WASHINGTON - The government paid more than $47 billion in questionable Medicare claims in the last fiscal year, including medical treatment showing little relation to a patient's condition, wasting taxpayer dollars at a rate nearly three times that of the previous year.
Excerpts of a new federal report, obtained by the Associated Press, show a dramatic increase in improper payments in the $440 billion Medicare program that government auditors have cited for 20 years as a high risk for fraud and waste.
It's not clear whether Medicare fraud is worsening. Much of the increase is attributed to the Health and Human Services Department imposing stricter documentation requirements and including more improper payments - part of a data-collection effort being ordered governmentwide by President Obama this week.
Still, the fiscal 2009 financial report - covering the first few months of the Obama Administration - highlights the challenges for an administration seeking to pay for its proposed health-care overhaul in part by cracking down on Medicare fraud. While noting that several new anti-fraud efforts are beginning, the report makes clear that "aggressive actions" aimed at reducing improper payments had yielded little improvement.
In recent years, the suspect claims have included prescriptions from doctors who were dead, and requests for payment for medical supplies such as blood glucose strips for sexual impotence and diabetic shoes for leg amputees. Patients, many of them new citizens who barely speak English, are sometimes recruited by brokers who go door to door offering hundreds of dollars for use of their Medicare numbers.
President Obama is expected to announce initiatives this week to help crack down on Medicare fraud, including a Web site aimed at providing a fuller account of health-care spending and improper payments made by various agencies. The Centers for Medicare and Medicaid Services will launch a site next month for tracking Medicare payment information by categories such as state, diagnosis, and hospital.
According to the report, the Bush administration from 2005-2008 reported improper payments of roughly 4 percent in the fee-for-service program, or about $17 billion total in 2008. Government officials at the time, however, typically did not consider a Medicare payment improper if the medical documentation was incomplete or a doctor's signature was illegible. Because these were flaws that ordinarily bar payment, that methodology drew complaints from government auditors that the figures were understated.
For fiscal 2009, the Obama Administration began counting those claims as improper, but it was unable to complete an official tally based on the new methodology.
As a result, it officially reported improper payments for its fee-for-service program at 7.8 percent, representing a partial tally under the new formula. But it considers the unofficial tally of 12.4 percent to be more representative.
Beginning next year, the 12.4 percent figure - a total of $47 billion in improper payments when counting both Medicare fee-for-service and managed care - will be used as the baseline estimate.
The federal report sets a target of reducing improper payments in the fee-for-service program to 9.5 percent by next year, which would be a saving of roughly $9.7 billion.
The findings come as the Obama Administration is making Medicare anti-fraud efforts an important priority. The Department of Health and Human Services has said it is increasing by tenfold the number of agents and prosecutors targeting fraud in Miami, Los Angeles, and other strategic cities where tens of billions of dollars are believed to be lost each year. The new partnership seeks to have better sharing of information on health-care fraud patterns.
Officials say they also want to increase training and outreach among Medicare providers to reduce documentation errors, while proposed health overhaul legislation would increase background checks on Medicare claimants and impose stiffer penalties for false claims.
•In the Medicaid program for the poor, roughly $18.1 billion, or 9.6 percent of claims, are believed to be improper payments.
•Using a baseline of 12.4 percent in improper payments in the Medicare fee-for-service program, the administration is setting targets of reducing fraud and waste to 9.5 percent, 8.5 percent, and 8 percent, respectively, for fiscal years 2010 through 2012.
Records released in the past week showed that for three years, Medicare and Medicaid officials ignored internal warnings about swindlers stealing millions of dollars by scamming Medicare programs. The agency received roughly 30 warnings from inspectors but didn't respond to half of them, even after repeated letters.