‘We Simply Don’t Know’ How Much Medicare Fraud There Is

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By Thomas Phippen

The Medicare program made at least $60 billion in improper payments last year, and government officials need to address the billing and documentation errors to prevent further waste of taxpayer funds, auditors told Congress Wednesday.

Medicare has an error rate of 10 percent, meaning payments to private health providers are either too high, too low, or completely unwarranted in cases of fraud.

“When trying to understand how much fraud is in Medicare, the answer is we simply don’t know,” Florida Republican Rep. Vern Buchanan, chairman of the House Committee on Ways and Means, said during a hearing Wednesday.

“Understanding payment errors is important as every dollar reported lost in error serves to undermine the good work of the program and could represent a dollar that should be spent on providing care to beneficiaries,” Buchanan said. “However, different types of errors require different analytics and different solutions.”

The Department of Justice charged more than 400 people with defrauding Centers for Medicare and Medicaid Services (CMS) of $1.3 billion in fraudulent payments. (RELATED: Sessions Announces ‘Largest Health Care Fraud Takedown’ In American History)

“Bad actors are real and it is important that we continue to provide support for the effort to combat fraud,” Buchanan said.

The Government Accountability Office (GAO) evaluated a relatively new program for detecting fraud last November that screens both new and existing Medicare providers, and estimates that the anti-fraud measure saved taxpayers $2.4 billion between 2011 and 2015.

It’s much harder for CMS to track and detect improper payments when there isn’t deliberate fraud. In CMS programs, “improper payments are most often payments for which there is no or insufficient supporting documentation to determine whether the service of item was medically necessary,” Jonathan Morse, acting director of CMS’s Center for Program Integrity, told the committee.

Currently, CMS is supposed to run audits to ensure that the money paid to healthcare providers matches the services provided on an annual basis. These audits reveal payments that should be recovered from providers, but the GAO says there are some problems with CMS’s method for looking for improper payments.

For example, CMS didn’t always audit the Medicare Advantage contractors who were at the greatest risk for improper payments. CMS also has audits outstanding on certain provider contracts from 2011, which ” conflicted with CMS’s goal of conducting … audits annually, and slowed recovery of improper payments,” James Cosgrove, director of health care research at GAO, told the committee.