The American Spectator : The Spectacle Blog : Medicare Official Blames Rampant Fraud on Low Admin Spending

Text Size

The Spectacle Blog

Medicare Official Blames Rampant Fraud on Low Admin Spending

By Philip Klein on 10.26.09 @ 12:07PM

Last Friday, I wrote an article on the main site exploring the issue of rampant Medicare fraud, noting that the problem undermines liberals' arguments that we need a new government-run plan to bring more efficiency to the system. Last night, "60 Minutes" took up the issue, and if you haven't seen the stunning report, I urge you to watch the video below and pass it along to all of your friends. After investigating the matter, even CBS acknowledged that it raised "troubling questions about our government's ability to manage a medical bureaucracy."

For the story, Steve Kroft traveled down to South Florida, where the Medicare fraud industry has become bigger than the drug trade, and visited a number of so-called clinics that billed millions of dollars to Medicare but were actually empty store fronts. He interviewed a Medicare cheat who stole $20 million from the government before getting caught, who described it as being so easy to steal that it was like "taking candy from a baby." And the show also visited with an elderly woman who in 2003 discovered phony health care charges being paid out in her name by the federal government. Even though she has been reporting these recurring charges to the Centers for Medicare and Medicaid Services for the past 6 years, no action has been taken by the government to stop the fraudulent payments.

The most relevant moment to our current health care debate came when Kroft asked Kim Brandt, Medicare's director of program integrity, to explain why the government couldn't do anything to prevent the widespread fraud.

"Well, it really does come down to the size and scope of the Medicare program, and the resources that are dedicated to oversight and anti fraud work," Brandt said. "One of our biggest challenges has been that we have a program that pays out over a billion claims a year, over $430 billion, and our oversight budget has been extremely limited."

Liberals keep touting Medicare's low administrative costs relative to the private sector. To start with, those estimates exclude a number of costs that show up elsewhere in the federal budget (office rent, staff salaries, the cost of raising capital through tax collection). But to the extent that the program does have lower administrative costs, the result is far more fraud than exists in the private sector, which is more aggressive about policing claims. Estimates of the amount stolen from the government each year vary from about $60 billion to several hundred billion if you include Medicaid.

Watch CBS News Videos Online

View all comments (5) | Leave a comment

Pete| 10.26.09 @ 12:42PM

How easy do you think it is to grab large chunks of the "stimulus" money? Just another way to redistribute taxpayer money to Democratic friends of the Messiah.

SC Mike| 10.26.09 @ 1:21PM

Philip’s broken the code on Medicare administrative costs: they are low in part because, unlike a private insurance company, the agency has no incentive and little ability to control costs. As long as they stay within Medicare’s cost per procedure, fraudsters can make off with oodles of loot billing the agency for non-existent services.

Private insurers usually have relationships with both the providers and the insured; that alone limits opportunities for fraud. Add to that the fact that when a cost is incurred with an approved provider, the insurer sends a notice to the insured summarizing the cost, payments, and notice of co-payment, if any.

Medicare operates like an EFT system where millions of old folks generally get whatever medical care they want while the provider does the billing. The sheer volume of transactions makes any enforcement difficult, but again, there’s no real incentive because there’s no need to make money or control costs at the agency level. Congress takes care of that through caps and discounting the fees for procedures.

BillF| 10.26.09 @ 2:04PM

Hmmmm...so why would the C(ontinuous)B(arack)S(upport) network air something so detrimental to the Messiah's plan? Could it be that he is about to unveil HIS new program to crack down on "just this type of corruption that I promised to eliminate if you elected me president."

Rodney | 10.26.09 @ 3:16PM

How easy do you think it is for Lockheed to lose 2.3 billion dollars of tax payers money and keep getting gov't contracts? How easy is it for Halliburton to rape women and still get gov't funding? The United States is lazy and people don't do anything, riots, rallies, etc are not enough people. Write letters to State Reps, Senators, organize otherwise both Dems and Republicans will keep it the same because it is easier to do that.

davod| 10.26.09 @ 8:17PM

First - If you want to send your rep a letter, don't. It will get trapped in the offsite testing for Anthrax. Send a fax instead.

Many, if not all Health Insurance companies use the Medicare pricing as a baseline. Medicare has some ridiculous guidelines. For instance. I am wheel chair bound (manual not electric). Medicare's rules (Which my HMO used as well) states that the wheel chair can only be used for inside mobility. I can get around pretty well in my wheelchair inside and outside. What am I supposed to do, have someone carry me around outside?