The Unbelievable Lengths Hospitals Will Go To Keep Their Fraudulent Medicare Payments

This is a story about how big hospitals, on the receiving end of an estimated $60 billion in fraudulent Medicare payments – annually – created their own problem to cry about so they could stop one of the government’s only effective programs for stopping waste and abuse.

As you may know, the government has instituted “Recovery Audit Contractors” (RACs) to look at Medicare payments to hospitals, identify fraud, and help Uncle Sam claw back some of these wasted billions of dollars.

As a reward for identifying the fraud, the contractors are awarded a portion (between 9-12.5 percent) of the recouped funds, a sensible means of incentivizing private companies to go through the hard work of auditing sophisticated billing schemes.

But allies of the hospital lobby, which is spending gobs of money on a small army of lobbyists to grease the skids on Medicare fraud, are working on Capitol Hill to fatally wound the program.

The hospital lobby has set up as its chief complaint the appeals process, where they argue that many of the flagged payments are ultimately ruled legitimate and the sheer number of cases brought against the hospitals has overwhelmed the adjudication system, leading to lengthy delays.

At the end of April, the Senate Finance Committee held a hearing on the problem, with the panel’s chairman, Sen. Orin Hatch (R-UT), noting in his opening statement that “This increase in appeals has resulted in long delays for beneficiaries and providers alike.”

Deep into the hearing, under questioning from the Finance Committee’s top Democrat, [mc_name name=’Sen. Ron Wyden (D-OR)’ chamber=’senate’ mcid=’W000779′ ] (D-OR), Nancy Griswold, the government’s chief administrative law judge for the appeals, dropped a bombshell fact that explains in a single sentence the root cause of this appeals explosion.

In 2015, “51 percent of our incoming appeals have been filed by five appellants,” Griswold told Wyden.

Five health care providers are filing more than half of the appeals, meaning that only a small fraction of the industry is completely dominating the docket and creating the backlog.

Then, once they have created the problem, the hospitals seize on it to grease the skids for their continued Medicare fraud.

In one sense, you have to hand it to the authors of this devious scheme. It’s sophisticated enough that it may have never garnered attention without the helpful spotlight of Griswold.

But it is also a testament to the lengths entrenched special interests will go to keep the government spigot from being turned off.

It is well established that the U.S. government is wrongly paying hospitals more than the Gross Domestic Product of small countries in fraudulent payments every year.

The hospital lobby, and its congressional allies – led by [mc_name name=’Rep. Sam Graves (R-MO)’ chamber=’house’ mcid=’G000546′ ] (R-MO) – are showing that there is no tactic they are above to keep it that way.