According to Kim Brandt, Medicare’s recent, former Director of Program Integrity, Medicare honors over 1 billion claims a year, they reimburse over 430 billion dollars, and most importantly, as of September 2010 the oversight budget was minimal. A recent 350 million dollars in stimulus money was awarded to apply to the oversight budget over the next 10 years, and an extra sixty days were granted Medicare to more thoroughly review claims as part of health care reform. A disturbing look at the problem of Medicare fraud in a September episode of 60 Minutes, however, might make you question if that is enough. Though Medicare expansion has been placed on the sidelines of the healthcare reform agenda, it has long been proposed as a means to expand coverage, and will likely emerge in the discussion in the future. As Savedoff and Hussmann argue, the US has a number of points of vulnerability, and the Medicare system exemplifies these vulnerabilities well.
According to the Justice Department, Medicare Fraud is now a 60 billion dollar industry. As Savedoff and Hussman note, due to a weak audit protocol, typically estimates underestimate the impact of Medicare fraud. Medicare fraud is largely driven by criminals impersonating providers, though 60 Minutes also highlights a hospital scam involving the recruitment of homeless people to fill beds and billing Medicare for costs. Fraudulent pharmacies and medical supply companies are opened, or fabricated, patient lists are purchased, and Medicare is billed for billions of dollars worth of drugs and equipment (such as wheelchairs and prostheses), that are never needed, used nor delivered.
Based on the argument of Savedoff and Hussman, this is a function of “the fee for service structure and payment on trust”, the nature of the system as being “largely contracted out”, and “absence of verification and focus on processing accuracy”. Criminals who run these scams sometimes bill for multiple supplies for the same patient. If capitation were in place, there would only be so much criminal could obtain per month off of a given patient. There are of course drawbacks when considering patients who may actually require services and supplies above potential monthly caps. In the instance of the hospital scams, actual physicians and administrators were breaking trust to bill for what was truly necessary and performed. 60 Minutes also points out that there are only 3 inspection officers for all of South Florida (the story’s spotlight location), to follow up on thousands of “questionable equipment companies”.