.6 to $38.2 billion annually
- Over-treatment or low-value care — $12.8 to $28.6 billion annually
- Pricing failure — $81.4 to $91.2 billion annually
- Fraud and abuse — $22.8 to $30.8 billion annually
- Administrative complexity – No studies identifying interventional savings
Total: $191.0 to $282.1 billion This is up to 8% of 2017 U.S. health-care- expenditures. These numbers simply magnify the necessity for technology to address this growing crisis.