Medicare agency stymied in quest for 'a pound of cure'

The federal Medicare agency spends less than two-tenths of a cent of every dollar in its budget to fight abuse, waste and fraud.

08/11/2008 3:01 AM

09/08/2014 5:34 PM

The dollar might not be worth much these days, but it can go pretty far in the fight against healthcare fraud, experts say.

For every $2 million invested in anti-fraud efforts annually, a health insurer can realize $17 million in prevented losses, savings and recoveries, according to the National Health Care Anti-Fraud Association, a private-public partnership based in Washington.

But when Medicare administrators make their annual pilgrimage to Congress to ask for hundreds of millions to confront the Medicare fraud crisis, they come up empty-handed.

'When we go before them, we are telling them, `This is a pound of cure,' '' said Kerry Weems, Medicare's acting administrator, who is seeking an additional $147 million for anti-fraud efforts in the 2009 Medicare budget. ``We've documented the payoff ratios. Depending on the type of activity, there's a return of 7 to 14 dollars based on one dollar invested to fight fraud.''

Medicare, which retains private contractors to process healthcare claims, is limited by Congress to spending $720 million a year to identify excessive bills and related mistakes. Some of that money goes toward rooting out fraudulent claims in hotbed areas such as Miami, Los Angeles and Houston.

But the reality is that Medicare spends less than two-tenths of a cent of every dollar in its $456 billion annual budget on waste, abuse and fraud problems.

In contrast, health maintenance organizations spend considerably more -- an average of six cents of every premium dollar, according to a 2006 report by America's Health Insurance Plans, which represents 1,300 members providing health coverage to more than 200 million people. That allocation includes anti-fraud, waste and claims compliance costs.

Some experts believe that Medicare -- armed with sophisticated computer weaponry like that of a credit-card company -- could catch much of the fraud that costs the program tens of billions of dollars a year.

Last month, Sen. Mel Martinez, R-Fla., held a policy forum on his new legislation to fortify Medicare's defense. At the hearing, a national information company summarized a compelling fraud study it had done for Medicare of claims in Illinois and Washington state between 2001 and 2005.

Using a supercomputer, LexisNexis linked certain Medicare providers that submitted medical equipment, home healthcare and nursing facility bills with a network of vital public records.

The company found that 4 percent of the claims -- totaling $3.2 billion -- were suspicious, in part because either the physician or patient was dead. Some providers had criminal histories or Medicare sanctions.

Martinez, citing this technology as a way to bring Medicare's processing of claims into the 21st century, said he hopes to gain bipartisan support after the presidential election to give Medicare more anti-fraud money.

A longtime expert in healthcare fraud, Harvard University's Malcolm Sparrow, said Congress must come to grips with the obvious: 'What you need is a lot more resources for detection, auditing and support for verifying the legitimacy of Medicare claims. This is Congress' role -- but Congress doesn't want to do anything.''

The legislative director for AARP, formerly known as the American Association of Retired Persons, said fraud has bled Medicare for decades, just as it has done to healthcare programs in the private sector. ''But Medicare is more vulnerable because of insufficient funding to fight back,'' said the AARP official, John Rother.

A nurse who investigates healthcare corruption for the U.S. attorney's office in Miami said it wouldn't take much money to make a real difference in the war on Medicare fraud.

The nurse, Peggy Sposato, thinks it could save Medicare itself.

'When you think about what we're being told, that Medicare is going broke . . . and I'm out here in the wilderness saying, `It doesn't have to be,' '' said Sposato, the only nurse in the country who is investigating federal healthcare crimes.

``If we just would stop the fraud, we'd have plenty of money.''

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