GAO reports on prevalence of Medicare fraud

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Despite the hundreds of millions of dollars spent every year to investigate and prosecute Medicare fraud, much still goes undetected and "the extent of the problem is unknown," according to testimony submitted Wednesday to Congress.

In its report to the health subcommittee of the House Committee on Energy and Commerce, the U.S. Government Accountability Office said that medical clinics and suppliers of durable medical goods are most commonly investigated and prosecuted criminally for Medicare fraud, accounting for 37 percent of all successful Medicare fraud prosecutions.

Individual fraud -- that is, Medicare beneficiaries cheating the system -- make up about 11 percent of criminal prosecutions and convictions.

Hospitals, meanwhile, accounted for about 20 percent -- or 2,339 cases -- of civil fraud investigations in 2010, according to the testimony prepared by Kathleen M. King, the GAO's health care division director.

Most Medicare fraud comes in the form of billing fraud -- submitting a bill for care that was not actually administered, or suppliers billing for supplies and services that are overpriced or not medically necessary. Other common forms of fraud include falsifying patient data to increase Medicare payment rates and paying kickbacks to providers for referring beneficiaries to a specific specialist or clinic.

Some of the more elaborate schemes involve setting up shell companies at bogus addresses that "sell" medical equipment; buying and selling lists of names and ID numbers of Medicare patients; and the case of a California hospital that recruited homeless people to fill empty hospital beds, offering the homeless room and board -- and then charging Medicare tens of millions of dollars for their care and hospitalization.

Though Medicare keeps no "official" estimate on the annual cost of fraud, outside experts say the tab could be $60 billion annually. In 2011, the federal government allocated $608 million to prosecute and investigate Medicare fraud.

Ms. King told the House panel that Medicare has been working on tightening its provider and supplier enrollment standards and on conducting more efficient post-payment audits, which prevents those who are defrauding Medicare from getting away with it for very long.

The GAO also has told the U.S. Centers for Medicare and Medicaid Services to remove patients' Social Security numbers from their Medicare ID cards, which in theory would not only make it harder to defraud Medicare, but also to steal seniors' identities.

While that sounds like the simplest of the fixes, a CMS official told Congress in August that "transitioning to a new identifier would be a task of enormous complexity and cost and one that [would] present great risks to continued access to health care for Medicare beneficiaries."

A report issued last year said it could cost nearly $850 million to replace the 50 million or so ID cards and remove the Social Security numbers from the equation.

Medicare is the federal health care program that insures Americans aged 65 and older.

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Bill Toland: or 412-263-2625.


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