National Public Radio recently reported that White House budget office director Shaun Donovan was quietly working to crackdown on Medicare billing fraud, estimated to cost about $50 billion annually, or enough money to build 60 Hoover Dams (adjusted for inflation).
Mr. Donovan, please call your office.
While the Office of Management and Budget (OMB) director was sending letters about getting tough, bureaucrats at the Department of Health and Human Services (HHS) have been helping enable Medicare fraud in unprecedented ways.
For example, HHS recently extended a “moratorium” of their own rule, designed to eliminate a Medicare billing loophole which has cost the government tens of millions of dollars in fraud.
The rule, called the “Two-Midnights” rule, was first put forward in 2013, but hospitals that benefit from the old billing practices have fought to keep it in limbo since then.
Donovan is full of tough talk – he told HHS Secretary Sylvia Burwell the agency needs to explore a “more aggressive strategy” to “reduce the levels of improper payments”. But the truth is Donovan hasn’t reduced any of the payments. He’s allowed a big lobbying war to slow and now stop any effort to add accountability to Medicare billing practices.
Caught in the crossfire are the Recovery Audit Contractors (RACs), a group of private auditors that are paid a portion of the funds they help the government recover. Since the RAC program began, the auditors have helped recoup about $10 billion in fraud. That sounds great to most people, but hospitals that are subject to the audits have waged an all-out attack on the RACs.
While that includes lobbying the Obama Administration to halt the “Two-Midnight” rule, the American Hospital Association is also blanketing Congressional offices (and the daily Capitol Hill fundraising events) to push legislation which seeks to gut the RAC program.
The lobbying tsunami has paid dividends at HHS. Bureaucrats have proven pliant in the face of complaints. The Administration has repeatedly watered down rules designed to tamp down fraud, ease the abuse of patients’ wallets and reduce the waste of taxpayer dollars.
Academics call this phenomenon “regulatory capture.” It’s when special interests with a lot at stake are able to bend the rules in their favor. It’s a nice deal for the people raking in $50 billion worth of fraud, but it isn’t a good deal for the American taxpayer. $50 billion is more than the gross domestic product of many small countries. That’s how much we are wasting, every single year, on payments that are unneeded and illegal.
The joke about government spending used to be, “A million here, a million there, pretty soon we’re talking about real money.” No matter how “big picture” you attempt to make it, $50 billion is a significant sum.
That’s why the headlines proclaiming that OMB Director Donovan and the rest of the Obama Administration are cracking down on Medicare fraud are such a joke.
As far as we know, Donovan has sent only one letter to HHS asking for a serious look at the problem. Meanwhile OMB, his own agency, has been working overtime to gut the “Two Midnights” rule and minimize other efforts to stop fraud. Obviously a serious effort to tackle the problem would be much, much more ambitious… with at least two or even three letters.
Considering that the long-term fiscal trends show massive expenditures from Social Security and Medicare, it does not bode well that fraud, let alone actual payments, seem to be untouchable.
If Donovan is really interested in stopping Medicare fraud, he could start by telling HHS to stop enabling it.
