Magazine article Reason

Medicare Thieves: Stealing from the Government-Run Health Care System Is Much Easier-And Potentially More Lucrative-Than Dealing Drugs

Magazine article Reason

Medicare Thieves: Stealing from the Government-Run Health Care System Is Much Easier-And Potentially More Lucrative-Than Dealing Drugs

Article excerpt


IF THE POLLS ARE TO BE believed, most American seniors love Medicare. It's easy to understand why: When seniors are sick, they get care, and the bills get paid. When a senior citizen walks into a storefront health clinic and seeks treatment--a prescription drug, say, or some sort of physical therapy--the service is performed and the patient walks away feeling better, if only because he knows that whatever the bill might be, the taxpayers will pay for it.

Doctors generally don't love Medicare as much as seniors, mostly because the program's reimbursement rates to health care providers are somewhat lower than the rates paid by private insurers. But doctors do love one thing about socialized health care for the elderly: its certainty. Seniors seek medical assistance, doctors respond with whatever treatment they deem necessary, and Washington picks up the tab. The providers must pass through a few cursory procedural requirements and complete some paperwork, but for the most part the government doesn't ask questions; it just sends money. What's not to like?

For taxpayers, this arrangement leaves much to be desired. What if the treatment wasn't necessary or the patient didn't want it, but the provider billed the government for it anyway? What if the storefront clinic didn't exist at all?

This is exactly what's happening all across the country, as schemers, career criminals, and unscrupulous providers take advantage of the government's lax controls over Medicare payments. Taxpayers are lining the pockets of health care criminals.

No one knows for sure exactly how much fraud exists in the Medicare system, but most experts agree that it costs billions of dollars each year. Between 2007 and early 2011, the federal government reports having won convictions against 990 individuals in fraud cases totaling $2.3 billion. In 2010, it recovered an additional $4 billion through collection of non-criminal penalties on health providers who improperly billed the government. But that's just a fraction of the total problem.

According to a 2011 report from the Government Accountability Office, Medicare makes an estimated $48 billion in "improper payments" each year, an estimate that's almost certainly lower than the actual amount since it doesn't include bad payments within the prescription drug program. Some of that money, perhaps a lot of it, is fraud, but experts differ on exactly how much. On the very low end, the National Health Care Anti-Fraud Association has estimated that about 3 percent of all U.S. health care spending is fraud. Assuming fraud is distributed equally across payment systems, that would mean Medicare's share is roughly $15 billion a year. But almost all analysts believe fraud is much more common in Medicare than in it is in payments by private insurers. Toward the high end, Sen. Tom Coburn (R-Okla.) once suggested the number could be as much as $80 billion a year. In March, the executive director of the National Health Care Fraud Association told members of Congress that total health care fraud losses likely range from $75 billion to $250 billion each year.

With $36 trillion in unfunded liabilities just over the horizon, and with Medicare's own actuaries projecting insolvency by 2024, Medicare is a fiscal nightmare. It's the single biggest driver of the long-term federal debt, and just about everyone in Washington is looking for ways to cut back on health spending without trimming legitimate services. Last year the program paid out slightly more than $500 billion in reimbursements to doctors and other providers. Paring it back by $48 billion a year--or even half that amount--by attacking criminal behavior would be a major accomplishment and could go a long way toward reducing the program's unsustainable fiscal burden.

Every politician with a pulse talks a big game about eliminating Medicare "waste, fraud, and abuse," yet nothing much seems to get done. …

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