Opinion: Medicare fraud: Obama administration brings enforcement into the 21st century


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Peter Budetti, deputy administrator and director for the Centers for Medicare and Medicaid Services’ Center for Program Integrity, responds to The Times’ Aug. 21 Op-Ed article, ‘An e-ripoff of the U.S.’ If you also have a bone to pick regarding a recent Times article, editorial or Op-Ed and would like to participate in Blowback, here are our FAQs and submission policy.

Nearly 48 million people rely on Medicare for the treatments and prescription drugs they need to get healthy and stay healthy. To make sure providers are paid promptly and patients receive the care they need, Medicare processes claims electronically. On any given day, Medicare pays 4.4 million claims worth more than $1 billion.


Medicare is a success story, providing high-quality benefits and a strong safety net for seniors and people with disabilities. But as costs have grown for both public and private insurers across our healthcare system, so have the opportunities for criminals to commit fraud.

In his Aug. 21 Times Op-Ed article, Malcolm Sparrow focused on one part of this problem, explaining how criminals take advantage of Medicare’s electronic payment system to make false claims. But what Sparrow does not mention is that over the last two years the Obama administration has undertaken an ambitious effort to rid Medicare of criminals, and we are turning the electronic payment system to our advantage in that fight.

Since President Obama took office, we have conducted an unprecedented crackdown on those who steal from Medicare, giving law enforcement greater resources, putting more boots on the ground and increasing penalties. In 2010, these efforts recovered a record $4 billion in taxpayer money.

But we’re not just prosecuting fraud. We’re also taking steps to prevent it. In the past, nearly anyone could fill out a form with the right information and become a Medicare provider. Criminals could set up false clinics, enlist willing accomplices and vulnerable seniors to submit false claims and begin collecting payments they had not earned for care they had not provided.

That’s changing.

First, we’re paying closer attention to who is signing up in the first place. Now, before you can become a Medicare provider, you have to go through a rigorous third-party review process that will make sure you have the correct licenses and meet all the requirements to bill Medicare. The days when you could just hang a shingle and start billing Medicare are over.

Second, if criminals do get into the system, they’re now a lot more likely to get caught. Starting last month, our Centers for Medicare and Medicaid Services have for the first time a comprehensive picture of Medicare claims nationwide. This means that our investigators can see billing patterns in real time and analyze those patterns. They can identify potentially fraudulent claims before they’re paid, investigate them and take action quickly. And we are doing this without placing an undue burden on honest providers, allowing them to focus on providing high-quality care to Medicare beneficiaries.

The technology behind this aggressive approach is built by the same people who have been using it for years in the private sector. It’s how your credit-card company can raise the alarm if it sees a dozen flat-screen televisions charged to your account in one day. Years ago when banks and insurance companies started seeing a rise in fraud, they did not respond by shutting down their computers and reverting to cash-only transactions. Instead, they made their technology smarter. Today, we’re taking the same approach to protect our healthcare system, using the same electronic technology Sparrow talks about to secure public resources and sending a powerful new message to would-be fraudsters that they will no longer find it easy to steal from Medicare.

Of course, making good on this technology also means making sure we have the best possible information to analyze.

In the past our response to fraud was often so fragmented because different jurisdictions didn’t have easy ways to share information. Claims data used to be scattered among several databases belonging to different contractors. If a local investigator wanted to track a lead or find out how many claims had been made for a certain kind of wheelchair, it could take days or even weeks to get the details.

Today, not only do we have all our claims data visible in one place in real time, we’re also adding other sources of information such as the many tips that come in to our 1-800-MEDICARE hotline. And we’re making sure the investigators who need this information have access to it.

Medicare fraud is not new. But for many years our resources weren’t keeping up with the problem. The data were out of reach and the technology in place had become a liability.

For criminals looking to get rich, Medicare’s electronic payment system was once an easy target. In the fight against fraud today, it’s quickly becoming one of our own greatest weapons.


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--Peter Budetti