One key area that has been totally ignored in healthcare debate is the jaw-dropping amount of fraud and abuse in the Medicare and Medicaid programs. We at the Center for Health Transformation believe that $100 billion a year is a conservative estimate. Our new book, “Stop Paying the Crooks” outlines examples of that waste and offers dozens of suggestions on how to fix the problems.

Consider just two examples: In January, 2009 the Government Accountability Office issued a report that said $32 billion of improper payments were made in the Medicaid program in 2007. Last year, Senator Charles Grassley of Iowa estimated that there is $60 billion in waste, fraud and abuse in Medicare annually. And now the Obama Administration and Congressional leaders want to create another government-run program along the same model.

The Miami Herald reported last summer that Miami-Dade County submitted bills to Medicare for HIV infusion therapy that were 22 times higher than the rest of the country combined. There are more home health agencies in Miami Dade as of this spring than in the entire state of California. When the Office of Inspector General conducted unannounced visits to 1,581 durable medical equipment supplier in South Florida in 2007, 491 either didn’t exist or were not staffed.

An important step toward real reform is to fight fraud first. A recent Zogby poll asked Americans what is their preferred way to pay for the modernization of healthcare. The biggest response, at 88 percent, was “eliminate fraud,” well-ahead of “standardize administrative forms” at 77 percent and “reduce medical errors,” at 72 percent.

A second poll by Insider Advantage found that the majority of respondents – 61 percent – felt that Congress should address fraud and abuse in Medicare and Medicaid before enacting a new government-run plan. Only 27 percent thought the opposite was fine.

And yet the two current bills in the House do nothing to effectively combat fraud. Indeed, the CBO score of the bill passed out of the House Ways and Means Committee contains across-the-board zeros in savings from anti-fraud efforts across ten key metrics for the next decade. It is unfathomable that the current Congressional leadership is so out-of-touch with reality. Thus far, their efforts represent an enormous missed opportunity to divert scarce taxpayer dollars away from thieves.

Consider another massive and highly complex industry and how well it fights fraud relative to health care. The credit card industry handles over $2 trillion a year in billing, involves 700 million credit cards, millions of vendors, and countless products available for purchase. Their rate of fraud is below one-tenth of one percent, making fraud in Medicare and Medicaid at least 100 times higher.

As legislators spend August poring over healthcare legislation constituents and experts alike it is incumbent on them to take seriously the issue of fraud in our existing programs. Simple steps that cost virtually nothing to deploy would begin saving billions instantly. Aggressive use of predictive modeling for payments common in the commercial market, requiring enhanced coordination of benefits and identification of third party coverage particularly in Medicaid, and flagging the Medicare ID numbers billing in the highest 1 percent for further scrutiny would be a good start. Simply adding the line “under penalty of perjury” to CMS form 855 that prospective suppliers to Medicare must fill out would be a big step in the right direction. Unfortunately, it appears that the people who run Medicare and Medicaid are pathologically incapable of dealing with fraud and abuse in any serious way.

We at the Center for Health Transformation continue to actively gather the most egregious stories of fraud and the most effective actions for eliminating it. It is our hope that you will join our efforts to ensure that policymakers in Washington and in state capitals from coast to coast take this issue with the gravity it deserves. Before creating a new government-run health care program, increasing spending on those we’ve got, or raising taxes, let’s fight fraud first.

James Frogue is Vice President of the Center for Health Transformation where Elizabeth Noelcke is the State Project Coordinator. Please visit for more anti-fraud action items, as well as information about the latest CHT Press Book, Stop Paying the Crooks, edited by James Frogue.

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