Government Waste At Its Worst

Government Waste At Its Worst

Medicare Doesn’t Recover The Majority Of Overpayment Payment Amounts, By Mary Johnson

Federal prosecutors recently announced the biggest-ever one-day takedown of a phony Medicare billing scheme. One hundred seven people were charged, including doctors and nurses in seven U.S. cities, with taking part in a scheme to steal $452 million from Medicare. About the same time, the Inspector General of the Department of Health and Human Services reported that federal investigators have uncovered questionable billings at 2,600 drugstores nationwide. A pharmacy in Kansas billed Medicare for more than 1,000 prescriptions each for just two patients. Medicare paid $5.6 billion to the drugstores whose billings are now being questioned. While those announcements generated great election year headlines, the fact is that seniors and taxpayers can only hope to see a tiny fraction of Medicare’s money recovered.

Fraud, waste and abuse are costing taxpayers and seniors an estimated $60 billion a year, but Medicare fails to recover overpayments about 80 percent of the time. The Inspector General recently said that of the $416,287,546 in overpayments identified through the 30-month period ending March 31, 2009, the Centers for Medicare and Medicaid Services (CMS) reported collecting only $84,168,502. But it gets even worse. The OIG said that it could not verify that the $84,168,502 had been collected as reported because CMS did not have an adequate system for documenting overpayment collections.

But here’s the real kicker. A statute of limitation loophole is hamstringing Medicare from recovering overpayments. Federal law allows a Medicare claims contractor to reopen a payment determination for “good cause” at any time within 4 years of the date the original payment determination was made. But another provision of law bars the recovery of overpayments from providers that are “without fault.” And the law states that a provider is deemed to be without fault 3 years after the year in which the original payment was made unless there is “evidence to the contrary.”

By the time the Inspector General has performed its audit reports and given CMS its recommendations, CMS has limited, if any, time to collect before the statute of limitation expires. The OIG recommends that CMS should pursue legislation to extend the statute of limitations so that the recovery period exceeds the reopening period for Medicare payments. In addition, the OIG recommends that CMS develop a system to verify that the amount reported collected has actually been collected. TSCL heartily supports these commonsense recommendations. With Congress debating a major Medicare overhaul that would make seniors pay a higher portion of Medicare costs in the future, Congress should move quickly to close the statute of limitation loophole that’s costing us millions in lost recoveries.

Sources: “Feds Announce Biggest-Ever Medicare Fraud, Totaling $450 Million,” Scott Cohn, CNBC, May 4, 2012. “Report: Suspect Billings At 2,600 Drugstores,” Ricardo Alonso-Zaldivar, The Associated Press, May 13, 2012. “Obstacles To Collection Of Millions In Medicare Overpayments, Office of Inspector General, Department of Health and Human Services, May 2012.