June 20 2014

Oops: Medicare & Medicaid’s Wrongful Payments Ring Up to $64 Billion

Patrice J. Lee

Government entitlement programs are fraught with waste, fraud, and abuse. Each year tens of billions are taxpayer dollars are doled out in improper payments –with a significant portion coming from health related programs. When agencies don’t do their due diligence to ensure that recipients are eligible and getting the right amount, they create opportunities for people to take advantage of these programs.  

More than six billion--$6.2 billion—in improper payments were doled out on food stamps and school meal programs. Recently we learned that Medicare made $50 billion in improper payments and Medicaid is on the hook for making an estimated $14.4 billion in improper payments.

A Health and Human Services internal audit found more than $6.7 billion payments (21 percent of the program’s total budget) to doctors for healthcare visits in 2010 that were listed as improper or erroneous. Apparently, overbilling by doctors drove this fraud.

Fiscal Times reports:

During the review, the auditors found that nearly half of the claims were improperly billed and nearly a quarter lacked documentation. Most of the physicians had billed at a more expensive rate than what the service they delivered was worth, though the auditors said some had under-billed.

The report dovetails with another 2010 report, which found that 1,669 doctors had repeatedly billed Medicare for the two highest-paying codes. USA Today first noted that 56 percent of claims for these physicians were incorrect—almost all of them were “up-coded in the provider’s favor” so they could get paid more through the federal program. Those doctors alone resulted in $26 million improper payments in 2010.

The IG has recommended that the Centers for Medicare and Medicaid Services began routinely reviewing the highest billing physicians—but CMS responded, saying it “isn’t cost effective to do so,” NPR reported.

Then there's Medicaid. It covers about 71.7 million Americans at a cost of $431.1 billion. However, there are gaps in efforts to ensure that the right payments are going to the right people and to avoid overlap and duplication of efforts.

Furthermore, the report concludes that the expansion of Medicaid under ObamaCare heightens the urgency of tightening up operations to ensure that these problems don’t accelerate.

The report concludes:

GAO identified a gap between state and federal efforts to ensure Medicaid managed care program integrity. Federal laws require the states and CMS to ensure the integrity of the Medicaid program, including payments under Medicaid managed care… Without adequate federal support and guidance on ways to prevent or identify improper payments in a managed care setting, states are neither well-positioned to identify improper payments ... Such efforts take on greater urgency as states that choose to expand their Medicaid programs under PPACA are likely to do so with managed care arrangements, receiving a 100 percent federal match for newly eligible individuals from 2014 through 2016…

Program integrity activities are fragmented across multiple state and federal entities. If not carefully coordinated, these fragmented activities could result in additional overlap and unnecessary duplication... Given that combined federal and state efforts have recovered only a small portion of the estimated improper payments, it will be important to continue to monitor federal and state program integrity efforts in Medicaid as a means of assessing whether the current structure is effective.

Americans want to be sure that our nation’s social safety net catches the poor and those who fall on hard times, but as these reports highlight, many unscrupulous people take advantage of the system. When federal and state agencies aren’t working together to minimize opportunities for fraud, abuse, and even duplication of efforts, it's us tax payers who lose out.

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