New York Times Reports On How Medicare Fraud Is A Tough Nut To Crack

Posted On Wednesday, August 27, 2014

As discussed previously on White-Collared (for example – herehere, and here), the federal government is hot on the trail of alleged health care fraudsters.  A recent New York Times article by Reed Abelson and Eric Lichtblau provides interesting insight into the expensive efforts – over $600 million annually – by the government to identify and stop fraudulent Medicare billing.  While DOJ and HHS often laud their successes in health care fraud investigations and prosecutions, the article pointed out the apparent irony in the government’s use of inefficient or ineffective contractors to investigate overbilling and health care fraud.

Rarely advertised by the government, much of health care fraud investigations are outsourced to private contractors to augment government agents and prosecutors.  The price tag on the war on health care fraud is over $600 million each year, which seems reasonable compared to the $60 billion in losses believed to be associated with fraud and systematic overcharging each year.  However, the Obama administration recovers only $4.3 billion of that $60 billion annually as the fruit of their labors. 

The limited success of the fight against Medicare fraud is reportedly attributable to “recovery audit contractors” hired to identify hospital overbilling.  These contractors are credited with the return of $8 billion to government coffers since 2009.  The Times article concludes that contractors’ success is hampered by hospitals’ refusal cooperate with the contractors and a Medicare appeals process that’s stretched to its limit, a perspective not likely shared by many hospitals and healthcare systems. 

The article also cites to an example of HHS taking action that adversely impacted the level of its contractors’ success by pointing out that HHS shut down a successful tipster hotline in South Florida, claiming that it was no longer needed.  However, the hotline resulted in over 1,000 fraud investigations and identified tens of millions of dollars in questionable billing over the last five years.  Operated by an outside contractor, tips were received via the hotline and passed to investigators within 48 hours.  Now, calls are reportedly routed to a general Medicare number where it can take months for a complaint to be addressed.

An interesting read, the New York Times article provides a unique perspective on the often unreported limitations of the government’s efforts to address health care fraud.  While it can be expected that HHS and DOJ continue efforts to remedy some of these problems, this uneven approach to addressing the multitude of conduct that falls under the umbrella of “health care fraud” is likely to continue to frustrate the principals on all sides of this issue.