• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Guest Bloggers: James Frogue & Elizabeth Noelcke On Healthcare Fraud is Worse Than You Think

    One key area that has been totally ignored in healthcare debate is the jaw-dropping amount of fraud and abuse in the Medicare and Medicaid programs. We at the Center for Health Transformation believe that $100 billion a year is a conservative estimate. Our new book, “Stop Paying the Crooks” outlines examples of that waste and offers dozens of suggestions on how to fix the problems.

    Consider just two examples: In January, 2009 the Government Accountability Office issued a report that said $32 billion of improper payments were made in the Medicaid program in 2007. Last year, Senator Charles Grassley of Iowa estimated that there is $60 billion in waste, fraud and abuse in Medicare annually. And now the Obama Administration and Congressional leaders want to create another government-run program along the same model.

    The Miami Herald reported last summer that Miami-Dade County submitted bills to Medicare for HIV infusion therapy that were 22 times higher than the rest of the country combined. There are more home health agencies in Miami Dade as of this spring than in the entire state of California. When the Office of Inspector General conducted unannounced visits to 1,581 durable medical equipment supplier in South Florida in 2007, 491 either didn’t exist or were not staffed.

    An important step toward real reform is to fight fraud first. A recent Zogby poll asked Americans what is their preferred way to pay for the modernization of healthcare. The biggest response, at 88 percent, was “eliminate fraud,” well-ahead of “standardize administrative forms” at 77 percent and “reduce medical errors,” at 72 percent.

    A second poll by Insider Advantage found that the majority of respondents – 61 percent – felt that Congress should address fraud and abuse in Medicare and Medicaid before enacting a new government-run plan. Only 27 percent thought the opposite was fine.

    And yet the two current bills in the House do nothing to effectively combat fraud. Indeed, the CBO score of the bill passed out of the House Ways and Means Committee contains across-the-board zeros in savings from anti-fraud efforts across ten key metrics for the next decade. It is unfathomable that the current Congressional leadership is so out-of-touch with reality. Thus far, their efforts represent an enormous missed opportunity to divert scarce taxpayer dollars away from thieves.

    Consider another massive and highly complex industry and how well it fights fraud relative to health care. The credit card industry handles over $2 trillion a year in billing, involves 700 million credit cards, millions of vendors, and countless products available for purchase. Their rate of fraud is below one-tenth of one percent, making fraud in Medicare and Medicaid at least 100 times higher.

    As legislators spend August poring over healthcare legislation constituents and experts alike it is incumbent on them to take seriously the issue of fraud in our existing programs. Simple steps that cost virtually nothing to deploy would begin saving billions instantly. Aggressive use of predictive modeling for payments common in the commercial market, requiring enhanced coordination of benefits and identification of third party coverage particularly in Medicaid, and flagging the Medicare ID numbers billing in the highest 1 percent for further scrutiny would be a good start. Simply adding the line “under penalty of perjury” to CMS form 855 that prospective suppliers to Medicare must fill out would be a big step in the right direction. Unfortunately, it appears that the people who run Medicare and Medicaid are pathologically incapable of dealing with fraud and abuse in any serious way.

    We at the Center for Health Transformation continue to actively gather the most egregious stories of fraud and the most effective actions for eliminating it. It is our hope that you will join our efforts to ensure that policymakers in Washington and in state capitals from coast to coast take this issue with the gravity it deserves. Before creating a new government-run health care program, increasing spending on those we’ve got, or raising taxes, let’s fight fraud first.

    James Frogue is Vice President of the Center for Health Transformation where Elizabeth Noelcke is the State Project Coordinator. Please visit www.healthtransformation.net for more anti-fraud action items, as well as information about the latest CHT Press Book, Stop Paying the Crooks, edited by James Frogue.

    The views expressed by guest bloggers on the Foundry do not necessarily reflect the views of the Heritage Foundation.

    Posted in Obamacare [slideshow_deploy]

    23 Responses to Guest Bloggers: James Frogue & Elizabeth Noelcke On Healthcare Fraud is Worse Than You Think

    1. william boyer cincin says:

      As long as there are unscrupulous people running the various agencies of the government there will be fraud, and I'm afraid that means forever. What angers me is that the most blatant of them are among the most popular. Everyone knows they are crooks, but for whatever reason no one can touch them. Worse, they appear in TV interviews and sneer in our faces.

    2. Ozzy6900, CT says:

      Let me say this about fighting fraud. I have complained to my health insurance many times about charges from normal office visits to hospital visits. I have told them that a service hasn't been received or a procedure was never done but they go ahead and pay anyway! Fight fraud? I have tried but the insurance companies just don't listen to us – what do we know anyway?

      My daughter was taken on a one block ride in an ambulance with no life support, no Oxygen, no nothing but the charge was $350. The ER visit was considered a Level 4 ($850) with no IV, elaborate testing (a finger stick and breath test was all), or even a visit from a doctor. A RN gave her a blanket and called me to come pick her up. A doctor charged $625 to sign her out of the ER and the hospital added a lab charge of $300 (which i finally got them to remove).

      She had a couple of drinks that didn't agree with her, no trama, nothing! But because she was sick in public, the Police (only doing their duty)put her in the ambulance.

    3. Albert Capbellsville says:

      Right on gentlemen,so much is being wasted and stolen it makes you sick.Every level and area of gov is guilty,even immigrants exec order no economic refugees.If we could even cut half we would have a surplus in no time.

    4. Bobbie Jay says:

      Ozzy6900, that's so they can cover the costs of the illegals and everyone else that is exempt to pay.

      Glad to hear your daughter is fine!

      Everywhere there's government, there's corruption and fraud.

      In this state they have a program where public funding goes to pay adults money to take care of their elderly family members. Just doesn't seem right that the public should be obligated to pay for the private family issue of another?

    5. Jack Lohman says:

      Hey guys, fraud happens. But it is higher on the private side because screwing the Feds involves jail time and much less in the privates.

      If you want to stop fraud, do not count on a new government department to investigate. Simply pass a law requiring all medical facilities to (a) educate annually all new and old employees on what fraud is and how to report it, and (b) strengthen the whistle-blower laws. Let the employees become the investigative arm and the employers will get out of the fraud business overnight. It will virtually cease to occur and the taxpayers will pay virtually nothing for enforcement.

    6. Therese, Appleton, W says:

      Before moving back to WI I worked for the medicare DMERC (durable Medical Equipment Regional Carrier) contractor… When the DMERC's were created, the state of Florida stated that if fraud was detected, it would prosecute if the total was $30,000 or over. Within 6 months to a year, they moved that threshold to 1/2 million. Anyone of us takes a penny from our bank, your next address is jail. You have to steal 1/2 million before the gov't will even look at you. It was a running joke that medicare fraud was the "legal" portion of organized crime in Florida. Our region included the south, southwest, Colorado, and puerto rico. Fraud is rampant and when you consider that a wheelchair can be as much as a new Lexus… it's like letting a kid loose in a candy store.

    7. Jack Lohman says:

      Once fraud is uncovered and reported by employees, is their not a way for citizens to sue the employer in civil court and receive a percentage of the fine?

    8. Sid - Montgomery, Al says:

      There is no incentive for government employees to care about fraud and waste. It isn't their money, their jobs are well protected and they show disinterest and disdain for the people they are supposed to serve. There is no responsibility or accountability in government jobs – administrators, worker bees or politicians.

    9. Jack Lohman says:

      But with employees as oversight, maybe they should subcontract this to a private group that gets a percentage of the fraud uncovered.

    10. Kris, Bx NY says:

      How about stopping those that are pre-meditated welfare abusers. Why is it taboo to mention them? Stop handing out medicaid to physically capable people. If they are told NO your 2-5th illegitimate child will not be paid for, guess what they would stop having them. Get real investigators to question why multiple checks are being sent to one address. YES, I am aware of and have reported people with more than one SS# collecting multiple checks and NO nothing is done about it. One lives with a NYC detective another spent three solid weeks at the Grand Floridian in Disney World and brought souveniers for everyone they knew.Schwarzenneger (??spelling)should follow through with the suggestion that no more welfare be handed out and watch California's budget issues improve dramatically. Stop giving my hard earned tax dollars to lazy, irresponsible, breeders, then look at the fraudulant medicaid billers.

    11. Ben Franklin says:

      "It is unfathomable that the current Congressional leadership is so out-of-touch with reality. Thus far, their efforts represent an enormous missed opportunity to divert scarce taxpayer dollars away from thieves."

      Are you kidding me? These guys are the original fraud-meisters.

    12. Bob, Portland, OR says:

      Further investigation would most certainly show connections between the the perpetrators of the fraud and elected officials. Why else would it be allowed and continued to be unnoticed.

      They are not ignorant or out of touch, they are on a linear path to grab all of the cash out of our democracy and this is just the beginning.

      Next will be our speech, guns, cars, religion, privacy, health records, everything.

    13. Bob, Portland, OR says:

      One last thing, The HIPPA law which is basically a health record privacy act, was inacted so that employers couldn't have access to our health records and discriminate against us for pre existing conditions. For the most part it's a good law. The proposed health reform will put all of your health records in a federal government system for the very purpose of LIMITING your health care. Do any of us know what our personal health issues will be 10 years?

    14. Jack Lohman says:

      No Bob, that is 100% wrong. The proposed national patient database is to allow physicians to compare the treatments of others with similar diseases and to automatically flag conflicts with drugs that when used in combination could harm or kill the patient.

      I look for the day when it will also allow patients to judge the expertise of their own physician so personality is not the only thing they have to judge quality.

      But two things should be required:

      1) Keep my data but remove my name so only I or a physician I've given my secured password to can access the data.

      2) Let those opposing their "data" being used to OPT OUT, which they do at there own peril.

    15. TJS, Leesburg, FL says:

      $100 billion compared to what? The article fails to give the baseline: What are the budgets of Medicare and Medicaid? In all these types of stories, we need the global picture. We must be able to answer: Compared to what?

    16. Jack Lohman says:

      In this case, TJS, it's $100 billion of fraud compared to what it should be: zero in fraud.

    17. R Taylor says:

      The bottom line is that the Federal Government is not qualitified to run a national health care system, and as we see from this story there unable to run Medicare or Medi-cade. Those who are in office now need to be removed and term limits need to be imposed.

    18. Larry, MIchigan says:

      I totally agree with R.Taylor. Those in Washington from the top down are not qualified, nor or they concerned enough about "WE THE PEOPLE"

      to run any type of health care program. When they get to Washington it seems as though they set themselves aside and encase themselves in a bubble and become the masters over the surfs. We do need term limites. There are too many special intrests groups with billions of dollars behind them supporting both progressive democrats and republicans. With all of the voting fraud going on during our elections, we can no trust that our elections are honest, so there must be some type of system established in order to prevent those who do not follow our constitution to be prevented from remaining in office.

    19. Jack Lohman says:

      So let me see. I'm on Medicare and have the option to sign onto the privately run Medicare Advantage system, which 19% of Medicare recipients have done. But that costs taxpayers 17% more than traditional Medicare. So much for private being more efficient than public.

      With Medicare, doctors and hospitals remain private and are "contractors." The only thing that changes is the logo on the check that pays my bill.

    20. Jack Lohman says:

      What I find particularly amazing is that this very wealthy insurance industry has managed to rally thousands of people to publicly protest against reforms that would be in their own best interests. Reforms that would remove profits from the industry and instead would filter them back to the protester's employers or their own pockets. Now there is an effective public relations scam.

    21. Julie Hartje, Beloit says:

      What I'm finding out in my research is that it isn't the government that is copmmiting the fraud, it's the private companies and insurance companies. For the last 10 years, where the government has been at fault is looking the other way.

    22. Pingback: Medicaid Fraud: Not Much of an Example to Follow | statehousecall.org

    23. Pingback: The Senate Cloakroom: Oct. 19 – 23 | Conservative Principles Now

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×