U.S. stresses prevention in fighting Medicare fraud

Wed Mar 2, 2011 2:08pm EST

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* Fraud losses "significant" for Medicare, Medicaid

* Some fraud schemes go viral and quickly replicate

By Donna Smith

WASHINGTON, March 2 (Reuters) - U.S. healthcare programs are moving away from "pay and chase" and concentrating more on prevention in the battle against fraud that costs the government billions of dollars, U.S. officials told Congress on Wednesday.

Overseers of Medicare and Medicaid are concentrating on preventing "bad actors" from enrolling as service providers in the massive federal programs that provide healthcare to the elderly and poor, Peter Budetti of the Centers for Medicare and Medicaid Services told the Senate Finance Committee.

"Our goal is to keep those individuals and companies that intend to defraud Medicare, Medicaid and (Children's Health Insurance Program) out of these programs in the first place, not to pay fraudulent claims when they are submitted, and to remove such individuals and companies from our programs if they do get in," Budetti said in testimony.

Historically the programs would pay claims and then chase after those found out to be fraudulent.

U.S. Health and Human Services Department Inspector General Daniel Levinson said he could not provide a precise figure on how much taxpayer money is lost to fraud, but told the committee, "I believe it is a significant dollar figure."

He said more needs to be done to prevent losses.

"Those intent on breaking the law are becoming more sophisticated, and the schemes more difficult to detect," Levinson said. "Some fraud schemes are viral and they quickly replicate."

Levinson said people set up sham offices or bill for medical services and equipment that are never delivered. When law enforcement close in, they relocate or shift fraudulent billing for other medical services such as home health services.

Republican Senator Tom Coburn said some estimates put the annual loss to fraud and waste in government healthcare programs as high as $120 billion.

The Congressional Budget Office estimates Medicare and Medicaid will spend a total $846 billion this year.

Finance Committee Chairman Max Baucus said tougher enforcement is starting to pay off with $4 billion recovered last year.

"This is the highest number of taxpayer dollars ever recovered by efforts to fight healthcare fraud," Baucus said.

With the cost of Medicare rising under an onslaught of new retirees, and states' Medicaid healthcare programs about to expand with the implementation of the year-old healthcare overhaul, combating waste and fraud in the programs is gaining greater attention in Congress.

The Senate Finance Committee was one of three congressional panels holding hearing on Wednesday on fraud and waste in Medicare and Medicaid spending. (Reporting by Donna Smith; Editing Jackie Frank)

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