MEDICARE: Bad Payments Halved by Fraud, Waste-Busting
An aggressive crackdown has cut Medicare fee-for-service fraud and waste in half over the past two years, but 7.1% of the program's outlays -- or $12.6 billion -- were still misspent in 1998, according to a new audit. HHS Inspector General June Gibbs Brown, whose office conducted the analysis, said, "We finally feel we have turned the corner" (Rosenblatt, Los Angeles Times, 2/10). The New York Times reports that improper payments "totaled $23.2 billion in 1996 and $20.3 billion in 1997." (Pear, 2/10). Hospitals, physicians and home health agencies were the worst culprits, and the mispayments discovered in the sample will be recovered. The audit sampled 5,540 claims worth $5.6 million and projected the results over the entire $176.1 billion fee-for-service system (McGinley, Wall Street Journal, McGinley, 2/10).
How It Was Done
The Justice Department's John Bentivoglio said "criminal prosecutions and convictions for health care fraud had doubled in the last four years," from 140 to 346, as "[h]ospitals, doctors, home health care agencies, laboratories and other health care providers [have] become more cautious in submitting claims to Medicare" (New York Times, 2/10). Brown said crackdowns on fraud have become well known, so "criminals are no longer being attracted to Medicare because the word is out that the government is catching and prosecuting fraud in this field." She added, "When I came here, we actually saw organized crime moving in because it was so lucrative. We have turned it around now." The Washington Post reports that one of the government's most effective tactics has been to improve documentation of claims, as "[i]n the past, documentation occasionally was missing entirely, making it impossible to determine whether the government was improperly charged -- or if the service had been delivered at all" (Havemann, 2/10).
The Wall Street Journal said that the DOJ and HHS will focus on "services that aren't medically necessary," as well as on "upcoding" (2/10). Even as documentation errors, non-covered services and other errors such as fraud decrease, medically unnecessary services and incorrect coding accounted for 56% and 18% of all incorrect payments in 1998, respectively (Washington Post, 2/10). In the report, the inspector general's office warned that Medicare "remains inherently vulnerable to improper payments" (Los Angeles Times, 2/10).
Sen. Tom Harkin (D-IA), who "has crusaded against Medicare fraud," said, "This is not time for a victory lap. ... There's still too much waste in Medicare" (Washington Post, 2/10). HHS Secretary Donna Shalala said, "We still have a big job to do in eliminating improper Medicare payments, but with a 45% reduction in improper payments in just two years, we are making real progress. ... Today's report by the Inspector General is welcome proof that our zero tolerance policy against waste, fraud and abuse is paying off" (HHS release, 2/9). House Committee on Government Reform and Oversight Chair Dan Burton (R-IN), who plans to hold a hearing on the report today, "praised Medicare officials for reducing overpayments, but said $12.6 billion was 'still an outrageous amount of waste'" (New York Times, 2/10). Senate Special Committee on Aging Chair Chuck Grassley (R-IA) said, "I commend [HHS] for making progress. ... The bad news is the government still wasted an incredible $12.6 billion in improper Medicare payments in just one year. Some of this money went to fraud. Some went to innocent billing mistakes. Every penny of it should have been spent on health care" (committee release, 2/9).