Program Integrity How much money can combating health

Program Integrity How much money can combating health care fraud and abuse save? ALLIANCE FOR HEALTH REFORM MARCH 5, 2012

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How much fraud? • “Hundreds of billions of dollars in waste and fraud. . . ” – President Obama speech to Joint Session of Congress. Sept 9, 2009. • “These schemes steal as much as $100 billion a year from Medicare and Medicaid. ” – Newt Gingrich and AARP CEO Barry Rand. Orlando Sentinel. Sept 29, 2010 • “…health care fraud and abuse (is) hundreds of billions per year…” – Harvard Professor Malcolm Sparrow. Senate Judiciary Committee. May 20, 2009 • “Medicare fraud, estimated now to total $60 billion a year…” – Steve Kroft, 60 Minutes. October 25, 2009 • Institute of Medicine (2011) and Thomson Reuters (2009) suggest a third of all health care spending is fraud, waste and avoidable inefficiencies. • Americans think 51 cents of every federal dollar spent is wasted. – Gallup. September, 2011

Underestimating Fraud? • Many people with access to the information have strong incentives to underreport the prevalence of fraud. – Providers • Punishment = fines and/or jail imprisonment • Reduced payment rates – Academics • “One of my deep regrets is to discover that academia has paid almost no serious attention to this critical problem. ” – Harvard Professor Malcolm Sparrow – State Health Officials • • • Admitting failure = loss of job and/or reduction funding Avoiding unrealistic expectations ($X of spending is fraud = $X budget cut) Returning funds to federal government that are not recoverable by state Most funds are federal (90%-100% funding for expansion population is federal) Prosecutions can cost more than the recoveries

The Fraud Continuum • Fraud – Deliberately false claims, identity theft, etc • Abuse – Upcoding, bill-splitting, excessive testing, etc • Waste – Coding errors, duplicate tests, prescription interactions, etc – Beneficiaries overusing free care in a third-party payer system. See, “Patients in Florida Lining up for All That Medicare Covers, ” by Gina Kolata, New York Times. September 13, 2003.

Examples of Fraud • Texas doctor and five accomplices arrested and accused of bilking Medicare and Medicaid for $375 million over six years – February 28, 2012. USA Today • Medicare’s new $77 million computer system launched mid-2011 saved $7, 591 in six months. Senator Carper: “Did they leave out some zeros? ” – February 23, 2012. Washington Post • Medicare spending on artificial feet went up 58% ($35 m) 2005 -2010 while amputations were declining according to Avalere Health study – February 15, 2012. AP • Los Angeles minister sentenced to 15 years in federal prison for $14. 2 million Medicare scam – January 6, 2012. CNN

Home Health Fraud Concentrated in 25 Counties

$100 billion annual Medicare/Medicaid fraud? What is detected What is prosecuted What is convicted What is recovered $4. 1 billion

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Legislation • Fighting Fraud and Abuse to Save Taxpayer Dollars (FAST Act) introduced by Senators Carper and Coburn with 35 cosponsors. Introduced in the House by Congressmen Peter Roskam and John Carney. • Medicare Data Access for Transparency and Accountability Act (Medicare DATA Act) by Senators Grassley and Wyden • Medicare Common Access Card Act of 2011 by Senators Wyden and Kirk