Fraud Found By Government In Medicare and Medicaid

MAY 20, 1996 VOLUME 3, NUMBER 47

Last May the big news in aging was the fourth White House Conference on Aging. While the Conference did not lead to major new initiatives or approaches in dealing with aging or the elderly, one crowd-pleasing promise came from President Bill Clinton and Health and Human Services Secretary Donna Shalala. While Congress considered massive cuts in Medicare and Medicaid, many focused on fraud alleged to be rampant in both programs, the Administration announced an initiative to crack down on such fraud.

Called “Operation Restore Trust,” the anti-fraud plan targeted the five biggest states in both population and Medicare and Medicaid expenditures. Government operatives particularly looked at the programs in New York, California, Illinois, Texas and Florida.

After one year, the program claims major success. Operation Restore Trust claims to have identified and corrected $42.3 million in overpayments in the five targeted states. Since the cost of the special program was about $4 million, the Department of Health and Human Services claims a return of $10 for every dollar expended on control of fraud and waste.

Among the examples of fraud cited by the Department was one instance in which a nursing home routinely invited new residents to a get-acquainted tea. Later, one resident’s son noticed that the nursing home had charged Medicare for a group therapy session; after investigation, it turned out that the tea was being billed as therapy for all attendees.

Most of the efforts expended by Operation Restore Trust have been in nursing home, home health agency and durable medical equipment suppliers’ bills. In appropriate cases, the task force has pursued and obtained criminal convictions, fines and civil penalties against offenders, all of which have been paid into the Medicare Trust Fund or the U.S. Treasury.

The five states targeted by Operation Restore Trust account for 38.5% of the nation’s Medicaid beneficiaries and 34% of Medicare beneficiaries, according to the Department of Health and Human Services. Although only a little more than a third of Medicare and Medicaid beneficiaries are directly affected by the initiative, Department officials point out that it has given officers practice in building cases for fraud and experience in assembling cases.

Based on the claimed savings of $10 for every $1 expended, President Clinton has indicated that he will include more funds for expansion of Operation Restore Trust in his 1997 budget proposal. According to HHS Secretary Shalala, “In its first year Operation Restore Trust has proved its value and the president wants to extend its reach to every state in the nation.”

Over the next six years, Congress has proposed cutting the growth of the Medicare and Medicaid programs by a total of approximately $240 billion (President Clinton has proposed smaller cuts, totaling “only” $170 billion). Based on the first year experience of Operation Restore Trust, this initiative might be capable of reducing the cost of Medicare and Medicaid by a total of about $600 million over that same period. In other words, and aggressive fraud and waste reduction program might account for as much as three-tenths of one percent of the President’s proposed reductions, or one-quarter of one percent of the proposed Congressional reductions. Clearly, while fraud detection and reduction should be given a high priority, it will be nothing more than the proverbial drop in the budget bucket.

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