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Medical Fraud Carries A Staggering Price Tag

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Medical Fraud Carries A Staggering Price Tag

Medical Fraud Carries A Staggering Price Tag

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STEVE INSKEEP, host:

A central player in all this is Kathleen Sebelius, the secretary of Health and Human Services. And today, she thanks a group of older people who've helped the government detect fraud within the Medicare system. They're part of a program that has saved the government $100 million. But that is only a small fraction of the money siphoned out of health care and into the pockets of criminals. We sent NPR's Joanne Silberner out to find how much health care fraud costs the nation each year.

JOANNE SILBERNER: According to the New England Journal of Medicine, virtually no academic researchers study fraud in the medical system. Nobody, that is, except for Malcolm Sparrow of Harvard University. So I asked him: How many dollars were siphoned out of the health care system by fraud?

Professor MALCOLM SPARROW (Harvard University): We know the order of magnitude, and that's to be measured in hundreds of billions of dollars.

SILBERNER: Maybe it's five or six hundred billion dollars a year, he says. Or it could be as low as 100 billion.

Prof. SPARROW: Just that first digit we don't know. But whatever digit it is, it has 11 zeroes after it.

SILBERNER: Maybe the director of the National Health Care Anti-Fraud Association, Louis Saccoccio, could come up with a precise number. The members of the association - representatives of private health insurers and law enforcement agencies - have their own estimate: three percent of the annual health care bill. He admits the estimate may be low.

Mr. LOUIS SACCOCCIO (National Health Care Anti-Fraud Association): But even that number, three percent, when you talk about the amount of health care spending in this country, which is over $2 trillion, that on an annual basis at three percent, it comes out to about 60 to 70 billion dollars a year.

SILBERNER: A significant number, even if it uses one less zero than the number from Harvard University's Malcolm Sparrow. Saccoccio says there's a reason he can't give me a more precise number.

Mr. SACCOCCIO: Trying to figure out how much fraud is in the system is a very difficult thing because you can't go out with a survey to folks that are committing fraud to try to discover exactly how much fraud that there is.

SILBERNER: He can though talk about individual cases like one recently in California.

Mr. SACCOCCIO: What happened was, a few outpatient ambulatory surgery centers out in Southern California went out across the country, paid folks to go out and recruit patients from across the country to come in and have various types of surgeries done, actually performed the surgeries.

SILBERNER: Everything from unneeded colonoscopies to surgery to deal with sweaty palms. In return, the patient's got cash or discounted cosmetic surgery. Saccoccio says in the two or three years before the fraudsters were caught, insurers paid out $300 million. The government and insurers have been stepping up their anti-fraud efforts of late. They're doing that primarily by investigating claims that have already been paid. What they don't want to do is slow down payments to doctors and hospitals long enough so that they could check each one out, although that might be more effective at catching fraud. A lot of fraud is still happening, says Harvard's Malcolm Sparrow. Take a case the government cracked in June with indictments of eight people in Miami. They're accused of billing Medicare and Medicaid for $100 million in services that were never rendered.

Prof. SPARROW: But that's only $100 million. We're talking about losses in the range of $100 billion per year.

SILBERNER: There are proposals in the House health care overhaul bill aimed at eliminating fraud, including an additional $100 million a year for the government's fraud fighting efforts and requirements for insurers, hospitals, and other large providers to have formal fraud detection programs. But the Congressional Budget Office says those efforts would not prevent many government dollars from being lost to fraud.

Joanne Silberner, NPR News.

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