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$4 Billion in Fraudulent Medicare Charges Found in 2009

Cheryl Clark, for HealthLeaders Media, March 5, 2010

The Office of Inspector General recovered $4 billion in fraudulent Medicare charges last year, but that sum is "just the tip of the iceberg" in the amount of corrupt practices overcharging taxpayers, Daniel Levinson, the agency's chief, testified Thursday.

"More disturbing, even if the rate of fraud remains constant, as healthcare expenditures continue to rise, the financial impact of healthcare fraud will continue to increase," he said.

Levinson made his remarks on efforts to combat healthcare fraud, waste, and abuse before the Subcommittee on Labor, Health and Human Services, Education, and related agencies of the House Committee on Appropriations.

His talk was indicative of the increased emphasis the Obama administration places on reigning in illegal, dishonest, and wasteful healthcare practices not just among providers, but in the system that allows wasteful spending to continue.

However, Levinson said it isn't just fraud that's the problem. Waste and abuse of health programs cost an estimated $7.8 billion in 2009, or 7.8% of the fee-for-service claims Medicare paid to providers who "did not meet program requirements."

"Although these improper payments do not necessarily involve fraud, the claims should not have been paid," he said.

Also, the Centers for Medicare and Medicaid Services often pays too much for services, relative to the cost of providing them. For example, he said, "Medicare reimbursed suppliers for pumps used to treat pressure ulcers and wounds based on a purchase price of more than $17,000, but that suppliers paid on average, approximately $3,600 for new models of these pumps."

Likewise in 2006, Medicare allowed approximately $7,200 in rental payments over 36 months for an oxygen concentrator that cost approximately $600."

Another problem, he said, is that the Medicare program "is increasingly infiltrated by violent criminals and our investigations are also finding an increase in sophisticated and organized criminal networks" often through "schemes [that] are replicated rapidly within geographic and ethnic communities."

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