Recently, Greg Mankiw had a post called: “Next time you hear someone advocate for single-payer healthcare, remember this.” He quotes the following NY Times story:
Two Florida doctors who received the nation’s highest Medicare reimbursements in 2012 are both major contributors to Democratic Party causes, and they have turned to the political system in recent years to defend themselves against suspicions that they may have submitted fraudulent or excessive charges to the federal government….
Topping the list is Dr. Salomon E. Melgen, 59, an ophthalmologist from North Palm Beach, Fla., who received $21 million in Medicare reimbursements in 2012 alone….
Dr. Melgen’s firm donated more than $700,000 to Majority PAC, a super PAC run by former aides to the Senate majority leader, Harry Reid, Democrat of Nevada. The super PAC then spent $600,000 to help re-elect Senator Robert Menendez, Democrat of New Jersey, who is a close friend of Dr. Melgen’s. Last year, Mr. Menendez himself became a target of investigation after the senator intervened on behalf of Dr. Melgen with federal officials and took flights on his private jet.
As I have mentioned in the past few weeks, according to the Office of Management and Budget (OMB), the federal government misspent more than $100 billion in 2012 on things like sending hospitals reimbursements for treatments they didn’t provide or overpaying them for treatments they did provide. And that figure is comprised only of mistakes the OMB managed to catch. According to the GAO, Medicare Fee-for-Service (FFS), Medicare Advantage, and Medicaid combined to a total $61.9 billion in waste in 2012, making government-run health care by far the biggest offender in the waste sweepstakes. Medicare FFS alone improperly spent $32 billion in 2012.
The problem is that nobody in the health-care system has a real incentive to crack down on fraudulent or mistaken payments. In fact, it is worse than that; the financial rewards provided by these overpayments are so lucrative that providers will go to great lengths to be sure that the money keeps improperly flowing. The New York Times quote above shows that.
In an October 2013 piece published in Citizens Against Government Waste’s WasteWatcher publication, analyst Leslie Paige laid out in detail the efforts by health-care providers and their sidekicks in Congress to slow down the rate of improper payments through recovery audit contractors (RACs).
This month, Paige doubles down with a piece showing that when it comes to controlling Medicare fraud, Centers for Medicare and Medicaid Services is all talk but no action. She writes:
Thanks to the Recovery Audit Contractor (RAC) program, $8.2 billion in improper Medicare payments has been recovered since its nationwide implementation in 2010. RACs operate on a contingency fee basis, so their work does not cost taxpayers a dime. Rather than celebrate this successful program, members of Congress, the Centers for Medicare and Medicaid Services (CMS), and special interests, particularly the hospital trade associations, are conspiring to kill it.
Beginning in October 2013, in three consecutive steps, CMS suspended 80 percent of the program’s post-payment auditing for an entire year. CMS also barred the RACs from reviewing retroactive claims, even though federal law allows the RACs to look at claims going back five years. The one-year suspension of claims reviews means that the Medicare Trust Fund will hemorrhage about $4 billion in overpayments to hospitals. Between them, Medicare and Medicaid have the worst improper payment rates in the federal government.
And members of Congress, both Republicans and Democrats, are no better. In fact, they are doing everything in their power to get in the way:
The landscape for the RAC program, and taxpayers, became exponentially worse on Thursday, March 27, 2014, when the U.S. House of Representatives moved to address Medicare’s Sustainable Growth Rate (SGR) issue, popularly known as the “doc fix.” In 1997, Congress established the SGR, which was supposed to peg the amount of money for Medicare reimbursements to physicians to economic growth. Almost immediately, Medicare spending began outpacing economic growth, which would have triggered reductions in the reimbursement rates. Since physicians are increasingly refusing to take on new Medicare patients, cutting reimbursement rates only accelerates their exodus from the program. Since 2003, Congress has passed temporary patches 17 times to prevent the SGR cuts from going into effect. Faced with a March 31, 2014 deadline, the latest “doc fix” patch was a must-pass legislative vehicle and was, inevitably, laden down with all sorts of other provisions, including language that would suspend all RAC audits for another six months.
When some members of Congress balked at taking a public roll-call vote that would enable billions of dollars in improper payments to flow out of the Medicare Trust Fund, House Republican leadership engaged in a stunning and outrageousprocedural gimmick. Collaborating with House Democratic leadership, as well as Senate Majority Leader Harry Reid (D-Nev.), they quietly jammed the bill through a virtually empty House chamber by voice vote. The House’s procedural skullduggery guarantees that this highly successful anti-waste program will remain vulnerable to future political manipulation by members from both sides of the aisle.
RACs will now be barred from post-payment reviews of improper hospital claims for 18 months, which means that the Medicare Trust Fund will lose at least another $2 billion in improper payments.
Paige’s piece is here.