MEDICARE: Bank’s ‘Creative’ Handling Practice Halted
A Chicago bank that found a "creative way to make $12.5 million handling Medicare money" was ordered by the federal government to stop the practice, HHS Inspector General June Gibbs Brown told members of Congress Wednesday. The AP/Lexington Herald-Leader reports that Highland Community Bank is one of 20 banks nationwide that "act as intermediaries between the government and contractors who process Medicare bills from doctors and hospitals." In early 1999, the Federal Deposit Insurance Corp. learned that Highland was withdrawing Medicare funds from the U.S. Treasury "sooner than necessary to pay claims." An investigation into the matter revealed that Highland had been withdrawing Medicare funds a day earlier than necessary since 1993. The bank was able to earn $12.5 million in interest by lending the Medicare monies to other banks overnight. During one 11-day period, the bank also withdrew hundreds of millions of dollars above and beyond immediate Medicare billings, earning more than $700,000 in interest.
During her testimony before a House Government Reform Committee panel, Brown said that bank officers agreed to halt the practice but said they "believed that withdrawing funds a day early was a 'perk' of maintaining Medicare accounts." No charges have been filed against the bank, but the federal government will confiscate the earned interest that would have otherwise accrued in Medicare's trust fund (3/16).