Combating Fraud in Medicare and Medicaid

Fraud in Medicare and Medicaid is a serious problem in America’s health care system. Improper payments currently cost our government $70 billion per year. Congressional action is needed to eliminate improper payments in Medicare and Medicaid. We must increase our investment in fraud prevention and enforcement programs and increase penalties, without impeding the delivery of health care services to beneficiaries.  The FAST Act, a bipartisan bill introduced by Sen. Thomas Carper and Sen. Thomas Coburn, includes essential policy changes to help combat fraud.

Currently, too many criminals are able to become Medicare and Medicaid providers because there is no efficient system for reviewing credentials prior to approval.  The existing system does not review the legitimacy of these “providers” before issuing reimbursements. We need to move away from this system of “pay and chase” and instead ensure that we complete cross-checks on services before paying a provider.

The fee-for-service payment scheme is also very prone to fraud. Currently most physicians are reimbursed through fee-for-service which means that they get paid for each service separately. This incentivizes doctors to order more tests and treatments. Switching to pay-for-performance would make it more difficult for fake providers to cheat the system, because it would require them to submit data on patient outcomes rather than just documentation that a service was provided.

CMS should take a risk-based approach focused on those services and goods most susceptible to fraud.  Criminals target certain industries, such as durable medical equipment, more than others in order to maximize their fraudulent gain. The pre-payment review process for items that have been targeted in the past should be strengthened in order to make it more difficult for criminals to interfere.

Finally, the claims data maintained by CMS is essential to ensure program integrity; without accurate data it is impossible to combat fraud effectively. Currently the databases that manage this data are too antiquated. It is especially important to improve data sharing between Medicare and Medicaid because dual eligible individuals are the most expensive and thus errors with duals are the most costly to the system. 

Rachel Lynn Wilson is currently a rising second year at Case Western Reserve University School of Law in Cleveland, OH. During the 2011-2012 school year, Rachel participated in a Health Law Competition at the Loyola University-Chicago focused on the Affordable Care Act and specifically Accountable Care Organization development. Rachel graduated from the University of Michigan-Ann Arbor in 2010 with a Bachelors of Science in Political Science and Spanish. During the 2007-2008 school year she published two papers on the effects of chemotherapy treatment on metastatic lung cancer with Dr. David Reisman, M.D. Ph.D.  She loves running, traveling, shopping and attending sporting events.