Medicare Fraud: A $70 Billion Taxpayer Ripoff
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The Fiscal Times
March 10, 2011

Medicare could wrench as much as $70 billion a year in savings by cracking down on fraud, experts told Congress this week. But the key is preventing scam artists and fake firms from doing business with the senior citizen health care program in the first place — not chasing them down after the fact.

At a series of congressional hearings, officials from the Centers for Medicare and Medicaid Services insisted that it is beginning to scrutinize new providers coming into the program, rather than waiting to chase down fraud until after it’s paid the bills. “We are going to keep out the bad guys without making things worse for honest providers, and cut off payments for things that should not be paid,” Peter Budetti, director of program integrity at CMS, told a Senate Homeland Security subcommittee hearing on Wednesday. “We want to move from the pay and chase mode to preventing fraud.”

Budetti cautioned, though, that most of the funding for a new electronic screening software that could help identify fraudulent providers was contained in the 2010 health care reform law, which most Republicans on the Hill are seeking to repeal.

The growth of Medicare fraud
could undermine the major source of
funding for the new health care reform law.


Republicans responded that the limited measures in the reform bill don’t go far enough. The Congressional Budget Office estimated the latest government fraud prevention effort would eliminate just $5.8 billion in improper payments over the next decade, or less than 1 percent of expected fraud, Rep. Charles Boustany, R-La., said last week at a House Ways and Means subcommittee on government oversight hearing. The legislation “left a lot of suggestions by Congress and other government agencies on the cutting room floor,” he said.

The Obama administration has clearly stepped up the government effort to combat Medicare fraud that began under the Bush administration. Its fear: If left unchecked, the growth of Medicare fraud could undermine the major source of funding for the new health care reform law. The administration hopes to raise about a half trillion dollars over the next decade through greater efficiencies in Medicare to help fund coverage for the uninsured.

To combat fraud, it has sought more money for the special interagency task force that investigates providers who abuse the system. For instance, last month Attorney General Eric Holder announced the arrest of 111 company executives, doctors and other health care providers in nine cities in what government officials called the largest ever federal crackdown on health care fraud. The charges ranged from submitting claims for medically unnecessary treatments to receiving kickbacks for referrals to billing for toenail removals that were never done.

New Approach to Root Out the Problem
Last year, the federal task force arrested 931 people and won 726 convictions in illegal billing schemes worth more than $2.3 billion, a 23 percent increase over the previous year, officials said. In 2010 it also recovered $4 billion through non-criminal penalties levied on Medicare and Medicaid providers who made improper claims to federal and state agencies.

spent 25 years as a foreign correspondent, economics writer and investigative business reporter for the Chicago Tribune and other publications. He is the author of the 2004 book, The $800 Million Pill: The Truth Behind the Cost of New Drugs.