November 1, 2009

Medicare and Medicaid fraud

This is the story I found in my Fort Worth Star Telegram this morning.

Texas a hotbed as authorities crack down on Medicare, Medicaid fraud

It could easily be subtitled "Why Government Run Healthcare Will Never Work".

Due to budget constraints and resistance to needed regulation, congress will never allocate sufficient resources to monitor any of the "free money" plans under their purview. As a result, some of the less scrupulous elements of our society have come to view the federal government as a slot machine.

The power scooter case referenced in the article only mentioned one offender, albeit a large one, while law enforcement acknowledges that there are hundreds, perhaps thousands of similar offenders stealing billions of dollars from the Medicare system, and more schemes are hatched every day.

Notice that the article speaks of millions of dollars in the few cases mentioned, yet the total annual loss to fraud is estimated at $60 billion. Notice also the length of time between the "Easy Rider" ambulance effort (December 2006) and when the three offenders will actually face a judge (December 2009).

It takes time for law enforcement and the prosecutors to build a good case and prepare for trial, but the bad guys have no such constraints and they never stop working.

For every criminal taken down, dozens are skulking in the shadows ready to take their place, and dozens more are filing new license applications. They have found the odds of getting caught to be in their favor, and have learned clever ways to mitigate even those odds. Many of these criminals are immigrants (one of the men mentioned in the article is of Nigerian origin) who can easily flee to their home country if they are unfortunate enough to attract unwanted attention.

The Star-Telegram story describes only the tip of an iceberg. The bad guys were getting away with this for a long time before law enforcement finally took notice, and by the time enforcement efforts got rolling there were far more criminals than there were cops. Only the worst offenders have ever garnered any attention, leaving the little fish free to continue their criminal enterprise.

With the insufficient resources available, all efforts aimed at getting this under control have proved futile. Investigators and prosecutors are hamstrung by policies intended to protect legitimate small business, and what regulation we have is full of loopholes.

Then we have the showboat aspect of criminal investigation and prosecution. To justify their efforts, government agents want the big splash. One case with big dollar signs is easier to prosecute than several cases of lesser magnitude, and a big case looks good on the résumé.

The smarter criminals know they become targets if their billing goes over a certain amount, so they keep it low enough to stay below the radar. After a year or two of fraudulent billing, they change the names of their companies (along with their Medicare billing account number) and keep doing the same thing. Many do nothing more than repaint the ambulance and buy new uniform shirts, then keep on committing the same fraud with the same patient base.

The result is a story like this one; the feds bragging about the big rat they caught while the little rats scurry around doing business as usual. Prosecutors earn stripes for jailing an offender on a $2 million crime, but nothing is said about the remaining $59,998,000,000.

The only way to enforce the law is to have sufficient resources and plenty of boots on the ground. We need more cops, prosecutors and courts. We can spend the money on regulation, enforcement and prosecution… or we can give it to the crooks.

An old saw comes to mind: Watch your pennies, nickels and dimes. The dollars will take care of themselves.



BadTux said...

There is no (zero) evidence that Medicare fraud is any more prevalent than fraud against private insurers. Federal prosecutors love announcing these prosecutions because they're low-hanging fruit and will get their name in the New York Times, while the state prosecutors who prosecute insurance fraud against private insurers get coverage only from the local paper, but there's no evidence that there's any difference in the amount of fraud, just in the level of coverage (the NYT vs. the 'Local News' section of local papers in individual states). The entire health care system is full of fraud from top to bottom, it's inherent in a multi-payer system where providers can easily game the system for profit, and short of some fundamental change such as single-payer (or a common insurance claim clearinghouse that might as well be single-payer since it will have every piece of paperwork and thus the ability to detect doctors gaming the system) nothing is going to fix that.

And yes, forcing every claim through a single claims processing system would virtually eliminate fraud. We had a problem in Louisiana with "ghost students" -- kids who had never attended schools, yet were counted as "present" in order to get state per-pupil money. Solution: Every single student's enrollment and attendance record had to be reported by computer to the state complete with their state ID number (either a social security number, or a state-assigned SID in the case of people with no SSN or who declined to give it). Funny, some school districts suddenly had 20% fewer students! And by catching school districts keeping students on their roster after the student had enrolled at the next school district over, the state virtually eliminated attendance fraud (as verified by sending actual auditors out). We could do this for health care too. If the current system wasn't so profitable for doctors and health care companies, that is...

- Badtux the Health Care Penguin

Mule Breath said...

Good points Tux. I was writing a reply, but it turned into a whole 'nother blog.