Taxpayers score victory against Medicare and Medicaid fraud

Joanne Butler Contributor
Font Size:

Last week, thanks to the actions of an obscure George W. Bush-appointed federal district judge in Florida, the United States took a significant step forward in the fight against Medicare and Medicaid fraud. If you missed the story, that’s understandable, as it received little attention from the general press.

On Friday, Judge Marcia Morales Howard partially overturned a 1979 injunction (by another Florida federal district judge) that prohibited outsiders from examining Medicare and Medicaid expenditure records.

The injunction stemmed from the American Medical Association’s concern over the privacy of the doctor-patient relationship. But, as the Carter administration argued at the time, it made Medicare and Medicaid fraud harder to detect. Medicare and Medicaid are unusually susceptible to fraud because they use a “pay and chase” model: first, the government pays the provider of a service, then, if the expenditure looks fraudulent, the government can chase the provider.

For the next three decades, activists tried — unsuccessfully — to get the injunction overturned. The turning point in that effort came in 2010, when the Wall Street Journal partnered with the non-profit Center for Public Integrity to request access to the Medicare/Medicaid fee-for-service payment file. That got an investigation rolling.

Investigators uncovered substantial amounts of fraud. Their findings led to the arrest of 114 healthcare providers in February 2011. More arrests followed.

Democrats are claiming that certain Obamacare provisions are helping to prevent fraud — but it seems to me that the Wall Street Journal and the Center for Public Integrity ought to get the credit for giving healthcare fraud the attention it deserves.

The scope of the problem is enormous. Dow Jones, the parent company of the Wall Street Journal, noted in its May 2012 plea to overturn the injunction that as many as 75,000 providers had billed in a way that is “indicative of fraud.” One Detroit podiatrist, for example, billed Medicare about $700,000 for supposedly removing 18 toenails from a single patient.

Judge Howard’s decision wasn’t a total win for Dow Jones. Under the new order, news organizations will have to file Freedom of Information Act requests to obtain Medicare and Medicaid expenditure records, with the Department of Health and Human Services retaining the right to refuse such requests. But I expect that reporters will push hard for the data.

This may seem like a small step forward, but the savings it will generate could go a long way toward keeping Medicare and Medicaid around for future generations.

Joanne Butler is a senior economics fellow at The Caesar Rodney Institute of Delaware. You can email her at joanne-butler@comcast.net.