Tag: pay and chase

As Predicted, Obama Administration Backs Off Medicare Anti-Fraud Efforts

Medicare and Medicaid are rife with fraud. We’re talking 10 percent or more of total spending, which is two orders of magnitude more than what credit card companies tolerate.

In a recent article, I explained a couple of ways such fraud occurs:

For providers, Medicare is like an ATM: So long as they punch in the right numbers, out comes the cash. To get an idea of the potential for fraud, imagine 1.2 million providers punching 1,000 codes each into their own personal ATMs. Now imagine trying to monitor all those ATMs.

For example, if a medical-equipment supplier punches in a code for a power wheelchair, how can the government be sure the company didn’t actually provide a manual wheelchair and pocket the difference? About $400 million of the…fines paid by Columbia/HCA hospitals were for a similar practice, known as “upcoding.”…

Yet federal and state anti-fraud efforts remain uniformly lame. Medicare does almost nothing to detect or fight fraud until the fraudulent payments are already out the door, a strategy experts deride as “pay and chase.” Even then, Medicare reviews fewer than 5 percent of all claims filed.

I also explained why fraud is so rampant:

Efforts to prevent fraud typically fail because they impose costs on legitimate beneficiaries and providers, who, as voters and campaign donors respectively, have immense sway over politicians. At a recent congressional hearing, the Department of Health and Human Services’ deputy inspector general, Gerald T. Roy, recommended that Congress beef up efforts to prevent illegitimate providers and suppliers from enrolling in Medicare. But even if Congress took Roy’s advice, it would rescind the new requirements in a heartbeat when legitimate doctors — who are already threatening to leave Medicare over its low payment rates — threatened to bolt because of the additional administrative costs (paperwork, site visits, etc.)…

How could it be any other way? Anti-fraud efforts will always be inadequate when politicians spend other people’s money…[People] care less about health-care fraud, and have a lower tolerance for anti-fraud measures, than they would if they paid the fraud-laden premiums themselves.

In a word, government is stupid.

As if to prove the point, the Obama administration—despite its rhetoric about getting tough on fraud—is behaving pretty much as I predicted. In mid-November, the administration announced two anti-fraud efforts, one to prevent fraudulent claims for power wheelchairs and scooters, and another to eliminate “pay and chase” for some Medicare claims in some states. Not two months later, under “heavy provider opposition,” Medicare has delayed these demonstrations “until further notice.”

If you’re interested to see how this all turns out, follow @CMS.gov on Twitter and keep an eye out for #pmd_demonstration (the wheelchairs and scooters demonstration project; there’s no hashtag for the project to curb “pay and chase”).  HT: Peter Suderman.

A Dishonest Budget, as Told in One Graph

Yesterday, President Barack Obama released his proposed budget for fiscal year 2012.  Many of my Cato colleagues have already discussed why the president should be embarrassed of this document.  Chris Preble writes that the president offers “faux cuts” to military spending.  Dan Mitchell says the president is “missing in action” on entitlement reform.  Chris Edwards writes that “the Obama administration has completely chickened out on spending reforms in its new budget.”

They were too kind.  This budget is thoroughly dishonest, too.

Back in 1997, Congress enacted automatic reductions in the price controls that Medicare uses to pay for physician services.  Congress has delayed those cuts year after year, and everyone now agrees they are politically infeasible.  We’re not talking about your the usual, Washington-DC definition of spending cuts here, which is just a reduction in spending growth.  If the accumulated cuts were to take effect in 2012, as provided by current law, Medicare payments to physicians would fall by some 25 percent, and lots of seniors would find their doctor no longer accepts their Medicare coverage.  The problem is, these cuts are still on the books and they grow larger every time Congress delays them.  But no one wants to come up with the money needed to pay for a permanent “doc fix.”

Enter President Obama’s FY2012 budget submission.  Rather than propose a permanent “doc fix,” the Obama administration proposes a temporary and dishonest one.  As shown by the blue bars in the below graph, the administration proposes to delay these cuts until 2014 at a cost of $54 billion.  As shown by the black line, the administration proposes to pay for this additional spending by reducing the rate of spending growth in other areas of Medicare by $62 billion over the next 10 years.  Note that only 6 percent of these Medicare “cuts” will occur in 2012 and 2013.  The other 94 percent of the “cuts” will come after the administration has spent the $54 billion it wants to spend.  Note also that the vast majority of the “cuts” would take effect after Barack Obama is no longer president.   Finally, the president offers no proposals to deal with the cuts in physician payments during the last eight years of the 10-year budget window (as shown by the purple bars).  But he’s more than happy to use those implausibly low current-law spending levels to make his proposed budget appear more responsible than it is.

It’s the same old story: dessert today, spinach tomorrow.  (Or, never.)

Both parties engage in such dishonesty all the time.  Those cuts in physician payments were scheduled to take effect in 2011.  To pay for delaying them until 2012, Congress and the president agreed on the ridiculous and dishonest strategy of trying to track down and recover excessive subsidies that the federal government will pay to people in ObamaCare’s health insurance “exchanges,” beginning in 2014.  (Call it the new “pay and chase.”)