How Medicare Wastes Almost $50 Billion a Year
November 25, 2011
The Fiscal Times
By CHAD TERHUNE
“A government program that wastes money? Really? Why do I not find this hard to believe? They just can’t seem to do anything right. What really stinks is that Medicare should be helping people – instead they waste billions of dollars every year.” — KTRN
Improper payments – to the wrong person, in the wrong amount, or for the wrong reason — cost Medicare $48 billion last year, or nearly 10 percent of the $516 billion spent on care for seniors, according to federal estimates. And others suggest that the total number for Medicare fraud and waste is close to $100 billion a year.
Whatever the tally, the inability to stop the bleeding at Medicare represents another lost opportunity to wring substantial savings from the federal budget, and it puts additional pressure on Congress and President Obama to cut Medicare benefits as part of the effort to shrink the deficit by at least $1.2 trillion over the next decade.
Beyond that, the losses at Medicare call into question the efficacy of contracting with some of the nation’s largest insurance companies to process Medicare claims, spot suspicious billing, and refer cases to law enforcement.
The contractors are primarily subsidiaries of big health insurers, such as WellPoint and Blue Cross Blue Shield.
Government auditors have criticized these companies for poor performance in the past and faulted Medicare officials for not holding them accountable. A report last year by the Health and Human Services inspector general said one group of 18 contractors identified just $835 million in overpayments in 2007, and 16 of them referred $54 million or less for collection. Medicare is now consolidating that work in seven regional contracts. Overall, in the last fiscal year (2010), Medicare paid $956 million to these contractors for claims processing and fraud detection, according to government figures.