CMS: We Pay Dead People

Philip Betbeze, for HealthLeaders Media, July 21, 2008

It's close enough to the truth. Medicare didn't actually pay dead doctors. Paying dead doctors probably would have been less costly, because they can't cash checks. Fraudsters who used dead doctors' Medicare numbers did get paid, however. And lots of live people cashed big checks from CMS based on prescriptions allegedly written by doctors who were cold in the ground at the time the equipment was ordered.

We're lucky we found out.

It took a congressional investigation to determine that CMS paid nearly 500,000 claims to medical equipment providers who billed the behemoth for medical equipment that probably was not only ordered fraudulently, but was also probably never delivered to anyone. In any case, they certainly didn't have a legit doctor's prescription for the stuff, which is required for reimbursement. The Senate Permanent Subcommittee on Investigations estimates that somewhere between $60 million and $92 million (they're really not sure exactly how much they lost to fraud, but what's a few dozen million among friends?) was paid to fraudulent billers using dead doctors' ID numbers between 2000 and 2007.

That's mind-boggling to most of us, but it's a rounding error in the nearly $400 billion CMS shells out to hospitals, doctors, and other healthcare providers each year.

If you're like most healthcare leaders, your hospital or nursing home or physician practice could use some of that money. After all, you follow the rules.

So for following the rules, what do you get? Reimbursements ratcheted down each year. A Band-Aid slapped on at the end of the fiscal year to avoid a yearly physician payment cut that springs from a now-inconvenient law like the Balanced Budget Act of 1997 that outlived its political usefulness about a day after it was passed. Temporary and convoluted "solutions" by career politicians who have never said "no" to anybody and can't imagine doing anything but telling the rest of us what to do. What about the regulatory front? You suffer under initiatives aimed at saving Medicare money that put onerous overhead costs directly on you. I'm painting with a broad brush here, of course, but that's what happens when you're fed up.

Note to Medicare: Not paying for "never events" is a great idea, but so is matching up Medicare's physician numbers with monthly death reports from Social Security so that you don't pay claims based on prescriptions that could have only been sent from beyond the grave. Apparently, it never occurred to anyone at CMS to do this before all this embarrassing stuff came out.

Oh, and by the way: Herb B. Kuhn, CMS's deputy director and the unlucky guy who had to explain this stuff to Congress last week, says he shares senators' concerns that Medicare continues to pay claims based on dead doctors' prescriptions.


Is this the blueprint for nationalized healthcare? I sure hope not.

Philip Betbeze is finance editor with HealthLeaders magazine. He can be reached at
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