Senators Push for More Healthcare Fraud Prevention in Health Reform

While efforts to fight healthcare fraud are addressed in both Senate reform bills, more is needed still at the federal level to tackle fraud and abuse at both the public and private sector levels, said Sen. Patrick Leahy (D-VT), chairman of the Senate Judiciary Committee, at a hearing on Wednesday on "Effective Strategies For Preventing Health Care Fraud."

"The scale of healthcare fraud in America today is staggering," Leahy said in testimony opening the hearing. According to conservative estimates, "about 3% percent of the funds spent on healthcare are lost to fraud more than $60 billion dollars a year," he said. In the Medicare program, the Government Accountability Office estimates that more than $10 billon dollars was lost to fraud just last year, he added.

"Whether it is federal dollars or private dollars, fraud is draining billions and billions away from providing effective healthcare. We must work together to ensure that we have tough and effective measures in place to prevent healthcare fraud and provide accountability," said Leahy, who after the hearing introduced a new bill calling for strengthening the "government’s capacity to investigate and prosecute waste."

The committee was informed of new efforts by the Department of Health and Human Services to eliminate fraud by HHS Deputy Secretary Bill Corr. For instance, the Centers for Medicare and Medicaid Services (CMS) is in the final stages of building an integrated data repository (IDR) that "will for the first time in Medicare’s history bring all Medicare claims data together in one centralized data repository," Corr said.

Using the IDR, CMS is expected to go beyond the "current practices of application and claims review" by using new technology to identify irregularities in claims data—such as "unusual, clinically inconsistent, or high volume billings."

One important tool to help fight durable medical equipment (DME) fraud is competitive bidding for suppliers, Corr said. In one effort that became effective in early October 2009, most DME suppliers participating in the Medicare program are now required to have both a surety bond and accreditation from a deemed accrediting organization.

"Most non physician suppliers of durable medical equipment are required to obtain a $50,000 or higher surety bond—thus deterring illegitimate suppliers from enrolling in Medicare," Corr said. This combination of the surety bond and accreditation requirements helps ensure that CMS is only doing business with legitimate partners and expel fraudulent suppliers from the program.