Health Market Science

As the federal government continues its pursuit to cut costs from its budget, the House Energy and Commerce Subcommittee on Oversight and Investigation and the Senate Finance Committee have begun to look more closely at waste contributing to rising costs of Medicare and Medicaid, the Heritage Foundation reports.

Government agencies have attributed the rapidly rising costs to fraud, waste and abuse throughout both programs. Excessive drug prescriptions, poor record handling and wasteful reports from both patients and doctors, among other issues, have led to both government programs becoming sources of runaway spending. But fraud, above all, is something lawmakers want to tackle.

The Government Accountability Office (GAO) cited the cases of four doctors in Hialeah, Florida, who racked up nearly $135,000 in wasteful spending. However, a closer examination revealed that the perpetrators weren't the doctors listed according to their prescription identification numbers because two of the doctors had died, one was in prison and the fourth was living in Oregon, the Center for Public Integrity reported.

Faulty prescriber data validation opened the door for such wasteful practices, which go beyond prescription drugs. The CPI reports that individuals are increasingly able to capture the identities of doctors, including their prescription ID numbers, giving them the ability to obtain drugs and other medical equipment. The CPI reports that such "sham suppliers" have far too easy of a time committing fraud within Medicare.

Former U.S. Attorney of the Southern District of Florida Alexander Acosta, who oversees Hialeah, said that his district reported $2 billion worth of fraudulent cases to Medicare between 2006 and 2009. That figure translated to more than $1,900 per senior citizen in southern Florida.

"Despite our success prosecuting Medicare fraud in South Florida, I believe that increased prosecutions are not the answer to reducing Medicare waste, fraud and abuse," said Acosta in his statements to the committee.

A report from the U.S. Department of Health and Human Services Office of Inspector General found that fraudulent reporting has been so common since 2007 that Medicare regulators are having a tough time discerning which claims are real and which represent criminal activity.

These activities have highlighted the need for greater master data management, particularly in the pharmaceutical industry. The GAO and other governing bodies have found that criminals are gaining more access to physician records, including the records of deceased doctors, and that the Medicare tracking system cannot keep pace.