Pervasive Medicare Fraud Proves Hard to Stop

Pervasive Medicare Fraud Proves Hard to StopBALTIMORE — The ordinary looking office building in a suburb of Baltimore gives no hint of the high-tech detective work going on inside. A $100 million system churns through complicated medical claims, searching for suspicious patterns and posting the findings on a giant screen.

Hundreds of miles away in a strip mall north of Miami, more than 60 people — prosecutors, F.B.I. agents, health care investigators, paralegals and even a forensic nurse — sort through documents and telephone logs looking for evidence of Medicare Fraud. A warehouse in the back holds fruits of their efforts: wheelchairs, boxes of knee braces and other medical devices that investigators say amount to props for false claims.

The Obama administration’s declared war on health care fraud, costing some $600 million a year, has a remarkable new look in places like Baltimore and Miami. But even with the fancy computers and expert teams, the government is not close to defeating the fraudsters. And even the effort designed to combat the fraud may be in large part to blame.

An array of outside contractors used by the government is poorly managed, rife with conflicts of interest and vulnerable to political winds, according to interviews with current and former government officials, contractors and experts inside and outside of the administration. Authority and responsibilities among the contractors are often unclear and in competition with one another. Private companies — like insurers and technology companies — have responsibility for enforcement, often with little government oversight.

Pervasive Medicare Fraud Proves Hard to StopFraud and systematic overcharging are estimated at roughly $60 billion, or 10 percent, of Medicare’s costs every year, but the administration recovered only about $4.3 billion last year. The Centers for Medicare and Medicaid Services, which is responsible for overseeing the effort, manually reviews just three million of the estimated 1.2 billion claims it receives each year.

“It’s pretty dysfunctional because the contractors don’t communicate with each other,” said Orlando Balladares, a fraud investigator who has worked for both the government and private firms.

Dr. Shantanu Agrawal, who oversees Medicare’s antifraud center, the Center for Program Integrity, said the administration had made fighting fraud a top priority.

“The focus is higher than it ever has been,” said Dr. Agrawal, an emergency medicine physician and former McKinsey consultant who took the Medicare job this year. But even some of the administration’s successes shed light on the crackdown’s limitations.

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Source:; Reed Abelson, Eric Lichtblau; August 16, 2014.