How to brazenly steal $100B from Medicare and Medicaid | Hacker News Reader

How to brazenly steal $100B from Medicare and Medicaid

cnbc.com

82 pointslatchkey72 comments

One thing I don't see mentioned here is unnecessary surgeries being performed on elder patients. My wife was a home health OT for a small rural county. She was primarily doing post-op rehab at home. Recently, she noticed a lot of old patients on Medicare had shoulder replacement surgeries done on them, even though looking at their medical records it was clear it's either not necessary (won't improve their QOL) or simply shouldn't be done since it introduces other complications.

Every time she encountered a similar case, she noticed it all traced back to a single doctor in the area.

It was extremely sad to see old people end up in a much worse situation because of complications from their surgery, or pass away because they got sick in the hospital. All because some greedy doctor wanted to make more money.

These old people place a lot of trust on their doctor and simply do what they ask without a second opinion.

Old people vote the most and "death panel" rhetoric works really well. This is the result unfortunately. Overprescription is generally a huge problem in medicine because of asymmetric information and the incentive structure that fee for service creates. That's why medicare is trying to move to a capitated system in which health care providers get paid per patient they cover per year, not per service they provide.

A significant amount of healthcare spending is in the last year of life due to an unhealthy relationship with death at a cultural level. Until that changes, people will commit to exhausting healthcare and medical resources to cling on to the last part of life (note: I am not advocating for withholding care when a positive outcome is possible, and I have had to make end of life care decisions for loved ones). There is also evidence the system is incentivized to consume resources versus allowing someone to choose to die at home.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6610551/ (Medicare Cost at End of Life)

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2708119/ (Place of Death Among Older Americans)

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5326787/ (Thanatophobia (Death Anxiety) in the Elderly: The Problem of the Child’s Inability to Assess Their Own Parent’s Death Anxiety State)

Good luck changing people's fear of death in this country. Properly disincentivizing interventions that don't work or aren't cost effective is the only solution.

I don't think you have to deal with incentives at all. We can simply stop paying for low or negative Roi treatments

This is where the death panel rhetoric comes in. As soon as medicare recipients realize their doctor is recommending stuff that some panel has decided they won't pay for politicians are in big, big trouble. "How dare the government claim they know better than my doctor" type of stuff works really well

You're not wrong, progress here is going to be governed by the velocity at which younger voters become a larger voting bloc than the elderly.

https://thehill.com/changing-america/respect/diversity-inclu...

https://www.pewresearch.org/fact-tank/2018/04/03/millennials...

https://www.pewresearch.org/wp-content/uploads/2018/04/FT_16...

Edit: https://www.populationpyramid.net/united-states-of-america/2...

Aren't demographics heading in the wrong direction for that?

https://www.morningstar.com/news/marketwatch/20230314284/bab...

https://www.pewresearch.org/fact-tank/2020/04/28/millennials...

https://www.brookings.edu/blog/the-avenue/2020/07/30/now-mor...

Yeah, I agree, but I think a "we dont cover that but you can pay for it" is a suitable answer.

In fact, it has to be an option if we ever want cost efficient state coverage.

No one asked, and not exactly on topic, but I'd like to throw in my $0.02 towards our culture having a slightly less unhealthy relationship with death.

The essence of it is this: No one suffers over how they don't exist on, say, the top of Mount Everest right now, or the bottom of the Marianas trench. They also don't worry about how they didn't exist in the 12th century in Madagascar, or on the surface of Mars one million years ago. No one worries that they don't exist in the center of the Sun, or on the surface of some star in some other part of the universe. There is an almost infinite number of places and times that I currently don't exist at. I think that death is like that. There is no one to worry about anything, just like you weren't there to worry about anything before you were born.

I went to a junior college that I spent time at years ago, and, being in the physical location made it easy to place myself in the mental space I was at then... The person I was then, the things that were important then, everything, all of it, are now gone. I have memories of that time... some sad, some happy, some bittersweet. But the person I was then is gone, no longer exists in any real way. It's easy to get swept up in those memories and the emotions, but, if I focus on what's going on in the present moment, then it's clear that none of that exists any longer (at least not outside my memories). And that's a good thing! It frees up the present moment for doing new things, for becoming someone else.

I'm not trying to get all nihilistic "nothing matters", and I'm also not all New Age "everything is going to be perfect". There are real problems in the world, and some seriously f*cked things happen. But working on real problems is hard enough without dragging a bunch of anxiety over fantasies into it.

The joke, of course, is that we have death panels already. They're even less accountable than the government. What I don't understand is how so many people think it would be worse with the government running the show, given we already know exactly how terrible the private insurance companies are.

It's worse with government because of the scale. The math of Medicare is that if it is not restrained, it will consume the economy.

> It's worse with government because of the scale.

Can you explain what you mean by this? Why would the cost per-person be greater? Are there not opportunities to take advantage of economies of scale? And to benefit from not needing to achieve profits for the shareholders of insurance companies?

Are you assuming that Medicare gets no additional funding?

My assumption is that every dollar which currently goes to insurance companies as premium ends up going to Medicare[0]. Medicaid would have no reason to exist any more either, it would become part of the same program.

The only way this ends up being more expensive than what we have now is if we must cover a bunch of people who are currently doing without health care. There's a really obvious moral question that comes up right about then, we can skip that. The actual number of truly uninsured people (no private insurance, no medicaid) is relatively small. That would be offset by all the money we don't spend on medical billing and insurance company bureaucracy.

[0] or whatever it would be called, Medicare is a nice name but I'm talking single payer

I don't think it's common, but it isn't uncommon either.

I'd encourage her to try to reach out to HHS. https://www.medicare.gov/basics/reporting-medicare-fraud-and...

It may take a bit of effort, but a huge part of Medicare abuse is that HHS can't know all the details of all procedures.

But if they're alerted to "you may want to look at shoulder replacements by this provider" then they can definitely put it under more scrutiny.

It'd be great if they had proactive systems to alert... but my guess is the size of the healthcare market at Medicare scale somewhat preclude open-ended, continuous queries.

While this is an incredibly serious issue, the fraud the article focuses on is billing for services that don't really get provided, which is very different than pushing unnecessary procedures.

The latter seems like fraud also.

I'd guess that in a similar situation of knowingly performing unnecessary surgical procedures would constitute assault in the uk. Among other things.

Both of my in-laws are in their early 70s have been recommended to have shoulder surgeries by their doctors because of shoulder pain. There was no recommendation of seeing a PT or introducing any sort of strength and mobility work into their lives. My wife and I keep trying to convince them that they should be using surgery as a last resort, not as a first attempt at addressing their pain. They've lived the typical sedentary lives most Americans live and it seems impossible to get them to believe that doing physical activity would help their pain.

If they get the surgeries they're going to have to do months of PT anyway, so why not at least try it first? But surgery is what their doctor recommended and they're of the generation that doesn't believe a doctor would be wrong about something or would be doing the thing that makes them the most money.

My father-in-laws doctors are kinda like this. He’s definitely had real damage in younger years but I think a lot of recent pain is because of a lack of any physical exertion, he’s allergic to stairs and takes the shortest path anywhere.

Spot on about the PT, it was probably the most regular physical exertion he’s done since the last surgery.

My docs are always like you need PT, stretches, and more movement for your upper back/shoulders/heel etc. Also stop doing these X things that bother it. In no way were they going to give me surgery or even pain killers.

an old surgeon here in California (now deceased) used to complain bitterly about the PTs making more money than he did ! So many stories about that guy.. big game hunting in Africa was a status symbol, his daughter had a $200k wedding.. etc

Good PTs are worth all their fees. Truly underrated profession. I wish they all made more money cause then more people would be motivated to get better at it.

It's true. The problem is hard it's hard to separate the wheat from the chaff.

The amount of money insurance will pay PTs is nonsense too. Last time my wife went it was like $40 or $50 an hour or perhaps less?

Does she know there are whistleblower rewards for Medicare fraud? She can make a report and possibly earn 15% of any money collected by the government.

1. It's not clear this is fraud, more like over utilization of reimbursed services

2. We're on H1B, can't complain without risking losing job tied to visa and having to leave the country.

I'm a medical student and I have actually been working on some research to re-evaluate how we decide when to do/not do large bone/joint surgeries. Currently, whether to do surgery or not is based on unvalidated questionnaires that basically ask how much pain they are in and how much it affects their daily activities. We basically don't know when to do these large surgeries or not and the few randomized controlled trials have many issues and report data completely different, limiting the usefulness of meta-analyses. Pretty disconcerting, but I hope that this starts to change in the future as the newest group of surgeons realizes that the current standard of care isn't very evidence based at all.

I had a herniated disc that took me down the rabbit hole of over-operated spines. It was astonishing the number of doctors who would straightaway recommend surgery, even though most spinal surgeries have complications, my case wasn’t particularly bad, and there is plenty of evidence that most spinal injuries heal on their own over time.

I could research and consult friends and family in the medical field, but good God there has to be some oversight.

For the record, conservative physiotherapy healed my back and I’m back to normal again.

South Florida resident. I've come to realize that non-SoFla Floridians call Miami "Scamy Miami" for a reason. Before moving here, I had zero clue. Yeah, money laundering through real estate development was pretty known to me - because this is where the Latin American elite park their stolen gains, and that's been a thing for decades...but I was not prepared for what I've since discovered.

The amount of fraud here is staggering. I've seen a number of "businesses" that range from questionable to highly suspect to outright blatant fraud in a number of different industries, mainly in real estate - but they all pale in comparison to the amount of straight-up scams that exist in the medical world that all seem to originate here.

It's not limited by demographic either. I've seen people of all shapes, sizes, creeds, etc... in on this game, and they're all damn proud to be playing it. You see it in their luxury condos & homes, and their fancy cars that they get tricked out. You see it in their high-end clothes, their frequent dining out, and everything in-between.

Fraud is the name of the game. Yet when you ask people what they do, you get a runaround, vague, BS filled answer. The lack of ethical or honest people around here is stunning.

I'd leave but as a NY'er, the weather is just unbeatable.

Hell, one of the two Senators for Florida, Rick Scott, was a founder and CEO of a company that was guilty of one of the largest healthcare fraud cases in US history, involving systematic fraudulent billing, unnecessary testing, bribes and fraudulent bookkeeping of Medicare.

Somehow he got off by resigning as CEO, and went on to be elected governor and then senator of Florida. Absolutely mind-boggling that he seemed to face no personal consequences for the fraud. In fact, when he resigned he was paid out millions and granted hundreds of millions in stock by the board.

https://www.justice.gov/archive/opa/pr/2003/June/03_civ_386....

> Previously, on December 14, 2000, HCA subsidiaries pled guilty to substantial criminal conduct and paid more than $840 million in criminal fines, civil restitution and penalties. Combined with today's separate administrative settlement with the Centers for Medicare & Medicaid Services (CMS), under which HCA will pay an additional $250 million to resolve overpayment claims arising from certain of its cost reporting practices, the government will have recovered $1.7 billion from HCA, by far the largest recovery ever reached by the government in a health care fraud investigation.

https://en.wikipedia.org/wiki/Rick_Scott

> Eight days after the initial raid, Scott signed his last SEC report as a hospital executive. Four months later, the board of directors pressured him to resign as chairman and CEO.[32] He was succeeded by Thomas F. Frist Jr.[33] Scott was paid $9.88 million in a settlement, and left owning 10 million shares of stock then worth more than $350 million

HCA is a huge health system. I’m no fan of Rick Scott, but hospitals are traditionally run independently. They have 180.

I suppose in a large enough system, the buck never stops anywhere.

And thus the reason for corporations in a single sentence.

As you surely know, Rick Scott (former Governor and now Senator) is a big player in the fraud game (as you put it).

Columbia / HCA Fraud Investigation: https://en.wikipedia.org/wiki/Rick_Scott#Fraud_investigation...

"In late 2002, HCA agreed to pay the United States government $631 million, plus interest, and $17.5 million to state Medicaid agencies, in addition to $250 million paid up to that point to resolve outstanding Medicare expense claims. In all, civil lawsuits cost HCA more than $2 billion to settle; at the time, this was the largest fraud settlement in U.S. history."

If this $100B number were accurate I would expect a certain group of politicians to jump on it. The total Medicaid spend in 2021 was $734B . So that would mean 14% of Medicaid payments are fraud. This would mean you could simply take ~100 Medicaid bills at random from the whole country and have an agent go follow the money in detail and 14% of the time they would end up arresting someone ? Seems like this could easily self fund more agents if the numbers are true.

Source: https://www.cms.gov/research-statistics-data-and-systems/sta...

> I would expect a certain group of politicians to jump on it

Is discourse here so bad the Republican party can't be named?

With how aggressively they de -fang the IRS so it can't enforce white collar crime, it doesn't seem a given that they would want to spend tax dollars investigating and prosecuting this kind of white collar crime. They're more likely to just get rid of Medicare to cut costs.

As economist C Northcote Parkinson wrote, once taxes become high enough tax evasion inevitably becomes the national sport.

> The total Medicaid spend in 2021 was $734B . So that would mean 14% of Medicaid payments are fraud.

The report indicates that the $100B/yr is between Medicaid and Medicare, which has a total spend of ~$1.6T, or roughly 6% are fraud.

A similar line of thought applied to white collar crime and blue collar crime (eg tax fraud and social benefit fraud) also nets a similar conclusion. Why aren’t white collar crimes chased harder?

https://www.wgtn.ac.nz/news/2017/08/why-is-tax-evasion-treat...

There are plenty of politicians who would like to take action to address the issue of Medicare and Medicaid fraud. The problem is, there's an equally influential group of politicians who prefer to use it for political purposes instead: "See? This proves how inefficient the government is at providing healthcare! Let's cut their funding and let corporations take over instead!"

Right, some want to cut out the middleman by paying Medicare money directly to the fraudsters.

I'm sure it's far higher than that percent. But it's questionable on how you define fraud. For example, is it fraud for an Ambulance service to pay $100 to a taxi for a referral to transport a someone on medicaid / medicare if their trip has any inkling of a medical reason.

Is it fraud for transport companies to take people wherever they want to go so long as they make some type of medical stop (grocery store with pharmacy) at some point during the trip.

Is it fraud to blanket an area with signs saying "Cash for Diabetic Testing Strips" then go around door to door and sell (bill medicaid) testing strips to Medicaid recipients?

Is it fraud that multiple FedEx trucks are needed every day to drop off "Mom's meals" which never get picked up in the lobby of any given senior apartment building?

I'm sure there's lots of examples of obvious outright fraud where things are never done or delivered, but there's orders of magnitude more scams that aren't clearly illegal.

Half of my high school class seems to have some sort of scam that involves billing the government. There are multiple people that have "Medical transport companies" they go to the USVI and recruit drivers then buy some shitty minivan and slap a large magnetic sticker on it and offer free rides so long as you do something vaguely medical.

> Is it fraud to blanket an area with signs saying "Cash for Diabetic Testing Strips" then go around door to door and sell (bill medicaid) testing strips to Medicaid recipients?

I saw one of these and was sort of confused (if you're diabetic don't you need the test strips?) but apparently this is legal and happens everywhere! It seems it isn't legal for pills because it's considered "misbranding" and there are some storage requirements but when I read about cases of that it sounded even more alarming. People with HIV selling expensive HIV medicines they got for free for $20.

The $100B number given is across Medicaid and Medicare together. Medicare spend in 2021 was around $901B so the total would be $1.635 trillion. This means around 6% of the total spend was fraud not 14%. It would be interesting to see the estimated fraud for each program. The examples in the article were Medicare fraud and not Medicaid.

Medicare directly pays providers but Medicaid is provided through block grants from the federal government to the states. The individual states administrator the Medicaid programs within their state. Some states direct pay providers as Medicare does and some work almost entirely through private insurance plans which Medicaid funds cover the premiums for. Because of this the level of Medicaid fraud likely varies much more between states than it does for Medicare.

if you randomly take 100, you wouldn't find 1 in 7 to be fraudulent. Fraud is not uniformly distributed. It is clustered mostly clustered around a few individuals. for the rest, if you look long enough, yeah you will likely find something fraudulent, but there's no way to find and fix those minor ones without harming real honest folks. But the fraudulent clusters, yeah those are worth identiifying.

My dad had diabetes, and I would order test strips for him from Amazon and ship them to his country of residence. Often times I'd get test strips marked for Medicare use, and sometimes the name of the person for whom they had been prescribed was also there. I reported it to Amazon once but never heard back from them.

I used to work for a company whose primary line of business was providing analytical support for state Attorneys General with Medicare and Medicaid fraud trials. The biggest issues were, beyond a shadow of a doubt, known and established healthcare companies knowingly breaking the law: major pharmaceutical companies overcharging for prescription drugs, healthcare providers receiving kickbacks for prescribing drugs or medical devices, doctors upcoding procedures, etc. As fascinating as the criminals and schemes described in the article are, organizations created deliberately for fraud are not where the most fraud is occurring. It's large, "legitimate" businesses sucking at the blood of both their patients and the American taxpayers.

Why is it that when I pay 20$ less on my taxes, the IRS sends me a letter to make sure I pay the right amount, but when the government has to spend that money, $100B is not a big deal.

Because taxes are meant to keep you as a serf.

Yup. The income tax was fundamentally designed to prevent the accumulation of wealth.

> The income tax was fundamentally designed to prevent the accumulation of wealth.

Progressive income tax in the abstract was conceptualized to prevent the concentration (persistent inequality of distribution) of wealth, not its accumulation.

The actual US implementation has been tuned very carefully to avoid doing even that, via (among other mechanisms) the preferential treatment of capital gains.

Because very little human labor was involved in determining that you payed too little tax, but proving the fraud currently does

This is a good estimate to remember when the argument is made that Medicare and Medicaid are superior to private payers because they have much lower administrative overhead.

Yes, if you are willing to tolerate mid-single-digit fraud rates—cost billed to the taxpayer—you can indeed lower your administration burden.

You know what, I'll take 6% fraud in place of 15% to 30% administrative costs.

https://www.healthaffairs.org/do/10.1377/hpb20220909.830296/...

Too many people think they are being smart with money when in reality they are just being petty and wasteful.

Many of those costs are borne by Medicare/Medicaid as well as private payers:

Costs from administrative activities are best defined as what is “left over” after accounting for clinical activities.

The hospital president's salary is paid by Medicare/Medicaid, too. Same with the armies of medical coders.

Wait... I keep hearing that Medicaid/Medicare don't pay enough, now they are paying for all the overage stuff?

Anyway, those quotes were for the internal management of the company, not the overhead at offices or hospitals.

> You know what, I'll take 6% fraud in place of 15% to 30% administrative costs.

Not to mention that private insurance companies aren't immune to fraud either.

Regulation is prone to capture. Procedures are prone to gamification. Courts are now pay to play.

What to do?

Part of the solution is a whistleblower & bounty program. Empowering 3rd parties to conduct investigation, oversight, and suing.

I heard about a law firm that solely sues prescription management companies for fraud. The only income is from winning court decisions. (Sorry, I can't refind the link.)

This could be a strategy to resurrect, revitalize local investigative journalism. Old timey broadsheet style publications backed by a good government law practice.

It goes far beyond outright fraud. Frontline did an episode a while back about dental centers being set up to provide free dental care for the poor. The government would reimburse them for the procedures provided.

The dentists would prescribe all sorts of expensive procedures, like root canals, implants, etc., that were unnecessary for the patients, and collect the payments from the government.

Frontline was suitably shocked by this behavior, but what does one expect to happen when the government sets up a machine that dispenses gold coins when the button is pushed? People are gonna push that button till their arm falls off, and then they'll push the button with their nose.

This goes on because nobody in government actually cares about the losses. After all, it's somebody else's money.

In business, when this happens, the business owner does something about it. For example, the cash register was invented by a bar owner who realized that his busy bar was losing money because the bartenders were pocketing most of the revenue.

Another important question would be how does this fraud estimate compare to fraud for private insurances. Perhaps private insurances reject more claims and look in more detail but they don't have the ability to directly hire a police force like the Government managed version of insurance.

Watching this felt like an advertisement for how to rob the government, and get away with it!

Just don't base your company in Florida and you'll be all good since they only have 450 enforcement officers in the country (a whopping 9 per state)!

I’m far from an anti-tax extremist, but it’s hard to read articles like this (that appear every year or two) and not be frustrated at calls to raise taxes in the same news cycle, when there is clearly so much abuse and waste in the system, that if largely eliminated would pay for so much! (E.g. eliminating $90b of fraud in Medicare, would allow for a 5% increase in discretionary spending across the board, without looking to the taxpayer!)

https://en.m.wikipedia.org/wiki/United_States_federal_budget

If you’d read the rest of the article, the reason there is a lot of uninvestigated fraud is because there isn’t currently funding to pay for enough investigators to drive around places like south florida.

In the same vein I’d gladly pay the extra $20/year or so to let the IRS staff up enough that it doesn’t take them 8 months to deposit a check and release my tax return.

I don't get why haven't they just hired more fraud investigators and people to recover proceeds then? It is laughable that the government only started to even remotely acknowledge the Medicare fraud issue in the 2000s. We are talking about tens of billions of dollars stolen every year for the past 30+ years. There are prosecutions but only in a fraction of cases because there are simply so many of them. You could even have something like the NYC Marshal system where they get a % of everything they recover. It's not hard to find pharmacies that 80% of the time prescribe expensive compounded medications that are incredibly rare in the real world or "telemedicine" doctors who are signing off on hundreds of prescriptions a day.

Americans don't know what corruption looks like because they're not familiar with it but it is pervasive here - made worse because it causes an American so much shame that he will reflexively attempt to deny it. Clever trick to make it part of the national psyche.

It's amazing because San Francisco is really as or more corrupt than most Indian cities I've visited. The difference appears to be that while corruption steals the same $90 out of every $100 made, the sheer economic productivity of American cities permits them to still provide services.

It's really an incredible sight.

Americans absolutely know what corruption and fraud looks like but the problem is that half of us seem to want to get in on it instead of fixing it. Look at MLMs, bitcoin, gambling, stock trading, americans are OBSESSED with get rich quick ideas. A lot of people's anger with 2008 seems to be, not that some people fleeced the general public, but rather that they themselves were not part of that group. Everyone seems to see life as a zero sum game where they can only improve by harming someone else first

As the saying goes, $100B here, $100B there, and pretty soon we'll be talking about real money.

More seriously, if the $100B estimate is accurate, all I can say is, wow.

The three-hit combo of “$100B in fraud”, “this is a conservative estimate and it’s way higher in reality”, and “Medicare and Medicaid are $900B each” really floored me. It’s 10% fraud!

Honestly 10% fraud doesn't seem that bad for a government program. I guess the real issue is how big the 90% is.

it's Florida. lived there for a couple of years. when Rick Scott - governor was chief fraudster. he made his billions defrauding medicare. now he's in the senate. what a life.

Fun fact, the previous largest medicare fraud in history was done by the former governor of Florida and now Senator Rick Scott.

Didn't slow down his career in the slightest.

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