Obama Care: Includes Systems to Eliminate $60 Billion in Medicare and Medicaid Overpayments and Fraud

Julie Northcutt, 8/16/2012

Senior healthcare needs are provided for by Medicare or Medicaid insurance, with all Americans required to enroll in Medicare or Medicaid at age 65.  Medicaid is for low-income seniors and actually provides more benefits, including ongoing long-term care in a nursing home.  One of the components of healthcare reform, agreed upon by both Democrats and Republicans, according to the U.S. Senate Finance Committee report, includes significant changes in the Medicare and Medicaid benefit qualifications and criteria required for payments in order to eliminate fraudulent claims which have resulted in more than $60 billion in costs.  The changes will not impact the quality of care for seniors, but rather eliminate flaws in the administration of these insurance benefits which have resulted in excessive fraudulent claims and inflated billing by service providers. 

O’bama Care, which is officially called The Patient Protection and Affordable Care Act, has both proponents and opponents.  Most everyone does agree on the same principal, which is that America’s current healthcare system needs to be fixed.  It should not be possible for a home health agency to bill Medicare for services to a client when those services don't take place.  Under the current system, that has happened often (Maxim Home Healthcare just paid $150 million to the U.S. government to resolve fraudulent billing and this is just one of many cases).  Overpayment for services, where the government has set lucrative reimbursement rates, has only attracted more capitalists to the industry.  At the end of this article you can read about the SCOOTER Stores' settlement with the U.S. government for improper billing.  There are a long list of cases which result in the $60 billion in fraud.  However, all agree that none of the fraud could have happened if better systems were in place. 

As Mediare and Medicaid programs have been created, the buffet table of special interests have added on more and more side dishes and desserts, leaving a fat and unhealthy system that the Senate Finance Committee wants to fix.

One of the healthcare industry’s largest associations, The National Association for Home Care and Hospice, just concluded their annual conference this week in Las Vegas, celebrating their 30^th anniversary as an association.  The membership includes Medicare home health agencies and hospice companies.  These are the skilled care providers:  Registered Nurses (R.N.’s), Speech Therapists (S.T.’s), Physical Therapists (P.T.’s), Occupational Therapists (O.T.’s) and Certified Nursing Aides (C.N.A.’s) who make visits to the home to assist seniors and the disabled.  When a person has 2 years or less to live, they will also qualify for hospice home care services which may include a Social Worker to help with grief counseling.

The membership of this association, 35,000 strong, has a staff of 85 people and $12.8 million in revenue to help pay for lobbying and advocacy.  Their membership dues are a percent of the Medicare agency’s revenues, which provides a snapshot of the size of the home health industry.  Home care agencies, hospices, home care aide organizations (private duty, meaning companion caregivers or nursing aides) and medical equipment companies are all members.

Healthcare costs are more than 17% of the Gross Domestic Product in the U.S.A, substantially higher than any other country, even those countries that insure all of their citizens.  This is 5% more than what France spends, for instance, and nearly everyone agrees this is a problem.  The U.S.A. is in a financial crisis and healthcare is looked upon as one of the causes.

Two areas that are a significant cost are hospitalizations and fraudulent claims via Medicare and Medicaid.  The United States Senate Committee on Finance found fraud, waste and abuse in our health care system account for 3% of our total health care spending, which accounts for the $60 billion in unnecessary healthcare costs Americans are paying for every year.

The Senate’s finance committee reported that the following health care reform provisions would attack waste and fraud in Medicare and Medicaid (these provisions were proposed by both Democrats, Republicans and President O’Bama):

•  Resources to Fight Fraud and Abuse:  the health care reform includes more than $350 million over the next decade in new funds to fight fraud as for every $1 spent on fighting fraud has delivered $17 in savings in the past (Health Care Fraud and Abuse Control Program).

• Launch Effective Technology to Monitor Medicare and Medicaid for evidence of fraud, waste and abuse.  Data sharing arrangements can create oversight and electronic payments can prevent gaming the system.

•  Swift and Sufficient Penalizing of Fraudulent Activity:  tougher penalties for false or misleading marketing or enrollment of seniors in Medicare Prescription Drug benefit plans and for submitting false applications, claims for payment or for obstructing audits or investigations related to Medicare and Medicaid.
• Enhanced Oversight and Screening to Catch and Punish Fraudulent Providers and Suppliers:  Health care reform will increase background checks, site visits and other enhanced oversight to weed out fraudulent providers of Medicare or Medicaid.  It also includes a national pre-enrollment screening program for institutional providers and places new controls on high risk programs like home health services or durable medical equipment.

• Requires Providers and Suppliers to Adopt a Compliance Program as a Condition of Participation in Medicare and Medicaid:  this will strengthen the Medicare and Medicaid program requirements for providers, suppliers and contractors.

• Negotiate Better Contracts:  Medicare Advantage plans are paid on average 14% more than it costs to provide care through the traditional Medicare program.  These overpayments drain the Medicare trust fund and increase premiums, costing $12 billion per year.  Healthcare reform eliminates these overpayments.

At the National Association for Home Care and Hospice conference this week, Dr. Robert Fazzi presented the results of "The Delta Study".  The study, titled “The Delta Study to Reduce Hospitalizations:  A National Study to Reduce Avoidable Hospitalizations Through Home Care, is the largest study on best practice strategies for reducing avoidable hospitalizations in the history of home care.  It involved more than 800 agencies, most of which were in the top 20% of lowest hospitalization rates in the country.  It was sponsored by Delta Health Technologies and co-sponsored by the National Association for Home Care and Hospice (NAHC).  We will note than when an association sponsors a study, they are looking for results which they hope to be able to use for their benefit.  However, this association did hire an outside firm to conduct the study and the data does include factual information from the Centers for Medicare & Medicaid Services (CMS).  It does leave out information on fraud, but we are providing those facts here, in addition to the study’s information.  Caregiverlist also encourages reporting of any instances of possible senior care fraud to the Office of the Inspector General Hotline.

“As budget cuts are necessary in order to reduce the nation’s debt, spending in healthcare is being scrutinized,” says Dr. Fazzi.  The growth in healthcare costs in the U.S.A. is significantly in Medicare and Medicaid.  Older people want to live, and Medicare pays for their healthcare needs. 

Paul Begala, strategist and commentator, who spoke the last day of the NAHC conference, said his father has survived 4 types of cancer and wants Medicare to pay for all of his healthcare needs.  Even though his father has been a lifelong Republican wanting little government involvement in American’s lives, he now does want the government to pay for unlimited healthcare.  When it comes to healthcare, most seniors want as much of it as possible, said Begala, and they want it to be paid for by the government.  This becomes costly and even more costly when Medicare and Medicaid are not efficiently managed.

Findings from the Delta Study

Healthcare as a Percent of Gross Domestic Product (GDP) in the USA

1970:  7.2%

1990:  12.3%

2005:  15.7%

2010:  17.5%

Meanwhile, home health care agencies and hospitals have grown tremendously during the last decade, providing services paid for by Medicare and Medicaid.

Number of Home Health Care Agencies

2002:  7,000

2009:  10,422

Number of For-Profit Hospitals

2000:  2,863

2009:  6,585

U.S. Senate Committee on Finance Healthcare "Fraud Findings"

$60 Billion Per Year

Medicare patients (age 65 and older) are admitted to the hospital more than 9 million times a year, with 1 in 4 rehospitalized.  This is a 26% rate of rehospitalization.  This results in a cost of $6.2 billion per year, which means reducing hospitalizations by even 1% will deliver significant savings to Medicare and Medicaid costs.

The Delta Study found home care has reduced rehospitalizations from 29% to 26% and saved more than $700 million in hospital costs.  

The health care reform law will require more monitoring to begin for home health care.  For example, the Delta Study also found that only 32.5% of home health agencies used telehealth systems for monitoring visits and care, but for those agencies who did, they were 3 times more likely to be in the top 5% of agencies with reduced rehospitalizations.

In summary, the Delta Study finds that using dashboards to manage systems, with effective leadership, results in better patient results.  This is obviously consistent with how any business in the private sector operates:  manage the numbers in order to manage the business.

Dr. Fazzi says, “We can absolutely reduce rehospitalizations and it will not cost money.”  This will then provide both a cost savings to Medicare and Medicaid.

Another benefit in the new healthcare law, that will benefit everyone who may need senior care at some point in their lives, is the CLASS Act:  Patient Protection and Affordable Care Act.  This act provides benefits similar to long-term care insurance for Americans who participate through a payroll deduction and will receive a benefit estimated at about $75 per day to pay for care needs.

Plan ahead for your own senior care needs by learning about long-term care paid for by Medicare (up to 100 days only, in a nursing home, after a major medical incident), Medicaid (for low-income seniors, with income and asset requirements varying in each state), and learning the daily costs and ratings of nursing homes nationwide.

You may also request a copy of the Delta Study from Delta Health Technologies.

 

SCOOTER Store fraud in reimbursement for Power Wheelchairs

 The SCOOTER Store, which advertises to seniors on television, promising "free" power wheelchairs, was also taking advantage of Medicare's lucrative reimbursement rates for power wheelchairs, even hiring their own medical doctors to approve claims and settling with the Department of Justice by paying $4 million in cash and giving up the right to reimbursement for $43 million in claims.  New rules for power mobility implemented in 2006 by the Department of Health and Human Services Centers for Medicare and Medicaid Services were designed in part to prevent the abuses that resulted in the government’s lawsuit against The SCOOTER Store who also billed the government from $5,000 to $7,000 for power wheelchairs when they were instead delivering cheaper $1,500 scooters to the seniors. The SCOOTER Store still advertises that their representatives will walk a senior through each step of the process of being approved for a wheelchair by Medicare.  Their scooters are manufactured in China.