Sunday, 60 Minutes did a piece on Medicare fraud saying it amounted to $60 billion per year. Some people watched the program and said, “You see that’s why we shouldn’t have programs like Medicare.” I saw it and said “We should have tougher law enforcement and a stronger program to fight Medicare fraud.” The Obama administration agrees. Here is an exerpt from the 60 Minutes program covering that aspect of the story.
"We have to understand this is a major fraud area," United States Attorney General Eric Holder told Kroft.
Holder is taking a crime that has been in the backwaters of law enforcement and made it a top priority at the Justice Department.
[Why has it been in the backwaters of law enforcement? Why haven’t previous administrations made fighting Medicare fraud a top priority?]
Kim Brandt, Medicare's director of program integrity.
"We're as frustrated by that as the law enforcement officials that you went out with. And in fact, our primary focus over the past years has been to tighten our enrollment standards to make it so it's much harder for people like that to be able to get in the program, and to be able to commit that kind of fraud," Brandt said.
"Well, it really does come down to the size and scope of the Medicare program, and the resources that are dedicated to oversight and anti fraud work. One of our biggest challenges has been that we have a program that pays out over a billion claims a year, over $430 billion, and our oversight budget has been extremely limited," Brandt said.
About that there is little dispute: Medicare has just three field inspectors in all of South Florida to check up on thousands of questionable medical equipment companies.
"Clearly more auditing needs to be done and it needs to be done in real time," Attorney General Eric Holder said.
The Obama administration is providing Medicare with an additional $200 million to fight fraud as part of its stimulus package, and billions of dollars to computerize medical records and upgrade networks, which should help Medicare catch more phony charges.
[I think $200 million is way, way too little. We’re talking about $60 billion that is going out the door to cheats, would $1 billion in fighting fraud be too much? Suppose we hired 300 inspectors to check up on medical equipment companies in South Florida, how much fraud might they prevent? How many crooks could they capture? How much would the extra cost of these 300 inspectors save us? For those of you who don’t want to have more government employees, suppose we spent $1 billion to contract out fraud investigations/inspections to private companies and gave them rewards for convictions?
Some people look at this fraud and say “Stop the program.” I look at it and say “Stop the fraud.” It’s a different take.
$850 BILLION PER YEAR IN HEALTHCARE WASTE
Medicare fraud may not be the only, or most expensive problem. According to Robert Kelley, vice president of health care analytics at Thomson Reuters, found actual waste in the U.S. healthcare system could be as high as $850 Billion per year
"The average U.S. hospital spends one-quarter of its budget on billing and administration, nearly twice the average in Canada," reads the report, citing dozens of other research papers. "American physicians spend nearly eight hours per week on paperwork and employ 1.66 clerical workers per doctor, far more than in Canada," it says, quoting a 2003 New England Journal of Medicine paper by Harvard University researcher Dr. Steffie Woolhandler.
Here are some of the study's key findings:
Unnecessary Care (40% of healthcare waste): Unwarranted treatment, such as the over-use of antibiotics and the use of diagnostic lab tests to protect against malpractice exposure, accounts for $250 billion to $325 billion in annual healthcare spending.
Fraud (19% of healthcare waste): Healthcare fraud costs $125 billion to $175 billion each year, manifesting itself in everything from fraudulent Medicare claims to kickbacks for referrals for unnecessary services.
Administrative Inefficiency (17% of healthcare waste): The large volume of redundant paperwork in the U.S healthcare system accounts for $100 billion to $150 billion in spending annually.
Healthcare Provider Errors (12% of healthcare waste): Medical mistakes account for $75 billion to $100 billion in unnecessary spending each year.
Preventable Conditions (6% of healthcare waste): Approximately $25 billion to $50 billion is spent annually on hospitalizations to address conditions such as uncontrolled diabetes, which are much less costly to treat when individuals receive timely access to outpatient care.
Lack of Care Coordination (6% of healthcare waste): Inefficient communication between providers, including lack of access to medical records when specialists intervene, leads to duplication of tests and inappropriate treatments that cost $25 billion to $50 billion annually.