Medicare Fraud
Since its creation under President Johnson's Social Security Act of 1965, Medicare, a government-run insurance program providing health coverage for citizens over the age of 65, has grown into a mammoth 44-million, $450 billion a year program, or approximately 5.3% of GDP (circa 2009). As the baby boomers and Tom Brokaw's "Greatest Generation" spills into the plus-65 age range, the Congressional Budget Office's Long-Term Budget Outlook predicts that Medicare spending will be at 6.4% in 2020 and 10% in 2030.
Some experts predict that as much as $100 billion is swindled from the U.S. healthcare system every year. Given its size and complexity, the Medicare program is hands down the single biggest victim of healthcare fraud in the country. In her testimony titled "Medicare Fraud, Waste and Abuse," Kathleen M. King told Congressional leaders, "We have designated Medicare as a high-risk program since 1990, in part because we found the program's size and complexity make it vulnerable to fraud, waste and abuse... The Centers for Medicare and & Medicaid Services (CMS) -- the agency that administers Medicare -- has estimated improper payments for Medicare fee-for-service (FFS) at $24.1 billion in calendar year 2009." Other sources have reported the bill to be much higher: Eric Holder, ABC's "Nightline," and The Washington Post pegged the amount lost in Medicare fraud at a staggering $60 billion a year, making it one of, if not the most, profitable crimes in America today.
Though technically a government-run program, most of the distributing of Medicare funds is accomplished through the work of private contractors. Given that these contractors must process and pay approximately 4.5 million claims a day, often through the use of computers that simply check to see that the paper work is properly filled out, it is understandable how criminals can so easily fly under the federal radar.
Common Terms
Here are a couple of terms that you may stumble upon while perusing through indictments, settlements or guilty pleads in Medicare fraud cases:
False Claims Act: A federal law that allows individuals not associated with the government to file actions against federal contractors who they believe to have committed fraud against the government. Though the "whistleblower" represents the U.S. Government in role of the prosecution, they are still entitled to a portion of the penalties received through "qui tam" provision of the FCA. The majority of funds recovered through the FCA, approximately 66% of $2.4 billion in 2009, involve health care fraud.
Stark Law: according to starklaw.org, the Stark Law "governs physician self-referral for Medicare and Medicaid patients. Physician self-referral is the practice of a physician referring a patient to a medical facility in which he has a financial interest, be it ownership, investment, or a structured compensation arrangement. Critics of the practice allege an inherent conflict of interest, given the physician's position to benefit from the referral. They suggest that such arrangements may encourage over-utilization of services, in turn driving up healthcare costs. In addition, they believe that it would create a captive referral system, which limits competition by other providers."