Medicare, the government health care safety net for seniors, processes $460 billion of claims every year--as much as 10% of which turn out to be fraudulent. Compare that to the financial services industry which handles $11 trillion in transactions every year, yet loses only 0.047% to fraudsters. Clearly, they know something the government doesn't.
I have a straightforward solution to make Medicare's claims processing more like the hyper-efficient financial services industry's systems. Even Nancy-Ann DeParle, the White House's Director of Health Reform, called me a few weeks before the health care vote to learn why my policy wasn't included in the health care bill. I can't answer for the Democratic Majority in Congress, but I believe this isn't a Democrat or Republican idea, and it isn't a liberal or conservative idea. It's just a smart way to save taxpayer money and ensure Medicare can continue to serve our seniors.
Medicare's size, scope and decentralized administrative structure make it especially vulnerable to fraud. In fact, the Chief Counsel to the U.S. Department of Health and Human Services Inspector General has said that "a Medicare fraud scam is far safer than dealing in crack or dealing in stolen cars--and it's far more lucrative."
Consider the case of Cuban-born fraudster Miguel Luis Perez. Mr. Perez--essentially the Al Capone of Medicare scammers--collected $56 million in taxpayer funds after filing nearly $180 million in false claims with Medicare. He later fled to Mexico. Fortunately, he was one of the few Medicare fraudsters later caught by Mexico's immigration service and turned over to the FBI.
In the last five years, sixty criminals have been indicted for Medicare fraud only to have later fled the country. These "Untouchables" have no Eliot Ness hot on their trail. Instead, the backwards payment system of Medicare crawls after them--if Medicare even notices. To remedy our current "pay and chase" pursuit of fraudsters, my legislative proposal makes Medicare's current authentication policy similar to the purchase-verification system employed by credit card companies with tremendous success.
The trick lies in predictive modeling, which detects fraudulent claims that traditional rule-based systems cannot identify. Predictive modeling was instituted by the financial services industry in the early 1990s to control rampant credit card fraud. Within five years, 80 percent of financial services institutions had implemented predictive modeling. We can cut Medicare fraud by designing a comprehensive pre-payment predictive modeling system that they would apply before reimbursing any claims.
Cutting fraud to spare the taxpayer and strengthen the Medicare program for our seniors shouldn't be held up by politics, but that's what's happening. Nancy Pelosi stiff-armed my idea, keeping it out of the recently passed health care law. So last week I wrote to the White House and sent an unsigned copy of the legislation to them so they could reward another Member of Congress with it if politics won't let them push something with my name on it. No word back yet.
Mobsters like Capone went down because people like Eliot Ness were on them like a dog with a bone. Fraud detection in Medicare is broken and enables fraudsters to make themselves into wealthy kingpins. My legislation isn't a cure-all solution to America's massive healthcare spending problems, and it won't drive our enormous national debt back to zero. However, it is one commonsense way that we can take successful private sector solutions and improve the efficiency of taxpayer-financed services.
Follow Peter Roskam on Twitter: www.twitter.com/PeterRoskam