Can Medicare beneficiaries routinely root out a significant amount of fraud and overbilling? That's one of the questions facing Medicare administrators and Congress as the ongoing problem of fraud and abuse is identified and prosecuted.

The Senior Medicare Patrol (SMP) has been in place since 1997 to "empower seniors through increased awareness and understanding of healthcare programs. This knowledge helps seniors to protect themselves from the economic and health-related consequences of Medicare and Medicaid fraud, error and abuse."

As a largely educational program, the SMP claims to have educated more than 3 million beneficiaries in its 15 years of existence, resulting in $106 million in Medicare and Medicaid savings (Medicare-specific savings are not broken out). SMP’s budget is more than $22 million annually.

More detailed figures from the Department of Health and Human Services Office of Inspector General (OIG), however, show that the program has had little measurable success.

Despite having nearly 6,000 volunteers across 54 separate projects, the OIG estimated that recovered Medicare funds totaled about $20,000 in fiscal year 2011. That's about $3 per volunteer, which drops considerably when you account for the more than 431,000 beneficiaries who were trained by those volunteers. The picture improves somewhat when the OIG examines the savings since SMP’s inception: $106 million, or about $7 million per year. The ratio of dollars spent on training versus funds recovered (from both programs) is roughly three-to-one. Still, does it make sense that the government spent$22 million in annual training to reap only $20,000 in savings?

To be fair, the OIG stated that referrals from the patrol program that lead to investigations or prosecutions are difficult to track, so it's possible that some of the volunteers may have provided tips that led to much larger recoveries down the road.

When I asked Professor Malcolm Sparrow, a Medicare fraud expert and professor of the Practice of Public Management at the Kennedy School of Government at Harvard University, he said more information is needed before you can reach a conclusion about the OIG's assessment.

"It is indeed genuinely difficult to evaluate the broader attitudinal, awareness, and deterrence impacts of any particular outreach or educational program," Sparrow wrote me in an email. "The principle benefits of such programs might even lie elsewhere, in social, community & civic engagement of elders."

While it appears that as a fraud detection program the SMP is woefully inadequate, it may promote awareness, thus channeling numerous anonymous tips to OIG auditors, leading to possible investigations. And one tip may lead to thousands of individual abuses.

"The report states that the $106 million of savings since inception is mostly the result of just one inquiry (involving issues of dual-eligibility for Medicare/Medicaid)," Sparrow added. Dual eligibles are those beneficiaries receiving both Medicare and Medicaid.

"The report also mentions that this year, 819 ‘complex matters’ have been referred for further action. I have no knowledge of what they mean here by a `complex matter,' but assuming that might indicate substantial potential for cases of fraud or abuse, then the low level of recoveries actually achieved might indicate that the bottleneck, assuming there is one, might be with the follow-up capacities for investigation, determination, and recovery, rather than with this particular mechanism for discovery. There is plenty of other evidence (including in OIG reports) that these capacities are sorely limited and break down in many ways."

What the OIG report doesn't cite is how many potential fraud inquiries were not referred to investigators or were ignored. With any investigative public agency, thousands of tips are received, but only a handful are probed. It also could be that the Department of Health and Human Services (HHS) doesn't have the system or manpower to do follow-ups. Most government entities are loath to admit this.

A less charitable view of the patrol is that it promotes public education well, but as a fraud deterrent or detection service, it's a waste of money. After a cursory look at the OIG report, former FBI agent and fraud expert Louis Straney told me in an email:                                              

"Since the program is well beyond the ramping up stage, if it takes approximately $3 to save $1, the program is totally dysfunctional. It would be like hav(ing) a trash removal business that collected $100 per load from customers and had to pay $300 per load in tipping fees at the landfill. Adding more trucks and drivers won't cure the problem. The only justification for something like this, on a public or private level, is brand awareness or consumer expectations.  For example, let's say that a company invests $100 million in recycling while simply hauling off the stuff would cost $30 million. From a business perspective, the practice appears unsound. However, the company is likely to be willing to overlook the bad economics and see it as an investment in the brand's reputation."

In the broader landscape of Medicare reform, though, the problem of fraud is so much more pervasive and complicated that perhaps the government's resources could be better spent elsewhere. According to a Government Accountability Office (GAO) report from 2011, Medicare is losing some $48 billion annually on "improper payments." The government watchdog suggested that Medicare pay closer attention to its contractors and billing processes.

Due to the complexity of Medicare payments and fraud, is it realistic to assume that barely trained volunteers can spot abuses? Some of the problems are systemic and have been resulting in overpayments for years. Many of these issues were addressed by multiple reforms and programs embedded in the Affordable Care Act (ACA). Here's a sampling of some of them:

• New Rules and Sentences for Criminals: The ACA increases the federal sentencing guidelines for health care fraud offenses by 20–50 percent for crimes that involve more than $1 million in losses. Convictions under the Health Care Fraud and Abuse Control Program increased by more than 27 percent (583 to 743) between 2009 and 2011, and the number of defendants facing criminal charges filed by federal prosecutors in 2011 increased by 74 percent compared with 2008 (821 to 1430).
• Increased Coordination of Fraud Prevention Efforts: Many of the ACA antifraud provisions increase coordination among states with the Centers for Medicare & Medicaid Services and its law enforcement partners at the OIG and the Department of Justice (DOJ).
• Health Care Fraud Prevention and Enforcement Action Team (HEAT): The law set up HEAT, part of a multi-agency Medicare Strike Force team. In 2011, HEAT coordinated the largest-ever federal health care fraud takedown. In one action, Strike Force teams charged 115 defendants in nine cities, including doctors, nurses, health care company owners and executives, for their alleged participation in Medicare fraud schemes involving more than $240 million in false billing. In another takedown, Strike Force prosecution teams charged 91 defendants in eight cities for their alleged participation in a Medicare fraud scheme involving more than $290 million in false billings.
• Expanded Overpayment Recovery Efforts: The ACA expands the Recovery Audit Contractor (RAC) program to Medicaid, Medicare Advantage Plans (Part C), and Medicare Prescription Drug Plans (Part D) programs. The Medicaid RAC program became effective on January 1, 2012, and is projected to save $2.1 billion over the next five years, of which $900 million will be returned to states. These efforts build on the success of the Medicare fee-for-service RAC program, which in fiscal year 2011 recouped nearly $800 million in overpayments.

The government's anti-fraud efforts might be better served through increased cooperation between the Administration on Aging, HHS, DOJ and state agencies. It's a pervasive and complicated problem that merits a multipronged approach.

"For a problem of the scale of Medicare/Medicaid fraud, all of the amounts relating to this program, both expenditures and recoveries, are tiny. Sometimes we worry too much about millions, when we should be focused on the tens of billions," Sparrow noted. "The principle benefits of such programs might even lie elsewhere, in social, community & civic engagement of elders."

Still, given that the government is aggressively pursuing fraud claims on a number of fronts, what's the most useful role for volunteers? After all, they are not trained auditors, investigators or prosecutors. Would more specialized training be appropriate? Should they focus on specific types of fraud? Should the government deploy more resources into bolstering a whistleblower program? These are all pertinent questions that either the OIG or GAO should consider if the government is serious about a comprehensive campaign to root out fraud. 

MedicareNewsGroup.com (MNG) original articles and Medicare Matters news summaries can be reprinted or republished with credit to the Medicare NewsGroup. To use our content, simply copy and paste text from the MNG website. Use of our content is done in compliance with our Terms and Conditions but does not extend to material from other sources that are subject to their copyright.

John is the award-winning author of 13 books and is a personal finance columnist/blogger for Reuters. His columns have been published in newspapers on five continents and he has appeared on various broadcast outlets including NBC, CNN and Bloomberg TV. He has earned 18 awards for his columns and investigative reporting, including the National Press Club award for Consumer Journalism.  

MedicareNewsGroup.com (MNG) original articles and Medicare Matters news summaries can be reprinted or republished with credit to the Medicare NewsGroup. To use our content, simply copy and paste text from the MNG website. Use of our content is done in compliance with our Terms and Conditions but does not extend to material from other sources that are subject to their copyright.