New CBO Report Calls for Stronger Medicare Anti-Fraud Reforms
NAHC has been a longtime proponent of stronger program integrity measures
October 27, 2014 03:59 PM
The Congressional Budget Office (CBO) recently released a report, “How Initiatives to Reduce Fraud in Federal Health Care Programs Affect the Budget.” The aim of the report is to look at the budgetary consequences that fraud in federal health programs – such as Medicare, Medicaid and CHIP – have on overall federal spending.
According to the report’s summary, the goal of analyzing such data was to estimate, “the budgetary effects of legislative proposals to reduce fraud in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP), and how those estimates are used in the Congressional budget process.”
A review of the report’s findings in Home Health Care News expounded on what the report means to the home health and hospice community:
“Home health care often catches a bad reputation for the prevalence of fraud that occurs within the sector, despite its role as a cost-effective alternative to institutionalized care. Although fraud is certainly detectable and quantifiable, instances of abuse usually surface after the acts have been committed.
This seemingly undetectable nature of healthcare fraud has created a billion-dollar problem for the government, despite its anti-fraud initiatives already in effect.
In fiscal year 2014, spending on dedicated anti-fraud activities through the Health Care Fraud and Abuse Control (HCFAC) program was approximately $1.4 billion, which CBO notes was equal to about 0.2% of the federal government’s spending for the programs’ benefits.
“Measuring fraud is not simple, in part because fraud can be determined with certainty only after the fact,” CBO wrote in the report. “Moreover, although fraud that has been successfully prosecuted can be quantified, there is no reliable method to estimate the amount of fraud that goes undetected, especially because at first glance successful fraud can look very much like appropriate payment for health care services.”
Furthering the idea that fraud is elusive and hard to detect, the Government Accountability Office (GAO) concluded that “there is currently no reliable baseline estimate of the amount of health care fraud in the United States.”
While government entities—primarily the Department of Health and Human Services (HHS), the Centers for Medicare & Medicaid Services (CMS) and the Department of Justice (DOJ)—have undertaken several initiatives to address instances of healthcare-related fraud, CBO notes that funding for anti-fraud activities is limited.
Since 2009, the HHS- and DOJ-formed Health Care Fraud Prevention and Enforcement Action Team (HEAT) has filed criminal charges and civil charges against more than 1,700 defendants who falsely billed the Medicare program for more than $5.5 billion.
In general, CBO estimates that federal spending for the programs’ benefits would be reduced by legislation that would provide either additional funding or new authority to reduce fraud.
Appropriating additional funds, making statutory changes, mandating new or additional anti-fraud activities and increasing penalties for offenders are CBO’s top proposals.
In analyzing past proposals for providing additional funding for anti-fraud activities, CBO estimated that such funding would produce savings that exceed the cost of carrying out those activities.
For such estimates, CBO compares the proposed funding against its baseline—projected spending over the next 10 years—for HCFAC spending under current law and applies to the difference a return-on-investment factor of about 1.5:1—meaning a dollar that is invested saves, on average, $1.50.
Although this new investment would yield savings, CBO stresses that the estimated savings do not “pay for” increased spending from those or other policies for the purpose of enforcing Congressional budget rules.
“Nevertheless, those savings, if realized, ultimately reduce federal budget deficits,” CBO wrote. “Whenever possible, CBO provides information about such potential savings to lawmakers while legislation is under consideration.”
CBO also analyzed legislative proposals to modify practices and behaviors in programs such as Medicare, Medicaid and the Children’s Health Insurance Program (CHIP).
Specifically, CBO focuses on the scope of new requirements in proposed legislation and whether they would increase existing laws and regulations—for example, by expanding the universe of prohibited behaviors or by adding conditions for providers who wish to participate in either Medicare, Medicaid or CHIP.
In analyzing proposals to mandate new or added anti-fraud efforts, CBO considers whether the government’s current authority permits it to undertake the activity.
“Proposals might reduce spending for health care programs if they direct resources away from less effective anti-fraud activities or if they include funding for new activities that would save more than they cost,” CBO stated. “Conversely, CBO might conclude that the newly required activity would displace other actions that are more effective at reducing fraud; if so, requiring new program integrity activities might increase, rather than decrease, federal spending.”
For offenders, CBO considers how proposed changes in penalties would affect the expected costs for individuals or businesses that commit fraud, particularly whether imposing large financial penalties might deter a significant amount of fraud.
To read the full CBO report, please click here.
To read the full Home Health Care News article, please click here.