August 18 2014

Rolling Away with Medicare Dollars

Patrice J. Lee

Medicare is in dire need of reform and quick! A blood-boiling expose this weekend revealed how over the past 20+ years scammers have taken advantage of Medicare’s fast and design, overwhelmed system, and lack of enforcement to rob the government of billions in taxpayer dollars.

In this scheme, shysters –some with barely a high school diploma- set up medical equipment companies and hired marketers to go after older and elderly Medicare patients and convince them to apply for a motorized wheelchairs. They even paid crooked doctors to administer “exams” as proof that the vehicles were needed. They ordered the vehicles and immediately billed Medicare, which is required by law –thanks Congress- to pay out claims within 30 days. Who knew any government agency worked that fast?

A power wheelchair would be delivered to a patient who posed standing beside it (sometimes in his construction uniform) for pictures before shuttling it off to a garage or corner where it languished untouched and unused except as storage. One patient used his wheelchair as a place to sit a giant teddy bear wearing a Lakers cap on it. That makes for a funny picture. Too bad taxpayers are the punch line of the joke.

 

For one $800 vehicle, Medicare is billed close to $5,000. All of that markup goes right into the pockets of scammers, which makes this scam particularly lucrative and attractive.

And who is to blame? Scammers yes, but Congress and Medicare even more.

The Washington Post explains how the government allowed these shysters to scoot away with taxpayer money:

From Houston, the scam spread out: to Louisiana, to Arkansas, to California. Nationwide, Medicare saw a sharp spike in wheelchair claims. Before the fraud had taken off, the chairs were rare:  One study estimated that in 1994, only 1 in 9,000 beneficiaries got a new wheelchair.

By 2000, it was 1 in 479.

By 2001, it was 1 in 362.

By 2002, it was 1 in 242.

But for Medicare officials at headquarters, this didn’t raise alarms—seeing the problem and stopping it were two different things.   

That’s because Medicare is an enormous system, doing one of the most difficult jobs in the federal government. It receives about 4.9 million claims per day, each of them reflecting the nuances of a particular patient’s condition and particular doctor’s treatment decisions.

By law, Medicare must pay most of those claims within 30 days. In that short window, it is supposed to filter out the fraud, finding bills where the diagnosis or the prescription seems bogus.

The way the system copes is with a procedure called “pay and chase.” Only a small fraction of claims — 3 percent or less — are reviewed by a live person before they are paid. The rest are reviewed only after the money is spent. If at all.

So why didn’t Medicare do even more to stop the wheelchair scam?

The answer seems to be that — in the huge universe of Medicare’s money — this big scam was still not that big. Last year, for instance, power wheelchairs accounted for just 2 percent of Medicare’s equipment spending. Which accounted for just 3 percent of  Medicare’s $248 billion outpatient spending (called “part B”).

It’s frustrating and angering to think that Medicare has simply shrugged its shoulders at this fraud. To accept that because power wheelchairs amounted to just two percent of its equipment spending, and so wasn’t seen as a big deal is indicative of a flawed philosophy that permeates big government spending and creates opportunities for unscrupulous people to take advantage of the system.

Also, has Medicare ever pushed Congress to legislatively relax the 30-day-claims-payout requirement? With more time on the front end, perhaps less fraud would slip through on the back-end.

There’s a current consensus in Washington that we should flood government programs with Americans, and we’re willing to relax rules to achieve that goal. That’s the wrong philosophy and the wrong goal. ObamaCare has expanded access to Medicare for millions of Americans. With greater caseloads, no change to policies to reduce fraud, and the same resources to go after scammers, it’s inevitable for opportunities for fraud to blossom.

The motorized wheelchair scam has fallen out of favor following a change to how Medicare handles claims, but systemic problems with Medicare persist. The next big scams in Brooklyn are shoe inserts. Prosthetic limbs are gaining steam in Puerto Rico too. The issue isn’t about any specific product, it’s about an unreformed government agency and system setup by Congress.

Medicare reform is something that IWF pushes for in a forthcoming book, Lean Together: An Agenda for Smarter Government, Stronger Communities, And More Opportunity for Women, due out this September 2014.

As Americans we need smart government reforms that work to minimize –not maximize – government waste, fraud, and abuse. We don’t shrug our shoulders at crime and fraud in the private sector, nether should the government in its own sphere.

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