The U.S. Department of Health and Human Services (HHS) released its annual Agency Financial Report for Fiscal Year (FY) 2016 this week. No surprise that improper payments continue to haunt the agency, which is responsible for over half of all improper payments in the government at large. According to this latest report, HHS reported $96.9 billion (yes, billion, with a B), of which Medicare (Parts A through D) and Medicaid are responsible for all but $1B of that.

Medicare Improper Payments

For the third year in a row, Medicare has toyed with a $60B improper payment rate, yet this little fact gets completely ignored when the media and politicians talk about the Medicare Trust Fund going bankrupt by 2030. When are politicians going to wake up and smell the coffee, for crying out loud! It’s time to do something about this, and as I’ve said before, I think President-Elect Trump is the right person for the job. I trust that he will apply his incredible business acumen to programs in this kind of trouble and get them turned around so they can continue to provide needed healthcare for seniors, put an immediate stop to the bleeding, and put a stop the wasteful spending of taxpayer dollars.

Medicaid Improper Payments

Similarly, Medicaid is on a three-year rocket trajectory with its improper payments. Since the Affordable Care Act’s “encouragement” to States to expand Medicaid kicked in in 2014, Medicaid improper payments have more than doubled. In 2013, Medicaid improper payments reached a low of $14.4B, but in 2014, they jumped to $17.5B, then to $29.1B in 2015. For FY 2016, Medicaid’s improper payments jumped another $7.2B to $36.3B. Again, how can we expect any program to survive with this kind of bleeding?

The Problem

To be fair, both Medicare and Medicaid improper payments came in a little under what was projected, but not much. And the fact they are more than all other agencies combined continues to be disturbing. The main problem, as I see it, is the “pay and chase” policy of both programs. Providers submit claims, which should be run through some basic automated edits to validate, then Medicare or Medicaid pays the provider. But the process doesn’t end there. Medicare turns a number of claims over to review contractors for more detailed review, at which point a number of claims get rejected, and providers have to refund the payments for those claims. Add to that the number of claims that result in a determination of fraud, of which only a fraction is recovered even after trials and settlements.

Both Medicare and Medicaid have spent a lot of time and money creating, updating, and in some cases simplifying (shocking, I know) regulations, but none of that has made any difference, and only seems to exacerbate the problem. Why? Because it’s nearly impossible to keep up with the thousands of pages of regulations and rules that come out each year! In some cases, providers are used to doing things one way, then some obscure change in a regulation makes that way wrong now. As soon as they do it the wrong way and still get a payment for it, that becomes an improper payment, and Medicare can then come after them for repayment! Thank you for your service, provider!

A Solution

Drastic problems call for drastic measures. I think one possible solution would be to put a moratorium on any new regulations except for those that have to do with annual payment rates. All of those policy analysts should be turned loose on prepayment review of claims so we can catch more potential improper payments BEFORE they’re made. Doesn’t that make sense? Of course it does, too much sense for an establishment politician!

In order to sustain America, one area we need to address is the incredible wasteful spending perpetuated by the Washington establishment and business as usual. I hope you share my concern that we need to try something completely different, and that difference will be President-Elect Trump.

Scott Stocking

My views are my own.



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