A government report recently pointed to an alleged key deficiency in federal efforts to ferret out the estimated $60 billion a year in Medicare fraud billing. It indicated that private contractors paid tens of millions of dollars to investigate Medicare fraud were themselves inadequately supervised, leading to their ineffectiveness in battling fraud.

The report, and legislators, have proposed a number of measures to better find and combat Medicare fraud.

One contractor paid to investigate Medicare fraud reportedly told federal officials of only two potential fraud cases in a three year period from 2005-2008, while a second, amazingly enough, did not report finding any possible fraudulent Medicare claims during that same time period. One possible measure to improve such performance, investigations surmised, might be to provide the contractors with financial incentives, giving them more of a motivation to detect a greater number of possible fraudulent claims.

Another problem detected was that contractors often lacked access to accurate and up-to-date data. Accordingly, improving the mechanisms whereby Medicare information is gathered, stored, and made accessible might also improve the contractors' performance.

Two legislators, Oklahoma Senator Tom Coburn and Delaware Senator Tom Carper, have proposed a law mandating that Medicare agency personnel make information about fraudulent claims quickly accessible to the contractors and to law enforcement agencies, as well as creating standards for data accuracy into contracts governing the administration of Medicare healthcare payments.

Medicare's normal procedure of initially paying all claims and later conducting investigations when problems arise or are pointed out may not work well today. An increased number of healthcare providers being paid by Medicare are no longer hospitals, but individual medical practitioners. Individuals submitting false claims often simply dodge fraud investigation because of the time delays inherent in the current system.

Source: Washington Post, "Report shows federal health officials struggle to monitor myriad of Medicare fraud contractors," November 13, 2011.