Fraud in Medicare can be more lucrative than dealing drugs.
No one knows for sure exactly how much fraud exists in the Medicare system, but most experts agree that it costs billions of dollars each year. Between 2007 and early 2011, the federal government reports having won convictions against 990 individuals in fraud cases totaling $2.3 billion. In 2010, it recovered an additional $4 billion through collection of non-criminal penalties on health providers who improperly billed the government. But that’s just a fraction of the total problem.
According to a 2011 report from the Government Accountability Office, Medicare makes an estimated $48 billion in “improper payments” each year, an estimate that’s almost certainly lower than the actual amount since it doesn’t include bad payments within the prescription drug program. Some of that money, perhaps a lot of it, is fraud, but experts differ on exactly how much. On the very low end, the National Health Care Anti-Fraud Association has estimated that about 3 percent of all U.S. health care spending is fraud. Assuming fraud is distributed equally across payment systems, that would mean Medicare’s share is roughly $15 billion a year. But almost all analysts believe fraud is much more common in Medicare than in it is in payments by private insurers. Toward the high end, Sen. Tom Coburn (R-Okla.) once suggested the number could be as much as $80 billion a year. In March, the executive director of the National Health Care Fraud Association told members of Congress that total health care fraud losses likely range from $75 billion to $250 billion each year.
With $36 trillion in unfunded liabilities just over the horizon, and with Medicare’s own actuaries projecting insolvency by 2024, Medicare is a fiscal nightmare. It’s the single biggest driver of the long-term federal debt, and just about everyone in Washington is looking for ways to cut back on health spending without trimming legitimate services. Last year the program paid out slightly more than $500 billion in reimbursements to doctors and other providers. Paring it back by $48 billion a year—or even half that amount—by attacking criminal behavior would be a major accomplishment and could go a long way toward reducing the program’s unsustainable fiscal burden.
Every politician with a pulse talks a big game about eliminating Medicare “waste, fraud, and abuse,” yet nothing much seems to get done. The bigger the government’s role in paying for Americans’ health care, the easier it becomes to divert that revenue stream into the bank accounts of criminals.
In 2007 the federal government set up its first ever “Medicare strike force” in Miami, assigned to target high-dollar fraud cases. As the news reports compiled by HHS show, there were plenty to be found. According to Alex Acosta, the former U.S. attorney for the Southern District of Florida, the newly created Medicare team charged more than 700 individuals with more than $2 billion in fraud between its inception and the middle of 2009.
Members of the task force have argued that the Medicare fraud industry has supplanted the illegal drug trade in Miami. In congressional testimony, Acosta noted signs that “Medicare fraud is rapidly eclipsing the drug trade as Florida’s most profitable and efficient criminal enterprise.” It has even trickled down to the folks who might otherwise have been involved in simple, petty crime. “They’ve figured out that rather than stealing $100,000 or $200,000, they can steal $100 million,” Justice Department fraud prosecutor Kirk Ogrosky told 60 Minutes in 2009. “We have seen cases in the last six, eight months that involve a couple of guys that if they weren’t stealing from Medicare might be stealing your car.” Medicare fraud also has spread to organized crime. In January 2011, Politico reported the bust of an Armenian mob ring charged with perpetrating $163 million in Medicare fraud. Among the items seized from the New Jersey group was a bundle of weapons, including multiple guns and a Bat’leth, a two-handed, double-bladed long sword modeled after the weapons used by Klingons on Star Trek. For criminals smart enough to work the basics of the payment system, the choice between drugs and Medicare is easy: Medicare is safer, potentially more lucrative, and much, much easier.
Link: http://reason.com/archives/2011/09/13/medicare-thieves