For Professionals: Medicare Fraud and Abuse

California’s SMP “Educates and Advocates” at the L.A. Fraud Summit

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Published: Oct. 26, 2010

SMP

Julie Schoen, Director of California’s SMP program, and Diane Caradeuc, Centers for Medicare and Medicaid (CMS) Liaison, presented on California’s current picture of Medicare fraud and SMP’s vital role in meeting Obama’s aggressive goal of cutting fraud in half by 2012. They were guest speakers at the L.A. Fraud Summit in August, spear-headed by Attorney General Eric Holder and U. S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius. This summit was the second in a series of seven daylong summits organized to bring together a wide array of federal, state and local partners, beneficiaries, providers and other interested parties to discuss innovative ways to eliminate fraud within the U.S. health care system.

The Summit served to strengthen collaboration among these groups, inform each other of their various roles in their anti-fraud efforts and put the “war on health care fraud” high on the public radar. What used to be honest billing mistakes interspersed with some cases of fraud, has developed into massive organized “white collar” crime. Our country’s annual health care spending has risen from “$75 billion in 1970 to more than $2.5 trillion today, making our health care system a bigger target than ever for criminals,” stated Secretary Sebelius in her opening address at the L.A. Summit. By educating the public on the harsher penalties for health care fraud (see the new fact sheet on Healthcare.gov); Medicare’s new requirement to check for fraud before paying claims (see our blog article); and the new and strengthened requirements for being registered as a Medicare durable medical equipment supplier (see our press release), the government shows its commitment and resolve to end Medicare fraud.

The message is that the risk of being caught is high and getting higher every day. What used to be a high benefit, low risk and low investment operation, basically just needing to 1) get a Medicare billing number, 2) get Medicare numbers from beneficiaries, 3) submit claims for payment, and 4) walk away with hundreds, thousands, sometimes millions of Medicare dollars, is no longer the case.

The Summit also highlighted how health care fraud is intimately interconnected to the ‘health’ of our country’s health care system, the strength (in quantity and quality) of our health care providers, and our own health. Everyone has a stake in what happens in fighting fraud. Fraud drives up health care costs and limits access to providers. Most Medicare providers are honest, yet they are all under a lot of scrutiny and all must invest time, staff resources and money to ensure they correctly comply with Medicare billing and claims procedures. Because of these increasing costs, and in some counties because of low Medicare reimbursement rates (See “Appellate Court Orders More Review of Medicare Underpayments,” Santa Cruz Sentinel, October 2, 2010), doctors are leaving Medicare and new doctors are choosing not to become Medicare providers. This affects access to care, especially as our aging Medicare population is one of the fastest growing segments of all age groups.

Diane Caradeuc, currently working with California’s SMP program with over 30 years experience with the Centers for Medicare and Medicaid Services and in the health care field in general, has seen firsthand how the fraud scene has grown and the interwoven impact it has on all players. For example, recently she counseled one beneficiary who isn’t able to afford her Medicare Part B premium ($110/mo. in 2010) and therefore has limited access to care and a compromised health condition. Medicare’s costs (premiums and deductibles) go up every year and amount to quite a substantial sum for beneficiaries to pay, many of whom struggle to pay the costs or, if they don’t qualify for Medi-Cal or a Medicare Savings Program, can’t pay them at all. Medicare’s rising costs directly link to the amount of money lost each year to fraud, which currently is about $60 billion per year, or $1 for every $7 Medicare spends. “If there weren’t any fraud, we’d already have universal health coverage and access to care,” said Ms. Caradeuc. “So much money is lost not just to fraud but also the millions going to law enforcement, oversight and compliance.”

Investing in Fraud Prevention and Detection

With health care reform, another $350 million over the next 10 years will be invested in stopping fraud. Yet, this investment may very well start paying for itself, based on the recovery trend seen in the last year. For example, in FY 2009, anti-fraud efforts put $2.51 billion back in the Medicare Trust Fund, a $569 million, or 29%, increase over FY 2008, and over $441 million in federal Medicaid money was returned to the treasury, a 28% increase from FY 2008. Also, as mentioned earlier, the increased investment in combating fraud is being directed in new and innovative ways, such as tougher sentencing for criminal activity, enhanced screenings and enrollment requirements for providers, increased sharing of data across government and law enforcement agencies, expanded overpayment recovery efforts, and greater oversight of private insurance abuses. Furthermore, the government will invest in changing Medicare’s billing system to have “predictive modeling” capabilities (where similar to credit cards, it can flag suspicious billings) versus relying on the failed “pay and chase” model.

What is SMP’s Role in the New Fight on Fraud?

“Educate and advocate,” said Diane Caradeuc at the L.A. Fraud Summit. She and Julie Schoen explained that this is the Senior Medicare Patrols’ mission. The SMPs educate seniors and the younger Medicare beneficiary population about Medicare fraud, how to detect, report and prevent it. They also recruit volunteers to become leaders, advocates and educators on Medicare fraud and prevention in their own communities. Recently, the SMPs nationwide have received much recognition particularly since the passage of health care reform, as they play a key role in the government’s revamped fraud detection and prevention campaign. Whereas some large beneficiary populations and immigrant communities are leery of the government and government programs, SMPs often serve as the “go-between” in these groups, providing a key link between beneficiaries and the government. And beneficiaries’ role in the anti-fraud campaign is invaluable. They are often the government’s wary and watchful eyes, reporting what’s happening around them in their communities and with their own health care. Most beneficiaries trust the SMPs and often share with them easily because the SMPs are intimately linked with their communities through a strong, peer-based core of local volunteers.

“The SMPs train seniors to spot potential scam artists and alert the authorities,” said Ms. Caradeuc. “And we’re successfully partnering with law enforcement to share resources, use new data, and break down old walls between jurisdictions.” Success on the anti-fraud front is blooming.

See our Medicare Fraud section for more information on California’s SMP program.

Also see StopMedicareFraud.gov, a comprehensive Medicare fraud education and advocacy website with a wealth of resources, press releases, videos, fact sheets, and state-specific information more created by the U.S. Department of Health and Human Services and the U.S. Department of Justice.

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