THE BLOG
12/10/2012 10:05 am ET Updated Feb 09, 2013

Cut Medicare? Cut Fraud!

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There is reason to believe that if the GOP will agree to raise the taxes on the super rich, President Obama will agree to cuts in Medicare. It is morally abhorrent to cut benefits to any current or future seniors before much greater efforts are made to stop large scale raids on the Medicare coffers by nefarious corporations.

Take the revealing and far from atypical case of Health Management Associates (HMA). According to its own ER doctors, HMA requires that 20 percent of people who step into the ER are admitted to one of HMA's hospitals -- and 50 percent of seniors. When a person visits an HMA Emergency Room, company software loaded onto the ER computer automatically orders a bunch of tests, whether they are needed or not, before the person is even seen by a doctor. When doctors try to discharge a patient from the ER, the computer intervenes, presenting them with a warning that the patient is a candidate for admission. If the doctors go ahead and override that warning, they must face the wrath of hospital administrators. Docs are continually evaluated on the basis of how many patients they admit and how many procedures they order. If not enough, they are warned -- and if they still do not comply, they are fired.

The result is not merely bilking billions from Medicare -- HMA made $5.8 billion last year -- but exposing people who do not need hospitalization to both infection via the pathogens common in hospitals, as well as to what one doctortermed "medical misadventures" -- errors and mistakes made by hospital staff that often result in severe consequences for those affected.

60 Minutes, which reported all this in an episode that aired on December 2nd, could only add that the Department of Justice is investigating the matter. So far no HMA executive has been jailed, nor has the corporation been fined a cent nor required to return the monies fraudulently extracted from Medicare.

Bilking Medicare is much easier and the risk of being caught and punished is much smaller than selling controlled substances. Crooks buy patient lists and bill the government for expensive items ranging from scooters to prostheses, all to the tune of some $60 billion a year. Because Medicare is required by law to pay all bills within 15 to 30 days and has a small accounting staff, it often cannot vet claims before the checks go out. By the time Medicare authorities do find out a storefront's bills are phonies, the crooks close it and open one next door under a different name.

HMA is the subject of the episode because of the limited scope of a single investigative news program. However, it is far from alone in its malfeasance. A previous episode of 60 Minutes reported that the Medicare fraud industry in South Florida is now larger than the cocaine industry. A recent report by the prestigious and non-political Institute of Medicine found that the estimates for Medicare fraud and abuse fall at around $75 billion, and other studies show $98 billion in fraud.

I say do not cut anyone's benefits until the government triples its accounting staff, quadruples the number of corporate crooks in jail, and reduces Medicare shortfall by cutting fraud at least by half.

Amitai Etzioni is a University Professor of International Relations at The George Washington University and author of Hot Spots: American Foreign Policy in a Post-Human Rights World, published by Transaction.