Medicaid is a U.S. program designed to provide health care to those with inadequate incomes and who cannot afford medical coverage on their own. Medicaid is not to be confused with Medicare, which is a program specifically designed for senior citizens. However, the two programs are often related because they both work to provide medical coverage for those who do not have health insurance through private providers. Some surprising statistics exist about Medicaid. Along with it are Medicare fraud and scams, and recent news stories of these occurrences.
Statistics of Medicaid Fraud That Will Shock You
1. In May of 2014, some 107 healthcare providers including doctors and nurses were arrested in several cities. These ones were charged with cheating the programs out of some $452 million in funds.
2. In 2010 federal officials arrested some 94 people who had filed false claims through Medicare and Medicaid, for a total of $251 million in fraudulent claims.
3. The Medicare Fraud Strike Force was formed by federal officials in 2007. The group visited some 1600 businesses in Miami at random, following up on billing to Medicare for durable medical equipment. Of those businesses, nearly one-third did not exist although they had billed Medicare for $237 million in the past year.
4. It was reported to one source that Russian and Nigerian mobs had moved to Florida from New York because it was easier to become involved with Medicaid fraud than it was to be involved with other organized crime activities.
5. A former official in New York City stated that some 40% of Medicaid payments in that city were “questionable.”
6. A story by the New York Times reported that a dentist in Brooklyn had filed 991 claims to Medicaid in one day alone.
7. The five states with the highest number of fraud cases include California, Texas, New York, Ohio and Kentucky.
8. In 2011, state governments recovered some $1.7 billion from fraudulent payouts. They spent an estimated $208 million to accomplish this.
9. In that same year, the federal government also recovered some $4.1 billion from fraudulent activity, but they too needed to spend hundreds of millions of dollars to do this.
10. In 2010 the Government Accountability Office or GAO reported that they had found some $48 billion in “improper payments” during the past year for Medicaid and Medicare. This amount was roughly 10% of the $500 billion that was paid out during the year.
11. That same year, U.S. Attorney General Eric Holder suggested that the amount of fraud was actually higher, somewhere between $60 and $90 billion in payouts.
12. The Department of Health and Human Services currently uses what is often called a “pay and chase” model for finding Medicare and Medicaid fraud. This is the practice of routinely paying out every claim as it comes in and then only pursuing those that seem blatantly fraudulent, such as a dentist filing 991 claims in one day.
13. The Department’s Secretary Kathleen Sebelius has stated that they are planning on pursuing pre-claim adjudication to analyze patterns in claims before they are paid out, and are looking to abandon the “pay and chase” model within the next few years.
14. Some estimate that private insurers lose 1% to 1.5% of their revenue to fraud alone and credit card fraud is estimated to be at around 0.05%, while Medicaid and Medicare numbers are closer to 10% to 15%. One reason for this discrepancy is that private insurers and businesses like credit card providers may be more willing to invest in software and other technology that allows them to spot fraud much more quickly than government programs, and to do so before those claims and charges are paid.
15. Spending for healthcare is estimated to reach some $3 trillion in the U.S. in 2014 alone, although this amount does not currently keep up with the rate of inflation.
16. Claims pursued by the federal government in 2012 included unlawful pricing by drug manufacturers, illegal marketing of products and medical devices that have not been approved of by the Food and Drug Administration, and violations of law in regards to kickbacks and self-referrals.
17. The year 2012 marked the third year in a row that the federal government recovered over $2 billion in these types of health care matters.
18. In 2012 the Civil Division Consumer Protection Branch, which files civil suits against those convicted of Medicaid and Medicare fraud, obtained almost $1.5 billion in judgments, fines, and other forfeitures against those convicted of such frauds. The department also obtained 14 convictions under what is called the Federal Food, Drug and Cosmetic Act.
19. As a means of preventing such fraud, punishments have become more severe. In a case reported on in The Economist, one owner of a mental health clinic received a penalty of 30 years in jail for false billing.
20. The number of fraud cases that have increased the most over the past few years include home health visits, as these are difficult to track and to prove or disprove in court. Durable medical equipment is also a large portion of the fraud cases, including electric wheelchairs and walkers.
21. Overbilling for HIV infusion is also a popular scam, despite there being a much more affordable and effective way of treating the disease. When one such fraudulent ring was shut down in Florida, it resurfaced in Detroit and Medicaid and Medicare were again scammed out of thousands of dollars, by the same perpetrator.
22. Medicare processors handle some 4.5 million claims every single day, which is also a reason for the high volume of fraud.
23. Many fraud cases also involve stealing the identities of patients. This allows doctors and other healthcare professionals and those who have nonexistent medical storefronts to bill these programs for equipment and medications.
The Purpose of Medicaid
Medicaid is meant for families and individuals who have low incomes regardless of their age, whereas Medicare is reserved for seniors. Medicaid is the largest source of funding for this type of coverage for those with low incomes in the U.S.
Medicaid is jointly funded by both the federal government and individual states, who manage their portion of Medicaid dollars. States are not required to participate in the Medicaid program, although currently all 50 states do participate. Those receiving Medicaid must be U.S. citizens or legal, permanent residents of the U.S. These participants may include adults with low income and their children as well as those who are disabled. One’s income alone does not necessarily qualify a person for Medicaid.
In recent years the Patient Protection and Affordable Care Act or “Obama Care” expanded the list of those eligible to receive Medicaid and also the federal funding for the program. Currently, all U.S. citizens and legal, permanent residents whose income are up to 133% of what is considered poverty level qualify for Medicaid in any state that participates in the program. This would also include adults without dependent children.
Despite this provision, the U.S. Supreme Court ruled in the case National Federation of Independent Business vs. Sebelius that U.S. states do not need to adhere to this expansion in order to continue to receive Medicaid funding. This would include funding for which they were already eligible.
The Cost of Fraud
Medicaid scams or fraud cost the U.S. government and in turn, taxpayers footing the bill for this program, literally tens of millions if not hundreds of millions of dollars every single year. Some news reports find small fraudulent claims such as individuals who do not reveal their entire income when applying for the program, but other sources report on tens of millions of dollars lost through one scam or fraudulent claim alone.
While fraud in both Medicaid and Medicare continues to flourish, not many can agree on a solution. Government programs, in conjunction with the Federal Bureau of Investigation and Department of Justice, have claimed that fraud and waste in these programs is a priority. These departments have had much success in recovering fraudulently gained money but the cost is very high, and the frauds continue.
Scammers have also become more sophisticated, overbilling for items rather than billing for items never received, or creating nonexistent businesses in many locations so they can continue to operate when one is shut down. Some have criticized the Affordable Care Act because it widens the requirements to receive Medicaid or Medicare, whereas others have praised it for working hard to crack down on these frauds.
As healthcare costs and expenditures continue to rise, many assume that frauds and scams will also continue to flourish. The number of claims processed every day along with the lack of oversight makes Medicare and Medicaid easy targets for an experienced scam artist, and for fraudulent claims. Anyone able to skirt the system by claiming just enough to go unnoticed may find that the federal government never notices their overbilling or fraudulent billing, at least not for years.
At the same time, very few are willing to give up the concept of Medicare and Medicaid altogether. These social programs are meant to protect those without an adequate income, and senior citizens. Many voters have voiced their concern over the state of these programs but rarely do they present the option of eliminating them altogether.
Investment in software that detects fraud is also very expensive and governments are often hesitant to spend the money to purchase these, without being able to convince voters that it is money well spent. At the same time, many welcome whatever efforts will be successful in cracking down on government waste and fraud, and in recouping dollars lost to fraudulent claims and scammers.