(CNSNews.com) – U.S. taxpayers spend at least $65 billion on health care waste and fraud, according to the government’s own numbers and even more according to independent studies, even as the federal purview over health care expands under Obamacare.
On Wednesday, the House Energy and Commerce Committee will hold a hearing into Medicare and Medicaid fraud and ways to combat the problem.
In fiscal year 2010, the Centers for Medicare and Medicaid Services estimated it made more than $65 billion in “improper payments.” Improper payments are defined as Medicare and Medicaid payments that should not have been made or were made in an incorrect amount, according to a memo by the committee.
The background memo for the hearing states, “The true annual cost of health care fraud and abuse to the Federal government is not known.” However, it could be more costly than the government states, even according to more left-leaning sources.
The controversial Donald Berwick, who was recess-appointed in 2010 to be the administrator of the Center for Medicare and Medicaid Services and who has advocated for health care rationing, participated in a study earlier this year on health care fraud.
Fraud and abuse made up $98 billion of Medicare and Medicaid spending in fiscal year 2011, according to a study by Berwick and RAND Corporation assistant policy analyst Andrew D. Hackbarth.
“The opportunity is immense. In just 6 categories of waste—overtreatment, failures of care coordination, failures in execution of care processes, administrative complexity, pricing failures, and fraud and abuse—the sum of the lowest available estimates exceeds 20 percent of total health care expenditures,” said the report by Berwick and Hackbarth published in the Journal of the American Medical Association in April.
A separate study in September by the Institute for Medicine found that in fiscal year 2009 about $750 billion was wasted on unnecessary services and heavy administrative costs that would not be categorized as fraud, but rather as an unnecessary expense.
“By one estimate, almost 75,000 needless deaths could have been averted in 2005 if every state had delivered care on par with the best performing state,” the Institute of Medicine study said. “Current waste diverts resources; the committee estimates $750 billion in unnecessary health spending in 2009 alone.”
CMS has been putting fraud prevention strategies in place, according to a Government
Accountability Office report from April, but the GAO said the agency had not completed other anti-fraud actions. CMS was supposed to extend the requirement for surety bonds to high-risk providers.
Surety bonds allow CMS to recover money even if it turns out that fraud was involved in the submission of claims, but the agency did not do this, according to the GAO.
“GAO’s previous work found persistent weaknesses in Medicare’s enrollment standards and procedures that increased the risk of enrolling entities intent on defrauding the program,” the April report said. “CMS has strengthened provider enrollment—for example, in February 2011, CMS designated three levels of risk—high, moderate, and limited—with different screening procedures for categories of providers at each level.”
The GAO report continues, “Having mechanisms in place to resolve vulnerabilities that lead to erroneous payments is critical to effective program management and could help address fraud.
Such vulnerabilities are service- or system-specific weaknesses that can lead to payment errors— for example, providers receiving multiple payments as a result of incorrect coding. GAO has previously identified weaknesses in this process, which resulted in vulnerabilities being left unaddressed.”
Witnesses scheduled to testify at the hearing are Louis Saccoccio, CEO of the National Health Care Anti-Fraud Association; Michael Terzich, senior vice president of global sales and marketing for Zebra Technologies; Alanna Lavelle, director of investigations for Wellpoint; Dan Olson, director of fraud prevention for Health Information Designs and Neville Pattinson, senior vice president with Gemalto, Inc. on behalf of Secure ID Coalition.