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Cato‑affiliated scholar urges payment redesign to curb fraud and improve value in mental‑health spending
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Summary
David Hyman told a congressional roundtable that fraud and misaligned incentives, not only clinical failure, help explain rising spending with poor outcomes, and he recommended front‑end payment and program design changes rather than relying solely on prosecutions.
David Hyman framed the problem in economic and programmatic terms. Citing recent peer‑reviewed analysis, he said mental‑health and substance‑use spending has risen faster than other medical spending and that a large share of growth reflects treating more people rather than rising per‑unit costs.
Hyman highlighted enforcement gaps and longstanding examples of fraud in mental‑health programs across multiple states and federal programs. "Fraud is everywhere," he said, and added that after‑the‑fact prosecutions and recoveries have not meaningfully deterred recurring misconduct because detection and recoupment are slow.
He urged changes to how programs are structured—front‑end controls and payment models that reduce the expected benefits of fraud—rather than sole reliance on punitive enforcement. Hyman also noted data gaps that limit policymakers’ ability to measure value and recommended stronger post‑market surveillance and statutory changes that would require reevaluation of long‑term outcomes.
Committee members and other witnesses agreed fraud and misaligned incentives matter, but they also highlighted the need to protect access for patients with severe conditions and to invest in behavioral and rehabilitative services.
