June 13, 2008 9:56AM

The Amazing Story of Medicare’s Low Administrative Costs

How is it that a government bureaucracy like Medicare can keep it’s administrative costs so much lower* than private health insurance? 

Today’s Washington Post may have the answer: “Medicare Pays Most Claims Without Review.” That was the sub‐​head of an article on today’s front page. The headline was, “Medical Fraud a Growing Problem.”

So, what kind of fraud are we talking about here?

All it took to bilk the federal government out of $105 million was a laptop computer.

From her Mediterranean‐​style townhouse, a high school dropout named Rita Campos Ramirez orchestrated what prosecutors call the largest health‐​care fraud by one person. Over nearly four years, she electronically submitted more than 140,000 Medicare claims for unnecessary equipment and services. She used the proceeds to finance big‐​ticket purchases, including two condominiums and a Mercedes‐​Benz

Law enforcement authorities estimate that health‐​care fraud costs taxpayers more than $60 billion each year.

Woah! That’s a lotta coin! How can it be so easy to bilk Medicare??

Health‐​care experts say the simplicity of Campos Ramirez’s scheme underscores the scope of the growing fraud problem and the need to devote more resources to theft prevention…

What’s that you say? Not enough administrative resources dedicated to preventing fraud?

A critical aspect of the problem is that Medicare, the health program for the elderly and the disabled, automatically pays the vast majority of the bills it receives from companies that possess federally issued supplier numbers.

So Medicare’s approach to paying claims is not unlike, say, shoveling money out the door?

Officials who oversee the Medicare program say they are vigilant despite time pressure and limited resources. Employees review fewer than 5 percent of the nearly 1 billion claims filed each year…This year, CMS is working to finalize a rule that would prevent convicted felons from obtaining Medicare billing numbers.

But the important thing here is that Medicare is keeping administrative costs down, and passing the savings on to you, the taxpayer.

*Claim not valid in your state. Or any state.