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Chicago Business - How to Cut Medicare's Whopping Fraud Rate


Location: Unknown

By Paul Roskam

The global credit card industry has a 0.04 percent fraud rate. JPMorgan & Chase Co. has a 0.6 percent fraud rate. Can you imagine the trouble your business would be in if it ran a rate of 8.5 percent? That's the fee-for-service fraud rate that Medicare is running on, and it's threatening the programs our nation's seniors rely on to get the health care they need.

Medicare and Medicaid's outdated programs practically encourage criminals to defraud the system, and ultimately seniors are robbed of a whopping $60 billion annually. My bipartisan bill, the Preventing and Reducing Improper Medicare and Medicaid Expenditures Act of 2013, or the Prime Act (HR 2305), enacts long-overdue updates to Medicare that will help combat fraudulent behavior and improper payments in the system.

The first priority is changing the outdated Medicare payment system. Medicare uses a "pay-and-chase" model, in which money goes out the door without rigorous fraud-check measures. Only when the money is out the door can fraudulent claims be tracked down. This makes it all too easy for criminals to commit fraud and get away with it.

The Prime Act phases this system out and moves to one of predictive modeling, similar to what's used by the credit card industry. Medicare claims would go through two separate and distinct fraud checks at the beginning and end of the process -- with heightened communication between the two -- before the money is paid out.


Additional common-sense measures include making it more difficult for bad actors to misuse Medicare provider billing information, such as physician identification numbers on Medicare Part D prescriptions. Law enforcement officials have reported incidents where "dead" doctors have prescribed drugs, such as highly addictive prescription painkillers, and sent Medicare the bill.

Similarly, criminals can steal patient-identifier information and have prescriptions filled in Grandma's name. The Prime Act would prevent Medicare from paying out claims without a valid physician ID on the prescription and up the criminal penalties for those who steal beneficiary and provider-identification numbers.

Our bill also encourages this new generation of tech-savvy seniors to join in detecting and preventing Medicare fraud. The Senior Medicare Patrol exists to help patients weed through their statements to identify billing or coding errors. The Prime Act will use this group to better engage seniors to find and report fraud and abuse -- creating a new front-line defense against fraud and abuse in Medicare.

Medicare, a federal program, and Medicaid, a state-run program, have no system in place to tip each other off to known or suspicious fraud attempts. For the 7 million seniors enrolled in both programs, the Prime Act promotes heightened communications between Medicare and Medicare to bolster security and fight improper payments.

Every American pays into Medicare, and it's important that money goes to the program, not to criminals. With Medicare set to go bankrupt as soon as 2026 -- and with 10,000 baby boomers becoming eligible for Medicare each day -- we need to make sure that the money in the system isn't wasted. The Prime Act's combination of 21st-century technology and common-sense changes will go a long way to shoring up these important programs.

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