Medicare: More Than $59 Billion Lost to Fraud

By George W. Chapman

The lead article in the current AARP Bulletin explains Medicare fraud.

Last year, Medicare spent $591 billion on claims. Medicare covers about 58 million senior and disabled Americans so that works out to $10,000 per enrollee. (11,000 to 12,000 people a day become eligible for Medicare.)

According to Medicare, 10 percent of the $591 billion was lost to fraud which comes to about $1,000 a year per enrollee. However, many experts in the field believe the amount of fraud could actually be more. Commercial carriers like BlueCross BlueShield, Aetna, Cigna, United, etc., all investigate suspicious claims before paying them. Medicare pays claims and investigates after paying them. Crooks have opened phony pharmacies or medical equipment stores, submitted phony claims using stolen social security numbers, made millions and closed down before Medicare got wise. The federal government spends a lot of money chasing fraud. The key is to prevent it in the first place.

A major change is the current discontinuation of social security numbers for Medicare identification. All enrollees will have a personal ID number this year. The format will look like this: 1GJ5 HB5 LR72.

Another change is the enrollment of Medicare members into Advantage plans that are run by commercial carriers. Finally, Medicare recipients can help fight fraud by reviewing their bills and reporting any service or item items not received. The Medicare fraud hotline is 800-633-4227.

DNA sequencing

The medical community agrees that sequencing will help them pinpoint your treatment.

In 2015, President Obama introduced the Precision Medicine Initiative and Cancer Moonshot projects as a way to get individually tailored treatment plans. While most insurers still consider DNA sequencing as “experimental,” which is their way of saying they won’t pay for it, the tide is turning. The Geisinger Health System, based in Pennsylvania, recently announced it will make DNA testing a routine part of preventive care, just like mammograms, colonoscopies and cholesterol tests. The “forecasting” provided by DNA testing allows physicians to provide active versus reactive treatment. Geisinger expects 10 percent to 15 percent of their patients will benefit from the testing. While most industry experts see the benefits of DNA testing, they are concerned about privacy and the use of the results, which will predict the diseases a person is prone to, by life and health insurance companies.

Uninsured rate up

The number of uninsured Americans is heading in the wrong direction, according to a Commonwealth fund survey. The number of uninsured has increased to 15.5 percent as of March 2018. That is up from 12.7 percent in 2016 and is expected to increase further, primarily due to the gutting of the Affordable Care Act and particularly due to the repeal of the individual mandate.

Premiums for those seeking insurance on the exchange will increase as younger and healthier people drop coverage. Drug prices continue to be virtually uncontrolled and add significantly to everyone’s premium increases, not just those on the exchange. According to a congressional report, drug prices have risen 10 times faster than inflation in just the last five years. Both President Trump and HHS Secretary Azar have vowed to bring drug prices down.

Physicians with computers

The paper record is virtually dead. A computer in the exam room, either hand held or on a stand, is as evident as an exam table. Computers are part of everyday life. Ironically, healthcare has historically been well behind other industries when it comes to computers.

So, that all being said, just what does the average patient think of providers using computers in the exam room? The University of Texas conducted a study to find out. Participants were asked to watch two videos with exactly the same script. In one video, the physician used a computer. In another video, the physician used a notepad. Seventy-one percent of participants preferred the physician without the computer and ranked him higher on communication and professionalism.

Realizing the computer is here to stay, researchers believe strategies that mitigate the perceived negativity of computers in the exam room are imperative to effective communication between provider and patient. Hopefully as providers become more familiar with their electronic medical records, their “art of eye contact,” while inconspicuously using their computer, should improve.

NPs and PAs

Just as computers and electronic records are now generally accepted integral parts of healthcare, so too are advanced practice clinicians better known as nurse practitioners and physician assistants. There are now about 375,000 active NPs and PAs as compared to about 950,000 active physicians. The anticipated physician shortage would certainly be worse without the 375,000 advanced practice clinicians. By now, most of us have come into contact with a NP or PA in the course of our care. Initially used primarily for follow up care, to the care provided by a physician, NPs and PAs now see new patients and provide acute care. In many instances, a NP or PA is the only provider on duty at many practices. Value-based care reimbursement and financial incentives for team-based care have further stimulated the use of NPs/PAs in both primary and specialty care settings.

Veterans care

In response to recent criticism of the care provided by the VA system, the “VA Mission Act of 2018” has been introduced to Congress. It allows vets to seek care from private, non-VA providers in the general community. A caveat is the veterans, VA-based provider must agree that private care in the community is the best interest of the veteran. Timely access to care would be a critical consideration for the ultimate approval to go elsewhere. If the veteran is denied approval to receive care elsewhere, there is a clinical appeals process.

Rural healthcare

CMS has recently vowed to take into consideration how their proposed policies and payments might, inadvertently, negatively impact rural-based physicians and hospitals. Sixty million of us live in rural areas which have higher rates of poverty and under-insurance as well as larger gaps in the delivery systems versus urban areas. CMS plans to increase its rates for telemedicine and make it easier for rural providers to bill for them.

George W. Chapman is a healthcare business consultant who works exclusively with physicians, hospitals and healthcare organizations. He operates GW Chapman Consulting based in Syracuse. Email him at