According to Malcolm Sparrow, in his book "License to Steal, How Fraud Bleeds America's Health Care System," the idea that the fraud and abuse problem has been uncovered, successfully addressed, and cut in half is "dangerous and misleading."

Most fraud, he says is not included in these overpayment rates. Medicare chiefly uncovers claims that fail to provide documentation for services. Sparrow says these studies cannot detect the bulk of "false claims" that involve false diagnosis, bogus medical problems, and illegal kickbacks because perpetrators fabricate documentation so the claims will never be detected.

In a letter, the General Accounting Office recently said that, "even though these amounts are substantial, agency-specific audits and studies continue to indicate that the extent of the improper payment problem is much more widespread than has been disclosed in financial statement reports." TSCL believes that far more needs to be done to protect Medicare from waste, fraud and abuse.

Source: "License to Steal, How Fraud Bleeds America's Health Care System," Malcolm Sparrow, 2000, Westview Press. "Financial Management: Improper Payments Reported in Fiscal Year 2000 Financial Statements," GAO-02-131R Improper Payments, November 2, 2001.

APPENDIX: Medicare's Improper Payment Record

By 1998, Medicare cut improper payments by almost half. Since then, there's been little significant improvement, as these statistics show:

Source: Department of Health and Human Services

If you would like to read more on Medicare Waste, check out "Reducing Medicare Waste Could Make Down Payment on Prescription Drug Benefit" at http://www.tscl.org/NewContent/100880.asp.

April 2002