Medicare Reimbursement Cap Called Unlikely to Stop Fraud – Pacific Research Institute

Medicare Reimbursement Cap Called Unlikely to Stop Fraud

Responding to serious Medicare fraud and corruption in Florida’s Miami-Dade County, where five doctors from one clinic were found guilty of racketeering over the past three years, the Centers for Medicare and Medicaid Services is proposing a nationwide cap on Medicare reimbursements for treating in-home patients with chronic ailments.

The plan would limit reimbursements to chronically ill patients needing in-home treatments to 10 percent of total costs. If approved, the cap likely will take effect in January 2010. Officials estimate it will save the government $340 million a year and significantly reduce fraud and corruption.

But John R. Graham, a health care policy fellow at the Pacific Research Institute, does not think the cap will reduce Medicare corruption nationwide or in Miami-Dade, where costs have risen 20 times faster than anywhere else in the country.

“Rolling back Medicare reimbursements to 10 percent does not stop the fraud,” Graham said. “How does that stop fraud? Committed Medicare fraudsters are going to figure out how to make money. Stuff like this is just a good headline.”

Avoiding Investigations

Graham believes CMS should start investigating allegations of fraud more actively instead of imposing arbitrary caps.

“The way to stop fraud is to investigate fraud,” Graham said. “If you suspect fraud, you don’t do a crude reimbursement rollback, you investigate.”

But Harvard University Medical School Professor Michael E. Chernew argues many people don’t understand how difficult it is to investigate alleged fraud and waste in Medicare.

“CMS is really trying to do a reasonable job under a difficult situation. It’s challenging fighting fraud,” Chernew said. “The challenge is, CMS treats different patients with different needs, and it is very difficult to identify care that is unnecessary and fraudulent for one person but not for another. CMS’s challenge is to find the right balance between unnecessary care and necessary care.

“It is a lot easier to complain about these things, but fighting Medicare waste is not simple to do, and we have to recognize there are always going to be challenges,” Chernew concluded.

Patient Control Recommended

Chernew says CMS is likely to do more to fight fraud as health costs rise.

“We have reached a point in terms of spending that America simply cannot afford to rely on health care systems anymore that provide access with lax oversight,” Chernew said.

Graham believes the solution is to give patients more control.

“Implementing a ‘cash-for-counseling’ system will give the Medicare patient control of the money, instead of the Medicare private contractor, who answers to the CMS bureaucracy,” Graham said. “The Medicare patient knows if he is getting the necessary service or not.”

Thomas Cheplick ( writes from Massachusetts.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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