Medicare & Medicaid Fraud Investigations: Health Reform in the US

Medicare and Medicaid fraud in the US has been growing in dollars for many years and is now receiving a lot of discussion- especially with the signing of the Universal Health Care bill by President Barack Obama.

Posted by Joe Gerard in Health & Safety, Healthcare Fraud, Medicare and Medicaid, SIU & OIG on March 24th, 2010

Medicare and Medicaid fraud in the US has been growing in dollars for many years and is now receiving a lot of discussion- especially with the signing of the Universal Health Care bill by President Barack Obama. Medicare is a government program that provides medical coverage to the elderly in the US and Medicaid provides for the poorest in the country.

As stated in the Presidential Memorandum Regarding Finding and Recapturing Improper Payments, on March 10, 2010, there was an expansion in the use of “Payment Recapture Audits,” which is a process where highly skilled accounting specialists and fraud examiners use different tools and technology to examine payment records and uncover problems such as duplicate payments, payments for services not rendered, overpayments, and fictitious vendors.

Reported in the Reuters article “Obama Backs Bipartisan Crackdown on Healthcare Cheats”:

“An estimated $54 billion was lost through improper Medicare and Medicaid payments in 2009. Obama is seeking to crack down on waste and fraud as his administration strives to secure an overhaul of the $2.5 trillion healthcare system to contain costs and expand coverage to tens of millions of more Americans.”

Medicare/ Medicaid Abuse

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In 2009, Bernie Sanders, US Senator for Vermont pushed hard to include the “fraud crackdown” in the healthcare reform bill. Sanders wanted to significantly increase, and even double the fines faced for those facing penalties for committing health care fraud. Sanders outlined the following cases that made it to court and contribute to the need for tighter restrictions on the medical insurance industry in the US:

  • Earlier this year, a jury found Pfizer owed Wisconsin $9 million for violating the state Medicaid fraud law more than 1.4 million times by purposely overcharging the state for prescription drugs. The company faces potential fines from $140 million to $21 billion.
  • Also in 2009, UnitedHealth, a leading insurance company, paid $350 million to settle lawsuits brought by the American Medical Association and other physician groups for shortchanging consumers and physicians for medical services outside its preferred network.
  • In 2003, GlaxoSmithKline paid $88 million in civil fines for overcharging Medicaid for its anti-depressant Paxil.
  • Also in 2000, Humana paid $14.5 million to settle federal charges of overcharging government health programs.
  • In 2000, the Hospital Corporation of America agreed to pay $745 million to settle civil charges that it systematically defrauded Medicare, Medicaid and other federally-funded health programs.

Easy Target

Reviewing various fraud cases involving Medicare and Medicaid makes me wonder how these people are getting away with stealing large sums of money- until I learned this:

“Medicaid and private insurance companies are also struggling with fraud. But there are a few factors that make Medicare almost a perfect target. One is that it’s a trusting system, set up to serve honest physicians — with few safeguards designed to weed out false claims. Also, most claims are paid automatically, so there’s little or no person-to-person contact.”

Verification of fraudulent claims has become sacrificed due to the goal of providing faster turnaround times for processing claims and getting money back to claimants- this makes it easier for fraudulent claims to go unnoticed. These types of fraud make health care more expensive than it already is in the US, forcing the government to take action and crackdown on those abusing the system in order to ensure that these costs are no longer passed on to the public.

Here is a list of the common types of  Medicare fraud:

  • A health care provider bills Medicare for services you never got.
  • A supplier bills Medicare for equipment you never got.
  • Someone uses another person’s Medicare card to get medical care, supplies, or equipment.
  • Someone bills Medicare for home medical equipment after it has been returned.
  • A company offers a Medicare drug plan that hasn’t been approved by Medicare.
  • A company uses false information to mislead you into joining a Medicare plan.

Solutions

The White House claims that correcting the fraud that surrounds Medicare and Medicaid claims could double taxpayer savings over the next 3 years- providing a savings of at least $2 billion. The New York Times reports that “White House officials said that a pilot program run by Medicare in California, New York and Texas recaptured $900 million in taxpayer money between 2005 and 2008.” A common trend that links the proposed investigation solutions is the increased use of technology to detect suspicious billing patterns and keep track of service providers with a track record of problems. Technology upgrades also extend to patient files, as another part of the healthcare reform is to computerize patient charts to allow for electronic filing as opposed to paper systems.

The focus on integrating technology into the fraud and insurance claims industry is not new- as you can see this is an urgent matter and some cities have already started targeting medical insurance fraud. There are time and money saving solutions, such as i-Sight Investigation Software, that make it easier to conduct inquiries and investigations into fraudulent claims. The “Payment Recapture Audits,” that will be conducted by highly skilled accounting specialists and fraud examiners, can become a less daunting task when an investigation software solution is implemented. Some of the features of i-Sight, such as the ability to identify and track repeat offenders, make it easier to catch and stop those committing the fraud before it’s too late. If the same individuals, groups or businesses have a history of submitting false or bogus claims, each time a case is made involving them, you will have to tools to refer back to previous events and put an end to their actions.

Success With i-Sight

With i-Sight, we provide investigations case management solutions for insurance companies to assist in catching fraudulent claims before they are processed and paid out. One of our clients, the TriZetto Group, Inc. has implemented i-Sight Investigation Software to improve their ability to track, manage and analyze investigations of insurance fraud and abuse in the healthcare industry. According to the General Accounting Office, approximately one-tenth of all U.S. spending on healthcare is lost to fraudulent insurance claims and other forms of abuse. The TriZetto Group realized that i-Sight was a perfect solution for tracking insurance based investigations as it’s fully customizable, conforms to laws and regulations that guide specific industries and saves them time and money through faster, more accurate investigations.


Joe Gerard
Joe Gerard

CEO, i-Sight

Spend my days showing off the i-Sight investigative case management software and finding ways to help clients improve their investigations. Usually working with corporate security, HR & employee relations, compliance and legal teams.

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