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Blog
Friday, October 1, 2010

The new law and Medicare waste, fraud, and abuse

Michealle Gady

Staff Writer

No one knows for sure just how much waste, fraud, and abuse occurs in the Medicare system, but everyone agrees there’s plenty of work to be done.

For example, one estimate says that Medicare could save as much as 30 percent if it could stop the delivery of unnecessary care. Everyone knows someone who’s received the same test twice—that’s wasteful, and coming improvements to the health care system, such as electronic medical records, should help address this problem.

Fraud and abuse is even more outrageous. For example, Medicare beneficiaries have been reported to receive wheelchairs that they never ordered and don’t need, and that’s just the tip of the iceberg.

In recent years, the Centers for Medicare and Medicaid Services (CMS)—the agency that administers the Medicare program—has stepped up its efforts to stop waste, fraud, and abuse. In 2009, increased efforts resulted in the recovery of $2.5 billion for Medicare.

To build on this success, the Affordable Care Act (ACA) takes additional steps to crack down on waste, fraud, and abuse in Medicare. The Affordable Care Act provides relevant agencies with an additional $350 million over the next decade to hire more investigative personnel to aggressively monitor and prevent waste, fraud, and abuse in the system. It’s a good investment. The nonpartisan Congressional Budget Office estimates that every $1 invested to fight fraud results in $1.75 in savings. The improvements included in the Affordable Care Act are expected to save the Medicare program about $5 billion over the next 10 years.

How will it happen? In addition to more investigation, the health reform law will require Medicare providers to go through stricter screenings, like background checks and site visits, to ensure that fraudsters never enter the program to begin with. Additionally, the Affordable Care Act imposes harsher fines and penalties on Medicare participants who submit false data on applications and claims. With stronger penalties, bad actors should be deterred from committing fraud and abusing the system.  

Waste, fraud, and abuse increases Medicare costs, and these costs are passed along to all of us—beneficiaries and taxpayers. The increased effort to prevent and root out waste, fraud, and abuse will not only save Medicare money—which will free up resources to serve the seniors and people with disabilities who rely on Medicare—but it will also lead to lower health care costs for everyone.