Speaking of Unchecked Fraud

This January 2010 NBC news story states, “Officials said Medicare pilferage is so widespread, with so much of it never detected, that no one can accurately say how much it costs American taxpayers. But a figure widely used by law enforcement officials suggests a staggering $60 billion a year is stolen”. The story cites very troubling figures, like more than 72% of Medicare-paid HIV/AIDS treatment in 2005 came from South Florida but only 8% of Medicare’s HIV/AIDS patients reside in that area. The article gives other unsettling examples, like a single $5,000 wheelchair that was billed to Medicare repeatedly to the point that this one device ultimately cost $5 million. Oh, and no patient ever even received this device because the entire thing was fraudulent. One criminal who spoke to MSNBC anonymously after his arrest said he was “amazed” at how Medicare unquestioningly paid his fake claims, even though the patients whose names he billed under were reporting the charges as fraudulent.


As recently as October 2009, this 60 Minutes report called Medicare fraud one of the most profitable crimes in America, possibly the most profitable. The story talks to one of the few who’ve been caught and learns that fake companies with no clients, no medical equipment but just a person answering a phone were able to rake in more than $20 million in just a few years. Until he got caught, the man was earning between $20,000 and $40,000 per day, which would translate to $20 million in under 3 years. This January 2010 CNN report talks to Rob Montemorra, chief of the FBI's Health Care Fraud Unit. He states that Medicare is the biggest victim of fraud because it’s so much larger than most insurance companies. As smaller entities, private insurers do a better job of preventing fraud, whereas Medicare must attempt to right the wrongs after the fact.

Surely prevention costs far less than the price of paying out fraudulent claims followed by the need to investigate, prosecute & punish criminals. Essentially, for every dollar in Medicare fraud, taxpayers are paying in multiple ways: We’re funding Medicare (likely at a higher rate than necessary, due to the rampant fraud); Our tax money also funds the law enforcement resources needed to investigate fraud, the justice system that deals with these criminals & the penal system that handles them.