As Predicted, Obama Administration Backs Off Medicare Anti-Fraud Efforts
Medicare and Medicaid are rife with fraud. We’re talking 10 percent or more of total spending, which is two orders of magnitude more than what credit card companies tolerate.
In a recent article, I explained a couple of ways such fraud occurs:
For providers, Medicare is like an ATM: So long as they punch in the right numbers, out comes the cash. To get an idea of the potential for fraud, imagine 1.2 million providers punching 1,000 codes each into their own personal ATMs. Now imagine trying to monitor all those ATMs.
For example, if a medical-equipment supplier punches in a code for a power wheelchair, how can the government be sure the company didn’t actually provide a manual wheelchair and pocket the difference? About $400 million of the…fines paid by Columbia/HCA hospitals were for a similar practice, known as “upcoding.”…
Yet federal and state anti-fraud efforts remain uniformly lame. Medicare does almost nothing to detect or fight fraud until the fraudulent payments are already out the door, a strategy experts deride as “pay and chase.” Even then, Medicare reviews fewer than 5 percent of all claims filed.
‘Biggest Crackdown Ever’ Shows Medicare’s Anti-Fraud Efforts Are a Fraud
The Obama administration somehow continues to garner positive coverage for arresting (alleged) Medicare fraudsters who bilk the program for, say $295 million. See this CBS News report:
Combating fraud is a good thing, but $295 million is chicken feed compared to the $100 billion or so that Medicare and Medicaid lose to fraudulent and other improper payments each year.
Instead of merely parroting the government’s press releases on its anti-fraud efforts, it would be nice to see some media outlet examine why Medicare and Medicaid fraud is so prevalent, so persistent, and why politicians have no incentive to do anything serious to combat it. They could start with this article and this video:
Wartime Contracting Report Provides More Evidence to Exit Afghanistan
Over the past decade, American taxpayers have lost as much as $60 billion dollars to massive fraud and waste in the nation building campaigns of Iraq and Afghanistan, according to a report released today by the Commission on Wartime Contracting. The independent panel confirms much of what we already know about rent-seeking in wartime; nevertheless, the panel details specific reconstruction projects and programs that display a stunning array of mismanagement:
- A modest $60 million agricultural development program in northern Afghanistan expanded to the south and east to the tune of $360 million. The cash-for-work program was intended to distribute vouchers for wheat-seed and fertilizer in drought-stricken areas. Today, the program spends $1 million a day. The panel reports, “The pressure to quickly spend the millions of dollars created an environment in which waste was rampant. Paying villagers for what they used to do voluntarily destroyed local initiatives and diverted project goods into Pakistan for resale.”
- During operations in Iraq and Afghanistan, waste and fraud averaged about “$12 million every day for the past 10 years.” [Emphasis in original];
- The Department of Defense (DoD) awarded an $82 million contract for the design and construction of an Afghan Defense University. Now, DoD officials say it will cost $40 million a year to operate—beyond the indigenous government’s ability to fund and sustain;
- The U.S. Agency for International Development, the U.S. Government’s main distributor of development contracts, funded the Khost-Gardez road project. Originally valued at $86 million it has since mushroomed to $176 million;
- The insurgents’ second-largest funding source is the U.S. taxpayer. Money for construction and transportation projects are diverted to the insurgency so Afghan subcontractors can pay them for protection. Of course, the insurgents use this money to buy bombs, IEDs, and other explosives to kill foreign troops and civilians.
The report goes on and on with examples that should disgust U.S. taxpayers. In addition, the report was released amid news that August 2011 was the deadliest month for U.S. service members, and 2011 shaping up to be the deadliest year for Afghan civilians. Despite the spin from warhawks, people in the region know the coalition has lost. Last year, the “Godfather of the Taliban,” Hamid Gul, the former head of Pakistan’s Inter-Services Intelligence agency, laid out in extensive detail why America has been defeated (for skeptics of withdrawal, it’s worth reading).
The United States has largely disrupted, dismantled, and defeated al Qaeda. America should not go beyond that objective by combating a regional insurgency or drifting into an open-ended occupation. We have endured enough with tens of thousands of people killed, injured, and traumatized, and billions of dollars wasted.
An 85 Percent Increase in Health Care Fraud Prosecutions? Be Still My Beating Heart…
USA Today reports that the Obama administration’s efforts may yield an 85 percent rise in federal fraud prosecutions. Yawn.
Fraud expert Malcolm Sparrow:
By taking the fraud and abuse problem seriously this administration might be able to save 10 percent or even 20 percent from Medicare and Medicaid budgets. But to do that, one would have to spend 1 percent or maybe 2 percent (as opposed to the prevailing 0.1 percent) in order to check that the other 98 percent or 99 percent of the funds were well spent. But please realize what a massive departure that would be from the status quo. This would mean increasing the budgets for control operations by a factor of 10 or 20. Not by 10 percent or 20 percent, but by a factor of 10 or 20. [emphasis added]
That’s not going to happen, as I explain here and in this video:
$154 Million Medicaid Fraud Settlement a Sign of Govt Failure, Not Success
The federal government, four states, and a whistleblower have extracted a $154 million settlement from Par Pharmaceuticals for fraudulently inflating the prices it charges Medicaid, according to the Associated Press.
With Medicare and Medicaid losing roughly $100 billion each year to fraud and other improper payments, however, the fact that a paltry $154 million settlement is news can only mean that federal and state governments are not even trying to combat fraud in any serious way. As I explain in this video, that’s because politicians have almost zero incentive to do so — which makes massive amounts of fraud an inherent part of these programs:
Under ObamaCare, Medicare and Medicaid fraud will only get worse.
Washington Post Asks for Budget Plans
The Washington Post’s editorial board issued a challenge to the president and his Republican opponents: “show us your plans” for deficit reduction. In fact, the Post says it would be “delighted” to receive plans from its readers. However, the Post isn’t interested in “meaningless promises” to cut “waste, fraud, and abuse”—it wants specifics:
Here’s what we’re not looking for: pablum about eliminating unnecessary spending without identifying where. Gauzy rhetoric about making hard choices without making them. Meaningless promises about eliminating waste, fraud and abuse. Broad assertions about where to find the money — “Medicare savings,” “tax reform” — without specifics. Arbitrary spending caps without accompanying details about how those limits are to be met. If you believe, for example, that federal spending should be kept to a specific share of the economy — 18 percent? 20 percent? — show the plausible path to getting there.
Amen. Chris Edwards and I have been beating the drum for Republican policymakers in particular to get specific about what they would cut. Chris recently noted that with the exception of Sen. Tom Coburn (R-OK), Sen. Rand Paul (R-KY), and perhaps a few others, Republicans aren’t putting much effort into identifying programs to terminate. And I have noted that “It’s more common to hear Republicans blubber on about ‘reducing waste, fraud, and abuse’ in government programs and ‘saving’ the pillars of the welfare state (Social Security and Medicare) for ‘future generations.’”
As for deficit reduction ideas from Washington Post readers, we have a balanced budget plan on our Downsizing the Federal Government website. In fact, not only do we have a plan, we have over three dozen essays on numerous government agencies that provide details on what programs to cut and why.
Medicare Fraud: Et Tu, Reverend?
From today’s Los Angeles Times:
On Tuesday, a jury found [south Los Angeles pastor Christopher] Iruke, his wife and an employee who worked for the couple guilty of healthcare fraud and conspiracy to commit fraud…
Authorities said Iruke and associates often supplied power wheelchairs to Medicare patients perfectly capable of walking on their own —including one who did jumping jacks to show agents he never needed one. Also among the patients Iruke and his associates filed reimbursement claims for were two people who were deceased, according to court papers…
After purchasing the wheelchairs at about $900 wholesale and paying for the prescriptions, he pocketed the remainder of about $6,000 in taxpayer money he received as Medicare reimbursements, according to court documents. The pastor operated four medical equipment supply companies between May 2002 and September 2009 as part of the scheme, according to authorities.
In all, Iruke’s companies filed for $14.2 million in claims and received about $6.6 million in reimbursements.
The money funded a lavish lifestyle, including several luxury cars, international travel, and about half a million dollars of remodeling on his Baldwin Hills home, prosecutors contended in trial…
The case was brought as part of a federal strike force on Medicare fraud, which has resulted in charges against more than 1,000 people across the country who billed the program $2.3 billion, according to a Department of Justice press release.
Apologies for the long excerpt, but this stuff is fascinating for several reasons. The ease with which these folks defrauded Medicare. The vast gulf between the market price for a wheelchair ($900) and what Medicare pays ($6,000) — which practically begs people to defraud the program. The fact that DOJ pats itself on the back for nabbing the perpetrators of $2.3 billion of fraudulent billings even though that represents a much smaller number of fraudulent payments, which in turn account for a teeny-tiny share of the official estimate that Medicare loses $48 billion to fraud and other improper payments per year, which itself understates the extent of fraud in the program.
As I explain in this article and the below video, the extent of Medicare and Medicaid fraud is truly mind-blowing.
ObamaCare will bring even more fraud. And efforts to combat Medicare, Medicaid, and ObamaCare fraud will always be inadequate until Congress reforms or scraps these entitlement programs.
‘Project Veritas’ Releases New Medicaid Fraud Video
Available here. Something about Medicaid employees coaching faux Russians on how to hide income and assets so as to enroll their father in Medicaid.
I’m not sure how much of what Project Veritas has found counts as fraud. But I’m pretty sure it’s chump change compared to this stuff:
It is interesting, and consistent with the thesis of this video and my National Review article, that Project Veritas’s Medicaid-fraud videos haven’t garnered nearly as much attention as their other “stings.”
GAO’s 159th Report on Medicare/Medicaid Fraud Finds Anti-Fraud Measures ‘Inadequate’
Today, the Government Accountability Office will release a new report on fraud in Medicare and Medicaid. By my count, it is the 159th report the GAO has issued on fraud in these programs since 1986. According to the Associated Press:
The federal government’s systems for analyzing Medicare and Medicaid data for possible fraud are inadequate and underused, making it more difficult to detect the billions of dollars in fraudulent claims paid out each year, according to a report released Tuesday.
The Government Accountability Office report said the systems don’t even include Medicaid data. Furthermore, 639 analysts were supposed to have been trained to use the system – yet only 41 have been so far, it said.
The Centers for Medicare and Medicaid Services – which administer the taxpayer-funded health care programs for the elderly, poor and disabled – lacks plans to finish the systems projected to save $21 billion. The technology is crucial to making a dent in the $60 billion to $90 billion in fraudulent claims paid out each year.
In this article for National Review, I explain that there are reasons why those tools are, and will remain, “inadequate and underused.”
Filed under: Cato Publications; General; Government and Politics; Health Care
This Week in Government Failure
Over at Downsizing the Federal Government, we focused on the following issues this week:
- Block-granting Medicaid would be a good short-term reform to get the program’s ballooning spending under control.
- Policymakers who are concerned with bureaucratic duplication and waste should focus their efforts on limiting the government’s capacity to spend.
- Federal spending would still increase in fiscal 2011 if Republicans get the $61 billion in funding cuts they’re seeking.
- The solution to a lot of the problems caused by farm subsidies lies not in changing the direction of the programs, but in abolishing them.
- “Other mandatory” programs are often forgotten in the debate over how to rein in our extraordinary deficits and mounting debt. That needs to change.
Follow Downsizing the Federal Government on Twitter (@DownsizeTheFeds) and connect with us on Facebook.
The Real Scandal of Farm Subsidies
When the Washington Post published a story in 2007 about how dead farmers had received farm subsidies to the tune of over $1bn, most people were horrified (even “farm subsidy moderate” Rand Paul thought they should go!). Although the article made clear that “most estates are allowed to collect farm payments for up to two years after an owner’s death,” and that the payments weren’t necessarily fraudulent, outrage ensued.
But a follow-up investigation by the USDA has found that all but about $1 million of the payments were completely above board. From the Associated Press:
A 2007 report that the federal government had paid $1.1 billion in subsidies to dead farmers sparked an outcry and has been frequently cited by critics who considered the payments a blatant example of wasteful spending. But a follow-up that found no fraud and determined nearly all the subsidies paid on behalf of dead farmers in recent years were proper has received little attention.
According to the U.S. Department of Agriculture’s Farm Service Agency, just a little over $1 million out of the billions of dollars paid in subsidies in 2009 went to estates or business entities that weren’t entitled to them.
“Very little money is going to individuals who have not earned that money. Very little is being paid in error because a farmer has passed away,” FSA Administrator Jonathan Coppess told The Associated Press. [emphasis mine]
Don’t you just love how Mr Coppess uses the word “earned” there?
That’s the real scandal of farm subsidies, readers. Not that they are fraudulent (although that is of course an outrage), but that they are, for the most part, perfectly legal.
How Gov. Cuomo Can Fix New York’s Budget Mess
New York’s budget problem is actually a Medicaid problem. In Sunday’s New York Post, I offer advice to New York Governor Andrew Cuomo (D) on how to fix a budget gap that will grow to $17 billion during his term:
Gov. Cuomo can’t fix Medicaid by himself. He needs the help of Congress.
There is a solution…
Block grants are how President Bill Clinton and a Republican Congress reformed welfare back in 1996, to spectacular success. Welfare reform forced New York to be smarter about welfare spending, just as a block grant would force New York to rededicate Medicaid to its original mission — providing necessary medical care to the truly needy.
There’s one place Gov. Cuomo can start on his own: Close the loopholes that allow well-to-do New Yorkers to feign poverty on paper so that Medicaid underwrites their long-term care. Medicaid exists for the poor, not to help well-off baby boomers protect their inheritance.
Steve Moses of the non-partisan Center for Long-Term Care Reform recommends that Cuomo take steps to ensure that New Yorkers with means pay for their own long-term care. These include reducing New York’s home-equity exemption from $750,000 to $500,000 (and seeking a federal waiver to reduce it to $0), expanding the use of liens and estate recovery and ending the abusive practice of “spousal refusal.”
Reducing Medicaid abuse won’t be easy. But Cuomo doesn’t have much choice.
In fact, what he has is an opportunity to become the leading national spokesperson for block grants, the quickest and easiest course to relief for states toiling under the unsustainable yoke of Medicaid spending.
For more on Medicaid reform, click here. For more on abuse of Medicaid’s long-term care subsidies, click here.
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