Is Spending Billions on Medicare Fraud Acceptable?

In a recent legislative forum, U.S. Rep. Peter Roskam brought to our attention that one out of every eight Medicare dollars is spent on fraud.

By Rick Banas of Gardant Management Solutions

U.S. Congressman Peter Roskam gave those of us attending a Legislative Forum on Tuesday something to think about when it comes to the federal government needing more money.

The forum was being hosted by the Batavia, Geneva and St. Charles Chambers Commerce in the Tri-Cities area along the Fox River west of Chicago.

The Medicare fraud rate, Roskam said, is well above 12%. Or, another way of looking at it, he explained, is that one out of every eight dollars spent on Medicare is used to fund fraudulent Medicare claims.

There are three reasons why this occurs, he said.

First, federal employees operate with the certainty that money to pay the bills will always appear. There is no consequence for failing to take steps to reduce the rate of fraud.

The second reason has to do with the way the federal government pays claims for Medicare. The federal government pays the claim before checking to see if the claim is legitimate. It is not until after the money has been sent, the check has been cashed and the money is no longer in the U.S. Treasury that government does any investigation. By then, if problems are discovered, it is very difficult to get the money back, especially since many of the payments are sent to off shore bank accounts.

As Rep. Roskam asked, if you saw a questionable charge on your credit card bill, would you first write a check and send it to the credit card company and then question the charge?

Third, the federal government, unlike credit card companies, does not use any predictive modeling. With the use of predictive modeling, Rep Roskam says he has been told, the fraud rate for Visa is 0.06%.

The Congressman talked about how he was pickpocketed while on a family vacation in Budapest. He called a credit company to report the theft of his credit card. The company’s response was that it already knew about the theft because of an attempted unusual $10,000 purchase that was identified by predictive modeling.

According to information posted on The Henry J. Kaiser Family Foundation website, the federal government spent $3.5 trilion on Medicare in 2014. This was 14% of the federal budget.

As such, more than 1.5% of the federal budget, or in the neighborhood of $440 billion dollars – is being spent on Medicare scams.

I certainly agree with Rep. Roskam. Let’s take the steps necessary to stop paying criminals. It has to be a much more appropriate alternative than raising taxes or cutting services needed by older adults to maintain their health and the dignity they deserve.

Gardant Management Solutions has 20+ years of industry-acclaimed operational history in developing, managing and consulting for senior living, assisted living and memory care communities.