MEDICARE FRAUD
The Symptoms and the Cure
Elizabeth L. Wright
1997
Click here for pdf version (http://www.cagw.org/upload/Medicare.pdf)
Executive Summary
Citizens Against Government Waste's (CAGW) 1995 Medicare Fraud: Tales From the Gypped exposed and detailed many avenues of Medicare fraud. Since then, numerous hearings have been held, and legislation, the Health Insurance Portability and Accountability Act (HIPAA), was passed in 1996 to further expose and punish those responsible for gaming the system by giving the Department of Health and Human Services (HHS) Inspector General's (IG) office additional resources to aggressively combat Medicare fraud. CAGW's new report, Medicare Fraud: The Symptoms and the Cure, not only documents new and unsavory examples of fraud and abuse, but offers long-term solutions to improve the Medicare system itself.
The report addresses major questions surrounding Medicare, including: Who's at fault for the waste, fraud, and abuse the system itself, those who use it, or both? Who are the real victims the taxpayers, the seniors who rely on Medicare, or those who are expecting to draw down benefits in the future? What is the best way to cure Medicare's afflictions in the long run? Should the current course of treatment be continued; i.e., attacking fraud, reducing payments to hospitals and doctors, and marginally increasing choices for seniors in Medicare services? Or, is the country ready to embrace more innovative approaches that will allow seniors to regain control of their healthcare choices, rather than deferring to third parties and the federal government?
This report identifies dozens of examples of waste, fraud, and abuse, which can be characterized as: civil penalties, criminal penalties, kickbacks, home healthcare, nursing home fraud, laboratory fraud, durable medical equipment fraud, hospital fraud, and program exclusions. These examples are further graphic proof that, as long as funds flow generously and indiscriminately from this impersonal and nebulous source called the government, Medicare will continue to be plagued by scam artists and crooks, as well as garden variety bureaucratic snafus and misunderstandings.
In 1995, HHS IG June Gibbs Brown estimated that up to $17 billion, or 10 percent of Medicare funds, were lost each year because of waste, fraud, abuse and mismanagement.1 In 1996, following the first comprehensive audit of Medicare since its inception 32 years ago, the IG was forced to revise that staggering figure upward, estimating that the true losses due to fraud, waste, and abuse were closer to $23.2 billion a year. That is $63 million per day, or about 14 percent of total program costs, in net overpayments by Medicare in FY 1996.2 Almost half (46 percent) of the $23 billion was the result of insufficient or absent documentation. The IG admitted that her staff was unable to determine exactly how many of the improper payments occurred as a result of outright fraud and how many were simply honest human errors.3
Recent high-profile Medicare investigations indicate that the system may be as much, if not more, to blame as healthcare providers. While there are certainly plenty of unscrupulous individuals bilking Medicare and the examples offered in this report will rightly outrage the public there are genuine disagreements between the Health Care Financing Administration (HCFA) and providers, and a significant number of these discrepancies grow directly out of misinterpretation of vague and sometimes conflicting HCFA guidelines.
HCFA has admitted that "the best hospitals can do is to be paid for their costs of furnishing services; they can also be paid less than costs, but they cannot make a profit even if they are extremely efficient."4 This no-win situation naturally drives Medicare providers to seek the highest possible reimbursements and encourages even the most law-abiding among them to stretch the rules as far as possible. Some providers conjure up ever more creative techniques to fraudulently squeeze out additional dollars. Further, Medicare's price control system is ineffective and may reduce the quality of healthcare services available to beneficiaries. In fact, the Balanced Budget Act of 1997, with its short-term "fix" of further lowering reimbursement rates for providers, will only exacerbate this problem.
This helps explain why attacking fraud alone, although a laudable goal and the government's only bulwark against the appalling abuses of the system, will never solve Medicare's problems entirely. Medicare needs much more than a vigilant IG to ensure its long-term viability.
Seniors are not the only players in the Medicare debate. Legislators, law enforcement officials, lawyers, healthcare providers, healthcare consultants, accountants, and bureaucrats all have a stake in the outcome. Ironically, two groups members of Congress and HCFA employees wield a disproportionate percentage of power over which healthcare procedures will be covered by Medicare and at what cost, despite the fact that few of them are healthcare professionals.
Their decisions are heavily influenced by the well-organized and well-financed lobbying efforts of hundreds of special interest groups. Members of Congress are under a constant barrage from groups demanding changes to the Medicare laws that address their special causes, diseases, or constituencies. Expensive legal advisors must, in turn, be retained by hospitals, healthcare professional associations, trade groups and other organizations to interpret the impact of these new laws on their ability to deliver quality healthcare to their patients. And finally, accountants, consultants and healthcare insurers must also pore over the 45,000 pages of convoluted Medicare regulations to determine which medical procedures they can bill for and for how much.
Medicare not only encourages providers to stretch the limits of reimbursement to recapture as many of their costs as possible, it also offers patients little incentive to question excessive costs or report overpayments. Because there are no rewards for delivering high quality healthcare or improving efficiency, there are no "up front" incentives for providers to control costs. Instead, there are "back-end" investigations and billing disputes, well after the money has disappeared, and lack of attention to the root causes of the problems. In this insidious cycle, more dollars are reprogrammed and committed to investigations, and regulations are constantly made more complex and vulnerable to misinterpretation, abuse, and litigation. This, in turn, leads to still more insistent calls for crackdowns and investigations.
These problems will multiply as technology and advances in medicine continue to outpace the government's ability to write and enforce new rules and regulations. Many of the newest and most innovative medical techniques are not even recognized or covered by Medicare, which means that seniors do not have access to all of the same high quality treatments under Medicare as patients under the age of 65. Medicare trails the private sector in using both managed care and healthcare outcomes to control unnecessary medical spending. The only way to control expenditures in this type of entitlement program is to specify in advance exactly what price the government will pay for each and every service rendered. A lumbering, monopolistic bureaucracy like Medicare is simply not nimble enough to keep up with a rapidly evolving industry that offers many different types of services, products, and treatments.
Real change in Medicare will only come about when the power to make healthcare decisions is taken away from politicians, bureaucrats, lawyers, consultants, and accountants, and placed into the hands of those who depend upon the program. The Balanced Budget Act of 1997 was a good start in providing seniors with more choices and more control. But it does not address the core problem: Medicare will begin to slide into bankruptcy in 10 years, as the baby boomers begin flooding the program. The commission created by the Balanced Budget Act must confront this immediate crisis head-on by taking bold steps. CAGW concurs with U.S. Rep. Pete Stark (D-Calif.), who recently wrote "Medicare beneficiaries deserve the best we can offer quality care at an affordable price with strong protections against unscrupulous providers."5
MUCH MORE AT:
cagw.org
Here is an excellent article with ideas published by non partisan Heritage Foundation:
heritage.org |
