Eliminate Fraud First in Health Reform

September 17, 2009

By Newt Gingrich and Jim Frogue The Daily Tribune News

Fuzzy math is back.

As Congress begins its work on health reform this week, President Obama has vowed to veto any plan that adds one dime to the $2 trillion federal deficit.

The President pledged to pay for his extensive health care reform -- including providing coverage for 17 million uninsured -- by eliminating waste and fraud in the current federal system. The American people are asking how those numbers would add up.

We at the Center for Health Transformation in our book "Stop Paying the Crooks" have instead called for an end to fraud and abuse in Medicare and Medicaid which costs taxpayers between $70 and $120 billion annually. That would be the most effective route to finding the revenue needed to tackle health reform.

It would also help restore Americans' confidence in their government. If we can't weed out fraud in the current system, elected officials can't expect taxpayers to stand behind new health care policies, particularly a new government-run "public option."

But to be clear, fraud and abuse that we know are rampant are something quite different than the "waste" the President cites. Let's look at the difference.

Waste is when a doctor has to order new tests because the results of a recent exam are not available electronically. Many Americans, especially seniors, however, fear the President's attempt to "eliminate waste" will translate into healthcare rationing.

Eliminating fraud, a criminal enterprise and an outright scamming of the taxpayers, is where we can find big money. Here is a small sampling of blatant theft in our current, government-run healthcare programs:

* A Russian organized crime outfit was recently prosecuted for operating a Pennsylvania hospice scam which cost Medicare $8.5 million.

* A Brooklyn dentist was caught defrauding Medicaid after billing the system for 991 procedures in one day.

* Authorities discovered that 55 men earned Medicaid maternity benefits in the state of New York.

* In 2008, the Inspector General found Medicare was defrauded $2.8 billion for durable medical equipment including oxygen supplies and motorized wheelchairs.

* One man was convicted of defrauding Medicare $5.5 million after using a utility closet as an address.

* A ring of Nigerians, newly-admitted to the United States, were busted for bilking Medicare for billing for 400 wheelchairs at $4,000 each.

Tackling fraud is particularly important considering an estimated 51 million baby boomers are expected to join the Medicare rolls by 2019. Think what would happen if we add another government healthcare program -- optional or not. Without better controls, more bureaucracy creates the opportunity for more theft.

In Medicare alone, an estimated $60 billion is lost annually on fraud and abuse, according to Iowa Senator Charles Grassley. About $460 billion a year is spent in the Medicare program. Compare this to charge card companies, for example, where fraud is one-tenth of 1 percent. Or compare it to Bernard Madoff, the New York financier, who defrauded his investors almost $50 million in an elaborate ponzi scheme.

Before embarking on any changes that cost the Treasury money, the President and Congress should be eager to hold onto the money it already has in its health care programs going out the door every day to criminals. For example, they could outsource the authentication of new suppliers to Medicare to Visa or MasterCard as those companies actually know what they are doing. It could also be far more transparent with taxpayers about where our federal dollars are being spent on health care programs.

Right now, the President and Congress are suffering a crisis of confidence. We have a situation of fuzzy math all over again. In no way does anyone with a straight face believe this Administration can find enough savings from waste in our current federal health programs to fund large-scale plans, including coverage for the uninsured.

Fraud is an enormous fleecing of taxpayers and their hard-earned money. The more the American people begin to ask, "How do we pay for health care?" the more they are going to demand accountability of what is already spent on healthcare. Particularly as they begin to realize so much of it is stolen by con artists who find government-run programs such an easy target.

Former Speaker of the U.S. House of Representatives, Newt Gingrich is founder of the Center for Health Transformation. Frogue is Vice President and Director of State Policy at the Center and editor of "Stop Paying the Crooks: Solutions to End the Fraud that Threaten Your Healthcare."

Copyright © 2009. The Daily Tribune News.