A report by the Centre for Health and the Public Interest (CHPI) argues that greater use of for-profit providers is likely to substantially increase fraud, resulting in less money for patient care.
The authors, director of the Centre for Counter Fraud Studies at the University of Portsmouth Professor Mark Button, and health policy academic Colin Leys, found the use of payment-by-results contracts with private providers was providing opportunities for ‘upcoding’ - with patients categorised as having more serious conditions than they actually have.
Professor Button said: ‘Upcoding by private companies is prevalent in the US healthcare market and the FBI has estimated that healthcare fraud in the US totals $80bn a year.
‘In the US, upcoding has also been found to be twice as high in for-profit hospitals as non-profit hospitals. This situation is compounded in the UK where opportunities for detection are weak and penalties for breaking the law, if found out, are insubstantial.’
He urged the UK government to pay more attention to the risk of fraud.
The report names several US health firms which have settled fraud cases in the US which are now central to the new NHS system, including through primary care provision.
Mr Leys said: ‘Under the 2012 Health and Social Care Act the new NHS is set to rely heavily on contracts between the government and private healthcare services, increasingly resembling the US healthcare system.
‘The use of payment-by-results contracts with private providers in the new NHS market provides significant opportunities for making fraudulent claims.
‘Private providers also have an incentive to overcharge because company law requires them to maximise the return to shareholders.’
But David Worskett, chief executive of the NHS Partners Network, which represents independent providers, said he was 'stunned' CHPI had chosen to publish such an 'ill-concieved' report as its first publication.
He said: 'There is absolutely no evidence to suggest that independent sector providers are engaging in fraudulent "up-coding" and to imply otherwise is damaging not only to the sector but, more importantly, to the delivery of high-quality cost effective patient care in the UK. Anyone with any knowledge of the sector would know that the range and complexity of procedures carried out by the independent sector for the NHS is strictly controlled and very limited. That of itself means the scope for up-coding could only be minimal.
He added: 'The provision of healthcare in the US is very different to the UK and assumptions drawn from direct comparisons are therefore unlikely to be accurate, relevant or helpful.'