How much money does Medicare waste?

September 9, 2012 in Medicaid/Medicare, Medicare

The answer depends on who you ask.

  • According to the GAO, Medicare spent $48 billion in “improper payments,” which include fraud but also waste, eligibility errors, miscoded claims and insufficient documentation. GAO determined that Medicare’s traditional fee-for-service plan had a 10.5 percent error rate.
  • Attorney General Eric Holder, suggest there may be $60 billion in annual Medicare fraud, about 12 percent of Medicare spending.
  • In 2008 PricewaterhouseCoopers estimated there is between $21 billion and $210 billion of waste in health claims processing (all claims, not just Medicare).

Although there is substantial room for improvement, politicians who think that these overpayments will be easy to recover are partially misguided.  Every Presidential candidate in recent times has stated that we need to reduce “fraud, waste and abuse” in Medicare.  think that

Further, CMS has already taken action in some areas—for example, as required by law, it implemented a national Recovery Audit Contractors (RAC) program in 2009 to analyze paid claims and identify overpayments for recoupment.

However, many of these efforts are subpar and other efforts to reduce cost have not been implemented.

Merrill Matthews reports on Forbes that, “though the agency launched its antifraud computer system last summer, by Christmas it had only identified one suspicious payment: for $7,591.” Read more