Medicare paid the bill — $122 million — for 21,000 artificial limbs in the Miami-Dade area over a four-month period last year. But no sudden amputees ever existed. Eventually, when federal prosecutors heard from seniors that they never needed or received any artificial limbs, the government investigated and filed suit.
Part of the problem says Malcolm Sparrow, author of License to Steal: How Fraud Bleeds America's Health Care System, is that Medicare contractors have a history of "pay and chase." Checking before paying "is almost unheard of" Sparrow says.
Incredible as it may seem, that's the way Medicare is set up. The federal government doesn't require Medicare contractors to verify claims before paying. Thus it comes as little surprise to TSCL that the government is reporting big jumps in improper Medicare payments due to waste, fraud and abuse. The Centers for Medicare and Medicaid Services (CMS) quietly announced last December that improper payments for 2003 were $20.5 billion, significantly more than earlier estimates, and another $20.8 billion for 2004. This represents a huge increase in improper Medicare payments after falling to a low in 2000 with an estimated $12.5 billion.
TSCL believes that the increase in improper payments is part of a troubling pattern. In recent years our government has relaxed a number of anti-health care fraud measures. The General Accountability Office (GAO) recently reported that the money earmarked by Congress for investigating health care fraud appears to have been improperly shifted to other purposes, such as fighting terrorism. The Federal Bureau of Investigation (FBI) was supposed to use the money exclusively to investigate fraud against Medicare, Medicaid and other health programs. The money came from an account in the Medicare Trust Fund, which although funded from payroll taxes, recently started dipping into deficit. During the same period that FBI agents were shifted to fighting terrorism, the Department of Health and Human Services' Inspector General — the official responsible for protecting the program from waste, fraud, and abuse, Janet Rehnquist — eased anti-fraud measures.
Higher than expected costs are clobbering Medicare beneficiaries and may lead to still higher out-of-pocket costs in the near future. To determine the Medicare Part B premium, the government estimates the total cost per Medicare beneficiary. The Medicare Part B premium paid by seniors is about 25% of the cost and the government covers the other 75%. Premiums have jumped 34% in 2004 and 2005, and the Medicare Trustees have estimated another whopping 15% increase for 2006.
TSCL believes that Congress could cut the growth in Medicare costs both for the government and seniors by implementing, and enforcing, stronger anti-fraud measures. With Medicare Part B premiums and deductibles expected to increase another 15% in 2006, Congress owes it to seniors and taxpayers to provide better oversight for scarce program revenues.
Sources: "Judge Takes Notice In Medicare Scandal," John Dorschner, The Miami Herald, May 10, 2005. "Medicare Says '06 Premiums Will Rise $11," Robert Pear, The New York Times, April 1, 2005. "Medicare Fee-For-Service Payment Report," Executive Version, Centers for Medicare and Medicaid Services, December 13, 2004. "F.B.I. Said to Misuse Funds for Health Fraud Cases," Robert Pear, The New York Times, May 16, 2005. M "Chief Justice's Daughter Lands in Hot Seat at HHS," Sarah Lueck, The Wall Street Journal, November 11, 2002.
