$77 million Medicare fraud catcher solves very little

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Debuting last summer, a $77 million computer system to detect Medicare fraud before it occurs had prevented just one suspicious payment by Christmas. That saved taxpayers exactly $7,591.

Hoping for much better results, a disappointed Sen. Thomas R. Carper, Delaware Democrat, said, “I wondered, did they leave out some zeros?”

Lawmakers had expected the system to finally allow Medicare to stanch a $60-billion-a-year fraud hemorrhage. Now they’re worried that cautious bureaucrats lacking a clear strategy will compromise its performance.

Medicare officials say it’s unfair to grade the new technology on a single statistic.

“Suspending payments is only one way of stopping the money,” said Ted Doolittle, deputy director of Medicare’s anti-fraud program. “There’s lots of ways of stopping the money, and we are using them all. Looking at payment suspensions only — that’s an unsophisticated view that doesn’t give you a full picture of our activities.”

When other benefits of the system are taken into account, such as cases referred to investigators and changes to payment software that result in automatic denial of suspect claims, the potential savings in the first six months of operation easily exceed $20 million, Medicare officials indicated in a Jan. 27 letter to Mr. Carper.

However, officials now acknowledge they don’t know how much of that money has actually been recovered.

Other experts point out that the mission of the new system was to stop bogus payments before they leave the U.S. Treasury and end what’s known as “pay and chase.” Under that method, the agency automatically pays claims, even suspicious ones, and then reviews them weeks after the fact.

That can be a self-defeating way to do business. Law enforcement is usually several steps behind the defrauders, who sometimes manage to flee the country with millions stolen from the government. The new computer system was meant to elevate Medicare’s game, putting it in the same league as major credit card companies that can freeze accounts quickly.

“The whole idea for creating this technology was they were going to be able to end pay-and-chase,” said Hank Walther, former head of the Justice Department’s health care fraud division. “But we haven’t yet seen evidence of its success.”

Medicare has “got to explain to us clearly that they are implementing the program, that their goals are well-established, reasonable, achievable, and they’re making progress,” added Mr. Carper, chairman of a subcommittee that oversees federal financial management. “We’re not sure if they’ve done those things.”

Just last week, at a news conference to announce a record $4 billion in fraud recoveries last year, Health and Human Services Secretary Kathleen Sebelius heaped praise on the new computer technology.

“Now, just as your credit card company freezes your account when it’s used to buy 10 flat-screen TVs in stores around the country, we have the technology to stop suspicious claims payments before they’re sent out,” she said.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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