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Program Integrity How much money can combating health care fraud and abuse save?. Alliance for Health Reform March 5, 2012. Jim Frogue. Partner FrogueClark, llc JIM@frogueclark.com www.frogueclark.com. How much fraud?. “Hundreds of billions of dollars in waste and fraud...”
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Program IntegrityHow much money can combating health care fraud and abuse save? Alliance for Health Reform March 5, 2012
Jim Frogue Partner FrogueClark, llc JIM@frogueclark.com www.frogueclark.com
How much fraud? • “Hundreds of billions of dollars in waste and fraud...” • President Obama speech to Joint Session of Congress. Sept 9, 2009. • “These schemes steal as much as $100 billion a year from Medicare and Medicaid.” • Newt Gingrich and AARP CEO Barry Rand. Orlando Sentinel. Sept 29, 2010 • “…health care fraud and abuse (is) hundreds of billions per year…” • Harvard Professor Malcolm Sparrow. Senate Judiciary Committee. May 20, 2009 • “Medicare fraud, estimated now to total $60 billion a year…” • Steve Kroft, 60 Minutes. October 25, 2009 • Institute of Medicine (2011) and Thomson Reuters (2009) suggest a third of all health care spending is fraud, waste and avoidable inefficiencies. • Americans think 51 cents of every federal dollar spent is wasted. • Gallup. September, 2011
Underestimating Fraud? • Many people with access to the information have strong incentives to underreport the prevalence of fraud. • Providers • Punishment = fines and/or jail imprisonment • Reduced payment rates • Academics • “One of my deep regrets is to discover that academia has paid almost no serious attention to this critical problem.” – Harvard Professor Malcolm Sparrow • State Health Officials • Admitting failure = loss of job and/or reduction funding • Avoiding unrealistic expectations ($X of spending is fraud = $X budget cut) • Returning funds to federal government that are not recoverable by state • Most funds are federal (90%-100% funding for expansion population is federal) • Prosecutions can cost more than the recoveries
The Fraud Continuum • Fraud • Deliberately false claims, identity theft, etc • Abuse • Upcoding, bill-splitting, excessive testing, etc • Waste • Coding errors, duplicate tests, prescription interactions, etc • Beneficiaries overusing free care in a third-party payer system. See, “Patients in Florida Lining up for All That Medicare Covers,” by Gina Kolata, New York Times. September 13, 2003.
Examples of Fraud • Texas doctor and five accomplices arrested and accused of bilking Medicare and Medicaid for $375 million over six years • February 28, 2012. USA Today • Medicare’s new $77 million computer system launched mid-2011 saved $7,591 in six months. Senator Carper: “Did they leave out some zeros?” • February 23, 2012. Washington Post • Medicare spending on artificial feet went up 58% ($35m) 2005-2010 while amputations were declining according to Avalere Health study • February 15, 2012. AP • Los Angeles minister sentenced to 15 years in federal prison for $14.2 million Medicare scam • January 6, 2012. CNN
$100 billion annual Medicare/Medicaid fraud? What is detected What is prosecuted What is convicted What is recovered $4.1 billion
Legislation • Fighting Fraud and Abuse to Save Taxpayer Dollars (FAST Act) introduced by Senators Carper and Coburn with 35 cosponsors. Introduced in the House by Congressmen Peter Roskam and John Carney. • Medicare Data Access for Transparency and Accountability Act (Medicare DATA Act) by Senators Grassley and Wyden • Medicare Common Access Card Act of 2011 by Senators Wyden and Kirk