Waste, Fraud, and Abuse in Medicare and Medicaid Still Await Solutions

Kathryn Nix /

Recent hearings in both the House Energy and Commerce Subcommittee on Oversight and Investigation and the Senate Finance Committee took a closer look at fraud within Medicare and Medicaid.

Spending on Medicare and Medicaid is on an unsustainable path due to rising health care costs and an aging population. Meanwhile, fraud within the program contributes to the program’s cost by an estimated $60 billion a year. Medicaid, the federal–state partnership to provide health care to the poor and disabled, is a victim of abuse as well.

Reducing health care costs and improving quality are priorities for health care reform. Tackling fraud within Medicare and Medicaid would not solve their long-term insolvencies but is an obvious place to find savings. Unfortunately, Washington has a long way to go to make it happen. A recent report from the Government Office of Accountability (GAO) highlights Medicare as a “high-risk” system because of its complexity, size, and “susceptibility to improper payments.”

The examples of abuse are mind-boggling. Last year, $135,000 was given to one discount pharmacy in Hialeah, Florida, for drug prescriptions written by four doctors. Two of them were dead, one was in prison, and the other said he never wrote the prescriptions filed under his name.

Former U.S. Attorney of the Southern District of Florida Alexander Acosta shared with the House subcommittee that his district saw $2 billion in fraudulent bills sent to Medicare between fiscal years 2006 and 2009. The district alone “prosecuted more than $1,900 in Medicare fraud per senior citizen living in South Florida.”

Representative Henry Waxman (D–CA) says that Obamacare’s dozens of antifraud provisions will address waste, fraud, and abuse. But all told, these provisions are projected to save American taxpayers just $7 billion over the next decade. With estimates showing fraud in Medicare alone escalating upwards of $60 billion in a single year, Obamacare clearly won’t fix the problem.

Medicare has a “pay and chase” system, which pays bills first and then checks whether or not they were appropriate later. Craig Smith, former general counsel of Florida’s Agency for Health Care Administration, told the House subcommittee that “the best techniques are those that prevent improper payments in the first place. With a greater emphasis on pre-payment fraud and abuse prevention, we can decrease significantly the loss of taxpayer dollars and make healthcare fraud a much less desirable career path.” Smith outlines five tactics to reduce Medicare and Medicaid fraud and abuse that can be read in further detail here.

With fraud schemes becoming more sophisticated, Inspector General of HHS Daniel Levinson told the Senate Finance Committee that the Office of the Inspector General has taken on new initiatives to achieve the goal of fighting fraud. According to Spiegel, the Centers for Medicare and Medicaid Services has stepped up its attempts to stop fraudulent claims. Still, according to the GAO, they have yet to take the appropriate “corrective action processes to address the vulnerabilities that lead to improper payments.”

Addressing waste, fraud, and abuse in government health care programs is one place lawmakers should agree on reform. Fixing the problem would be no silver bullet, but it would be represent a strong step toward restoring the programs’ integrity and longevity for current and future beneficiaries.

This post was co-authored by Amanda Rae Kronquist.