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A Conversation with … Natasha Parekh MD, MS—Expert on Waste and Fraud in the US Healthcare System

Leopold, Seth S. MD

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Clinical Orthopaedics and Related Research: March 2020 - Volume 478 - Issue 3 - p 447-450
doi: 10.1097/CORR.0000000000001128
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A recent study in Clinical Orthopaedics and Related Research® [6] found that between 2005 and 2015, the mean non-profit medical center chief executive office (CEO) compensation increased by 93%, to a mean of more than USD 3 million per year. This spiked the wage gap between CEOs and “line workers” from 3:1 to 5:1 with orthopaedic surgeons, and from 23:1 to 44:1 with registered nurses over that span of time. The number of healthcare workers rose 20%, from 13 million to 15 million, but by the end of the study period, for every physician, there were 10 non-clinical workers.

In an interview I did with the senior author of that paper, he raised concerns that the expected efficiencies that should have accrued to the healthcare system during that period (given the number of mergers and acquisitions that took place over that span of time) did not; instead, we saw only worsening administrative bloat [16]. This important paper [6] saw wide coverage in the national lay press [17].

Even so, by looking only at the cost side of the equation, it could not directly answer questions of value. The authors found plenty of smoke, but stopped short of shouting “fire!”

Enter Natasha Parekh MD, MS, expert in healthcare systems and the waste that resides therein; we might call her the firefighter, or at least the fire-finder. In her important JAMA study late last year, Dr. Parekh and her team analyzed not just costs but actual waste in the system, and found that waste—defined as failure of care delivery, failure of care coordination, overtreatment or low-value care, pricing failure, fraud, and abuse, and administrative complexity—accounted for about one-quarter of all healthcare spending in the United States [18].

Natasha Parekh MD, MS

How much is that in real dough? Nearly USD 1 trillion. That’s trillion with a “T”.

Look at it again: Almost USD 1,000,000,000.

It’s easy for the eyes to glaze over when staring at all those zeroes. Lay those dollar bills end to end and—at about 97,000 miles—you get just shy of halfway to the moon, which doesn’t do you a bit of good. But here on earth, that kind of money goes a long way. For example, it would cover almost the entire US federal expenditure on health care [19]. The savings that the system could garner by following the practical prescriptions in Dr. Parekh’s study [18] could approach USD 280 billion (give or take a few billion), which is enough to cover every uninsured and underinsured patient in the United States, to more than double the budget of the NIH [8], and still leave a few billion in the couch cushions to play poker with.

Intrigued? I sure was.

If you are, too, please listen in on my conversation with Dr. Parekh, expert on waste in the US healthcare system.

Seth S. Leopold MD:The data in the CORR study[6]—and yours[18]—suggests that administrative bloat in the U.S. healthcare system is severe and worsening. In your paper, you wrote: “As more clinicians transition into value-based payment arrangements with financial risk, administrative burden and oversight could be reduced …”[18]. Can you help me see how shifting risk onto physicians will reduce administrative bloat, and perhaps share some other specific ideas that may help bend the curve?

Natasha Parekh MD, MS: This is a really good question, and you raise an important point about how sometimes reducing waste in one domain (value-based payment models that can address high costs of healthcare services) may increase waste in another (administrative costs). To clarify the statement from the article, sometimes both providers and payers invest resources into their programs that address identical issues—for instance, complex and transitional care management, quality improvement initiatives, and population health management. In value-based payment models where incentives are more aligned between providers and payers, there is opportunity to partner and align in these programs (rather than duplicate services), thus reducing administrative burden through streamlining resources. Furthermore, in value-based payment arrangements where payments to providers are capitated, administrative burden could potentially (time will tell as these models become more popular) be reduced since the resources that were previously focused on billing, processing, and coding may be unnecessary.

In terms of other ideas that could help bend the curve, there is real opportunity to use technology to streamline burdensome processes. For example, the Centers for Medicare & Medicaid Services’ (CMS) Blue Button 2.0 program leverages technology to ease Medicare beneficiaries’ access to and sharing of their health data, payer coverage, and billing status. Initiatives such as this obviate burdensome administrative processes and empower patients to own their own data.

Dr. Leopold:I may need a little hand-holding here. Those seem like smallish back-end process elements; do you really see them as having the potential to take a real bite out of a trillion-dollar problem?

Dr. Parekh: I disagree that streamlining processes and reducing redundancy in care management, quality improvement, and population health management are “smallish back-end process elements.” There is substantial waste in duplication and redundancy in these services.

Dr. Leopold:It seems like the area of your study that individual orthopaedic surgeons can best influence might be the delivery of low-value care, which accounted for USD 200 billion in waste. Good research suggests that some very-commonly performed interventions—such as knee arthroscopy for meniscal pathology in older patients[14]or injections of “viscosupplements” for arthritis[15]—are minimally effective or ineffective. What are the best evidence-based approaches to changing long-entrenched practice patterns? Journal articles do not seem to do the trick (ask me how I know).

Dr. Parekh: Dissemination of evidence-based practices is one of greatest challenges to the provision of high-value care to patients. As you mention, unfortunately it is difficult for journal articles to impact practice.

I think there are a few ways that data can systematically change entrenched practice patterns. First, systems must develop and follow processes by which high-quality evidence and guidelines are efficiently translated to clinical decision-making. Some systems and programs are already doing this, such as the High-value Healthcare Collaborative [11] and Kaiser’s E-SCOPE model [12], where evidence-based practices are assessed by system leaders, prioritized to help decide which to embrace, piloted and implemented across the system, and evaluated. Second, evidence-based practices can be encouraged through financial incentives. For instance, in the Medicare Diabetes Prevention Program [3], CMS actually ties funding to the administration and effectiveness of evidence-based practices in diabetes prevention. Finally, quality measures can encourage dissemination of evidence-based practices, especially in pay-for-performance models where provider payments are linked to quality. For example, the Merit-based Incentive Payment System measure for statin use to prevent and treat cardiovascular disease can encourage physicians to use statins for populations that have been proven to benefit most based on high-quality evidence.

Dr. Leopold:I’m especially intrigued by the Medicare Diabetes Prevention Program that you mention. I can see something like this being applied to many areas of surgery that I alluded to in the previous question. How might CMS decide what is and isn’t “evidence based”? Do they work with subspecialist stakeholders (in this case, that’s another word for surgeons), or do they see us as too self-interested to be dispassionate?

Dr. Parekh: My impression is that CMS performs extensive reviews of the literature to assess the evidence base in specific areas and identify best practices that should be included in value-based models. I imagine this is particularly difficult for clinical processes where the evidence is weaker/still mounting. In terms of working with subspecialists in value-based models, subspecialist engagement has been a challenge due to several factors, including difficulty in attributing specific outcomes and costs to specialists and persistent dominance of fee-for-service payment mechanisms in the US. That being said, many payers (including CMS) have been embracing the challenge over the last decade by linking payments to specialists with outcomes and costs for specific episodes (or bundles) of care. For instance, CMS has engaged orthopaedic surgeons in its Comprehensive Care for Joint Replacement bundle [2] and oncology in the Oncology Care Model [4].

Dr. Leopold:Fraud is a big part of waste; there recently was an exposé about the care of older patients who were targeted for “genetic testing,” generating Medicare bills as high as USD 25,000[1]; the scope of this fraud was estimated at over USD 2 billion[13]. A first-year medical student would recognize the inappropriateness of such testing, and yet scores or hundreds of patients received such “care”. Frauds like this affect—and reflect badly on—all of us; what specific steps are likely to be more effective than those now in place to mitigate fraud?

Dr. Parekh: This is a great question, especially in a world where the internet and telemarketing calls lend increased patient access to a host of fraudulent health-related information and activities. The Affordable Care Act strengthened the battle against fraud and abuse through reinforcing CMS’ authority to screen and suspend payments to questionable providers and consolidating separate Medicare and Medicaid efforts into one government program [7]. Additionally, CMS is leveraging data to flag suspicious claims and providers. As you pointed out, however, despite increased efforts to curb fraud over the last decade, it is still a significant issue. I think historically a major barrier to identifying fraud was anti-fraud organizations’ limited access to comprehensive data. To truly identify fraudulent activities early, we need public-private partnerships where big data are used to identify and predict fraud. I think there is a lot of potential in the National Fraud Prevention Partnership, a public-private partnership comprised of more than 10 federal organizations, over 40 state-based partners, over 70 private companies, and over 10 associations, whose goal it is to curb fraudulent activities by sharing claims data and employing sophisticated analytics in order to identify and predict fraud [5]. In the last few years, they have developed reports focused on fraud in clinical laboratory services and opioid prescribing based on their analyses.

Dr. Leopold:To what degree was that partnership successful, and what (if anything) is keeping it from achieving broader reach in a fraud problem that by your estimate draws USD 58.5 billion per year out of the US healthcare system?

Dr. Parekh: From what I can tell, the Healthcare Fraud Prevention Partnership has focused on specific areas of identified fraud. It released a white paper in 2018 focused on fraud and abuse in laboratory services [9], emphasizing variability in laboratory practices, high-volume of unnecessary lab prescribing, billing fraud, and inappropriate laboratory relationships. The paper is the beginning of a longer project acting on the issues identified in the report. In 2017, it developed a similar report [10] on fraud and abuse in opioid prescribing, endorsing three approaches for payers and stakeholders to follow to combat the crisis. I am not familiar with financial evidence of the National Fraud Prevention Partnership’s impact but I am look forward to seeing it!


The author thanks Paul A. Manner, MD, Randall E. Marcus, MD, and Terence J. Gioe, MD, for their thoughtful suggestions about the interview, and more broadly for their thoughts about the topic of waste in the healthcare system.


1. Bailey M. Genetic-testing scam targets seniors and rips off Medicare. Accessed July 31, 2019. Available at: Accessed October 29, 2019.
2. Centers for Medicare & Medicaid Services. Comprehensive care for joint replacement model. Available at: Accessed December 11, 2019.
3. Centers for Medicare & Medicaid Services. Medicare Diabetes Prevention Program (MDPP) expanded model. Available at: Accessed December 11, 2019.
4. Centers for Medicare & Medicaid Services. Oncology care model. Available at: Accessed December 11, 2019.
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13. Landi H. DOJ Arrests 35 in $2.1B Medicare scam targeting seniors for fraudulent genetic testing. September 30, 2019. Available at: Accessed October 29, 2019.
14. Leopold SS. Editorial: Appropriate use? Guidelines on arthroscopic surgery for degenerative meniscus tears needs updating. Clin Orthop Relat Res. 2017;475:1283-1286.
15. Leopold SS. Editorial: Getting evidence into practice—or not: The case of viscosupplementation. Clin Orthop Relat Res. 2016;474:285-288.
16. Leopold SS. Editor’s Spotlight / Take 5. The growing executive-physician wage gap in major US nonprofit hospitals and burden of nonclinical workers on the US healthcare system. Clin Orthop Relat Res. 2018;476:1906–1909.
17. Lovelace B. LifePoint Health top 4 executives could get $120 million in ‘golden parachute’ payouts in sale to Apollo. September 28, 2018. Available at: Accessed October 31, 2019.
18. Shrank WH, Rogstad TL, Parekh N. Waste in the US health care system—Estimated costs and potential for savings. JAMA. 2019;322:1501-1509.
19. Tax Policy Center. How much does the federal government spend on health care? Available at: Accessed October 31, 2019.
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