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Fighting health care fraud a difficult battle

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The Obama administration has talked about stepping up efforts to investigate health care fraud, waste and abuse to recoup nearly $3 billion as a way to help pay for health care reform, but rooting out improper health care spending and fraud in Medicare and Medicaid is not easy.

Gerald Wilhelm spends most of his time as a federal prosecutor in Minnesota chasing health care fraud. Last year, he led Justice Department lawyers in getting Walgreens to pay nearly $10 million to settle allegations that the pharmacy chain improperly billed Medicaid. 

In that case, a couple of whistleblowers came forward. But without them, Wilhelm said health care fraud is tough to ferret out.

"Medicare cases are often what I call the death of a thousand ankle bites," Wilhelm said. "Every bad claim is a dollar, but there are a billion bad claims so it's a billion dollars, and so to look at all of those claims is impossible."

"Every bad claim is a dollar, but there are a billion bad claims so it's a billion dollars, and so to look at all of those claims is impossible."

Wilhelm said there are easy cases, like when a therapist bills Medicare for a counseling session that never happened because the therapist was out of the country. But he said many cases fall into a gray area that mean second-guessing a physician's decisions. 

The Medicare statute itself prohibits the government from interfering with the practice of medicine. 

Wilhelm said the question with Medicare is often whether a clinic billed the government for a more complex procedure than it performed or than the patient needed. He said it's like buying a Chevrolet and charging the government for a Cadillac. 

Wilhelm said one example is a person going to the Emergency Room to get a grain of sand out of his eye.

 "Let's just say it's a simple removal but he decides to anesthetize you instead," he said. "Now was that medically necessary? Was that a function of medical judgment? All of those things become more difficult as medical judgment becomes more and more of a factor."

Medicare and Medicaid serve more than 90 million people and cost more than $700 billion per year. Because the programs are so big, it's impossible to know precisely how much fraud, waste and abuse exists. 

Since 2002, Congress has required every government agency to measure what it calls the "improper payment rate." These are payments that can range from computer keystroke mistakes to outright, intentional fraud. The Department of Health and Human Services estimates that about 10 percent of Medicaid and Medicare payments were improper.

Susan Foote, a health care researcher and former head of the University of Minnesota's Division of Health Policy and Management, has analyzed the way Medicare pays claims. She said one problem is that the federal government contracts with insurance companies to administer the payments. The contractors are paid based on how many claims they process, not on how many improper payments they find.

"They're not paid to enforce or manage quality or any factors," Foote said. "Therefore, what incentive do they have to say I'm putting this on hold? I'm going to call for review, I'm getting the records, [and] I'm going to challenge these physicians? They're not at risk."

Dr. Bruce Quinn is a health care consultant for a Boston law firm and the former medical director for Medicare's biggest state, California. He said it's always going to be difficult to root out fraud and overuse in the health care system. But, he said the way to get at those problems is to give doctors and clinics financial incentives to do less, rather than continue the current system of paying them more for more procedures.

"You're incentivizing people to do things that are less expensive by putting a slightly higher margin of return on it," Quinn said. "There's nothing in the system that does that now."

The two major versions of health care reform in the House and Senate would increase the penalties for health care fraud. The Congressional Budget Office estimates that both bills would save the government about $1.3 billion dollars in fraud and improper payments over 10 years.