White House Takes Aim at Billions in Medicare and Medicaid Fraud
Policy + Politics

White House Takes Aim at Billions in Medicare and Medicaid Fraud


Alarmed by the tens of billions of dollars in Medicare and Medicaid fraud and overpayments annually that are draining the federal health care system, the Obama administration has quietly stepped up its auditing and enforcement efforts to crack down on doctors, hospitals and other medical facilities cheating on their billings. 

The effort includes a strict review of reporting procedures and a “comprehensive corrective action plan” involving the Department of Health and Human Services, the Centers for Medicare and Medicaid Services and law enforcement officials. It comes on the heels of a Feb. 26 letter from White House Budget Director Shaun Donovan declaring the crackdown a “key priority” in the final two years of the Obama administration. 

Related: Medicare Drug Program Still Plagued by Fraud 

“While some progress has been made on this front, we believe a more aggressive strategy can be implemented to reduce the levels of improper payments were are currently seeing,” Donovan said in a letter to Health and Human Services Secretary Sylvia Mathews Burwell that was obtained by The Center for Public Integrity, a watchdog group. 

A spokesman for the Centers for Medicare and Medicaid said today that HHS and the Office of Management and Budget were working in tandem to address the costly problem. 

Overpayments by the Medicare and Medicare Advantage programs for seniors and Medicaid for low-income Americans have grown into a massive fiscal problem for the government and an endless source of public outrage over the vast scale of erroneous or fraudulent payouts to the medical profession.

In June, for example, a total of 16 people – including six doctors, a social worker and a pharmacist – were charged by federal prosecutors in Detroit in connection with a Medicare healthcare fraud and kickback scheme throughout Southeastern Michigan. The charges included doctors submitting fraudulent claims for services that were not necessary or that never were provided.

That same month, the federal government was under attack for having handed out hundreds of millions in erroneous benefits after the disclosure that about 200 people received $10 million worth of Medicaid benefits despite the fact they had been dead for years. The Government Accountability Office’s latest report on improper payments found – among other things – that in 2011, four states reported that at least 8,600 people received double benefits from different states – in effect bilking the government of about $18.3 million.

Related: The Government’s $125 Billion Slap in the Face to Taxpayers

Overall last year, Medicaid programs were stung by an estimated improper-payment rate of 6.7 percent, or $17.5 billion – an increase over the 2013 estimate of 5.8 percent, or $14.4 billion, as The Fiscal Times previously reported.

Meanwhile, errors in Medicare fee-for-service billings rose by 2.62 percent in fiscal 2014, at a cost of $9.7 billion more than the previous year, according to Donovan’s letter. The director of the Office of Management and Budget noted that some progress had been made in reducing Medicare Advantage payment mistakes but added that the estimated $12.2 billion in mistakes for fiscal 2014 “remains a concern,” according to his letter.

The Center for Public Integrity revealed last year that government officials made nearly $70 billion worth of improper payments to Medicare Advantage plans for wealthier Americans  between 2008 and 2013 because of overbillings. Medicare Advantage includes health maintenance organizations and private fee-for-service programs.

In his letter, Donovan instructed health officials to develop a comprehensive corrective action plan by April 30 that spells out the “root causes” of the problem and provides innovative ways of cracking down on overpayments. He also sought a plan to improve the integrity of the Affordable Care Act program to “insure payment accuracy.”

Related: $Millions in Medicaid Benefits Flow to Dead People

Aaron Albright, director of media relations for the Centers for Medicare and Medicaid Services, said today that the Health and Human Services Department “met both outlined response deadlines and has worked to reduce improper payments associated with inaccurate Medicare Advantage diagnosis data. CMS has recovered $13.7 million from all 2007 audits of the program.

“HHS and OMB are continuously working together to identify and reduce improper payments,” Albright said in a statement.