Sociology 3357F/G Lecture Notes - Pharmaceutical Industry

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Lecture Five October 24, 2013
Deviance and Deception in Action: White Collar Property Crimes
Healthcare Fraud
Healthcare: largest industry in US
15% of GDP (gross domestic product)
Stakeholders: doctors, hospitals, treatment centers, nursing homes, clinics, testing labs,
medical supplies, equipment, pharma, billing, record keeping and accounting firms
Extent of problem?
Estimated 10%/year
For $1 trillion dollar industry, that’s $100 billion per year
$238 million/day
$11 million/hour
Healthcare industry in US
In most cases, insurance covers costs,
oPrivate, Medicare (seniors over 65), Medicaid (people with low income)
Contrary to most other transactions where consumer directly pays for product or service
What does this look like?
oReality: doctor submits the bill to the insurance company (electronic), computer
pays out doctor
Ideally at point of claim submission
Problem is 3 fold:
Size, complexity, structure
Medicare: 800 million claims filled per year
Computerized system of payment
Difficult to look for patterns things can be swept under the rug
oIf someone had a physical, and needed a cast on their finger there are probably
lots of cases like this out of 800 million
Resources for fraud control: time, people and money
All of the above could be delegated to claims processing
oSpeed vs. pattern
oIf you want to go fast, using people is very difficult
oComputers are not as good at looking for patterns
Healthcare fraud “on the ground”
Government now beginning to use big data in order to sift through patterns
Use to be a pay and chase model: pay doctor then chase them down for money
Fraud in Banking
Banking: deposit money, bank keeps it safe and provides you with: ATM access, cheque
writing capacity, potential interest
What does the bank do with your money?
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