There are some obvious steps we could take to make sure that state and federal contributions for medical assistance are spent as effectively as possible.
The California Medical Assistance Program (Medi-Cal) provides health care services to eligible low-income persons and families, paid for with a combination of state and federal funds. Medi-Cal spending rose from $28.0 billion in the 2003-04 budget to an estimated $34.2 billion for 2004-05 (source: Governor’s 2005-06 Budget), a 22% increase in one year. To put this number in perspective, $34.2 billion would amount to 35% of all California state expenditures (excluding federal funds) for Fiscal Year 2003-04 (source:
"http://www.dof.ca.gov/HTML/FS_DATA/STAT-ABS/tables/m11.pdf">California Statistical Abstract, Table M11)
and exceeds the total combined expenditures across all categories for the California General Fund for any year before 1988 (source: Governor’s Budget Summary, 2005-06, Schedule 6).
Given these facts, it would seem more people should be paying attention to this story from Dailynews.com:
In a bustling black market trade, unscrupulous medical providers are buying Medi-Cal and Medicare patient identity numbers and using them to get reimbursed for millions of dollars in tests and other services that are never provided, authorities say.
Of $34 billion annually spent by the Medi-Cal program for health care for some 7 million poor Californians, state officials estimate that as much as 40 percent or nearly $14 billion is stolen in fraud.
The identity theft scam involves conspirators using stolen patient information purchased for as little as $100. They submit bills for up to $30,000 to cover tests, prescription medicine, wheelchairs and incontinence supplies which are either never delivered or are received and resold on the black market….
Criminals also forge signatures for diagnoses and drugs, without providing supporting patient complaint histories….A recent case in Burbank highlights the issue. Sofik Nazarian, 47, and Vrej Oganesian, 40, co-owners of The Best Pharmacy and Medical Supply on Glenoaks Boulevard, were arrested July 26 on suspicion of billing Medi-Cal for $375,000 in prescription drugs that were not delivered to patients.
I have always been skeptical of claims that a huge component of state or federal spending could be attributed to pure fraud and eliminated with some easy fix. But in this case, CaliCapia suggests some simple and obvious steps that could make a tremendous difference for eliminating this kind of fraud to the extent that it is prevalent:
There’s some pretty straightforward approaches available, like random audits of incoming bills, database searches to locate businesses that are billing Medi-Cal extensively, but never seem to bill the state employee’s system, drive-bys and drop-ins to verify the business actually exists. In a case we’re familiar with, simply reading the letter from a physician warning them his number was being used fraudulently would have saved a small fortune. Every provider should know that for every charge submitted there is a small, but real, chance that somebody’s going to check with the patient and see if it’s legit, and that check is going to happen next week, not three years from now. This is a problem that’s solvable.
I don’t know how big a contribution such steps could make to the huge fiscal challenges we’re facing at both the state and federal level. But can anyone tell me why measures like these wouldn’t be worth trying?