Taking the Fraud Out of Medicare Expansion

Decamps (1837)

One of the ways the Obama administration hopes to pay for health care reform is through policing Medicare fraud.  It is estimated that the Centers for Medicaid and Medicare Services (CMS) spends $60 billion a year on fraudulent claims.  According to Senator Grassley of Iowa, the federal agency received warnings of fraud by watchdog organizations, but did not respond to most of them; these warnings fell upon the CMS’s shoulders under the Bush Administration.

A report by the Department of Health and Human Services finds that much of the fraud in the Medicare Prescription Benefit program could have been avoided through better management of the companies that were hired by the federal government in 2006 to investigate and monitor the fraud.  Grassley notes that the companies, called Medicare drug integrity contractors or Medics, were essentially a waste of money because they were never given the proper information to perform the audits.  The New York Times reports that the Bush Administration did not allow for the audits by Medics to proceed until its final few months in office.

Under the current model, scams to get Medicare reimbursement for non-existent services are easier than one might think.  Just this past July, a couple who owned a medical business was indicted for submitting false reimbursement bills to the CMS for power wheelchairs that they claimed had been lost or destroyed during Hurricane Katrina.  Other scams include medical suppliers billing Medicare for equipment that was never given to patients, creation of fake medical supply companies, and acceptance of illegal kickbacks for referring Medicare patients to unneeded services.

Solutions to fraud, however, are not as clear-cut as one might wish.  For example, there is a worry that over-policing the CMS will lead to valid claims being denied at greater rates. Also, enforcement and punishment are issues.  Some health care companies have been able to escape criminal prosecution by paying restitution amounts for the fraudulent claims.  Finding restitution to be an insufficient deterrent to would-be fraudsters,  Senator Arlen Specter of Pennsylvania wants to see scammers put behind bars. But there is also something to be said for the realization that the “Arthur Anderson solution” is really no solution at all.

Another interesting aspect to consider here is that the CMS finds that provisions of the House bill intended to reduce Medicare fraud will not save all that much money.  In spite of this (or perhaps because of it) many of our leaders have demanded that some action be taken to reduce Medicare fraud– even Sarah Palin says fraud is an issue.  One hopes that the Obama administration will learn from its predecessor’s mistakes (if in fact they be such) when it comes to creating watchdogs such as Medics, but then muzzling and not feeding them.