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."
Levinson outlined five agency strategies to help its investigations weed out more fraud:
1. Scrutinize individuals and entities that want to participate to make sure they are qualified providers, possibly with unannounced checks. In 2006 and 2007, the agency discovered that almost 600 of 2,500 Medicare durable medical equipment suppliers did not maintain a physical facility or maintain a staff as required.
2. Establish payment methodologies that are reasonable and responsive to the market and medical practice; for example, capping oxygen concentrator payments at 13 months instead of 36 months.
3. Assist healthcare providers and suppliers to comply with program requirements and make them adopt compliance programs as a condition of participation.
4. Vigilantly monitor the programs for evidence of fraud, waste, and abuse, through rapid detection and the use of data and technology and cooperation with private insurers as well as federal and state agencies.
5. Respond swiftly to detected fraud with quick imposition of sufficient punishment to deter others.
Levinson added that through the OIG's Health Care Fraud Prevention and Enforcement Action Team (known as HEAT), strike forces have expanded from two locations in Miami and Los Angeles, to seven last year, including Houston, Detroit, Brooklyn, Tampa, and Baton Rouge. The 2011 budget would further expand the strike force to 13 other locations, with a cost of $25 million and an additional 130 employees.