Medicare fraud influences finding affordable health insurance in West Los Angeles by Barbara Kempen | Aug 24, 2011 | Affordable Health Insurance, Health Insurance Brentwood, Health Insurance Pacific Palisades, Health Insurance Santa Monica You might have read last weeks Los Angeles article reporting about a jury convicting a pastor and his wife in Los Angeles of fraudently claiming $ 14.2 million from Medicare. In 2007 Medicare and Medicaid made an estimate of $ 23.7 billion in improper payments. These $ 23.7 billion fraudulent payments, could be much better used in offering affordable health insurance, so think twice if a public plan is the solution of our current health care problem. Scores of reports over the last decade catalog completely implausible Medicare and Medicaid claims paid, for patients who are dead, imprisoned or previously deported from the country and forbidden to return. A significant number of claims involved prescribing physicians who were long since dead. The vulnerability of Medicare and Medicaid fraud stems from the payment mechanism the government has chosen to use. Most Medicare and Medicaid are paid electronically. Those committing fraud find it easy to get paid for fabricated claims because the government’s systems check for billing and correctness but not for truthfulness. Accordingly to a recent Wall Street article there are ” administrative expenses of private insurance plans represent money well spent for their members. Here are four reasons:” “First, private insurers must build provider networks. These networks can include high-value providers and exclude low-quality providers. Except for certain circumstances, including criminal acts, Medicare is forbidden from excluding poor quality providers. It lets in everyone who signs up. So one question to ask is, will the public plan have Medicare’s indifference to quality — or invest in the cost of a network?” “Second, private insurers must negotiate rates. Medicare just fixes prices using a statutory and regulatory scheme. And anyone who imagines a public plan would be less costly than private plans must keep the following issue front and center: In the many procedure categories where Medicare’s statutory price does not cover full provider costs, shortfalls are shifted to private payers who end up subsidizing the public program. So, will a public plan negotiate rates or simply use fiat as a means of gaining subsidies from private insurance?” “Third, private insurers must combat fraud — or go out of business. Indeed, these payers have every incentive to invest in antifraud personnel and strategies down to the point where return and investment are equal. But anyone who thinks that a public plan could serve as a “yardstick” for the private sector needs to consider Medicare’s dismal record with regard to fraud, waste and other abuse.” “In fact, the total amount of Medicare fraud is unknown. The government does not measure or estimate fraud in its programs; instead, it measures payments made “in error.” According to Medicare’s own most recent data, payments made in error amount to over $10 billion annually. Others have claimed Medicare’s payments made in error are much higher. Even with the inclusion of the budget of the inspector general for the Department of Health and Human Services, Medicare spends less than one-fifth of 1% on antifraud measures — a small fraction of what private plans invest in their efforts to build a network of honest providers.” “Worse, in four of the past five years Congress has turned back Medicare’s pleas for $579 million of additional antifraud funding, on the grounds that these dollars subtract from the budget funds for curing cancer and anti-obesity campaigns. Based on experience, Congress will always underinvest in fraud. Yet according to a House of Representatives Budget Committee hearing in July 2007, return on investment for certain Medicare antifraud measures were estimated to be in excess of 13-1. Will a public plan also hemorrhage from fraud because of chronic Congressional underinvestment?” “Fourth, private insurers must incur the administrative cost of marketing. Medicare, of course, does not need to market. A public plan competing with other alternatives would have to market itself to the public, and this means tax dollars used to advertise against private plans. Or the public plan could “compete” by using heavily subsidized marketing channels not available to private insurers, such as Social Security mailings, welfare offices, unemployment check stuffers, and the constellation of government-funded “advocacy organizations.” The existing Medicare & Medicaid fraud stats combined with the above mentioned facts, should put in question if a government-run health insurance is the ideal way to improve affordable health insurance in West Los Angeles and in the rest of the country.