Fraud hunt expected to save Medicare, Medicaid $25 billion

Washington -- Federal health investigations and other anti-fraud activities could produce $25 billion in Medicare and Medicaid savings in 2011, according to a November report from the Dept. of Health and Human Services Office of Inspector General.

The OIG expects to recover $5.2 billion, which includes $627.8 million from audits and $4.6 billion from investigations. An additional $19.8 billion in savings will come from legislation, regulations and administrative actions supported by the inspector general.

The semiannual report to Congress lists the OIG's accomplishments, highlighting investigations involving health fraud, improper payments and waste over the last year. The investigative arm of HHS has integrated new technology to improve its effectiveness and maximize a return on investment to taxpayers, Inspector General Daniel Levinson said.

"OIG realizes that technology has tremendous potential to enhance our program integrity capabilities," he said. "OIG is using data mining, predictive analytics, trend evaluation and modeling to better analyze and target the oversight of HHS programs."

The OIG Medicare Fraud Strike Force has charged 283 people, obtained 184 convictions and recovered $225 million from October 2010 through September 2011, the report said. OIG highlighted a 50-year prison sentence, the longest ever stemming from a strike force investigation, for a Florida man for his role in a Medicare fraud scheme involving assisted living facilities, halfway houses and patient brokers.

The report also summarizes previous investigations involving Medicare billing and policy. It notes that Medicare contractors have overpaid physicians about $28.8 million because they had used the wrong place of service on claims in 2008 and 2009. Doctors had written nonfacility place-of-service codes instead of facility codes, which account for less overhead compared with the nonfacility environment, the OIG said.

To address this issue, the inspector general has recommended strengthening coding education, developing a system that identifies physicians prone to coding mistakes and recovering any overpayment amounts.

Another 2011 investigation found that medical records did not support $38 million for physician interpretations of diagnostic radiology services in emergency departments in 2008, the report said. The Medicare program paid for physician interpretations of computed tomography, magnetic resonance imaging and x-ray services even though the services lacked physicians' orders.

The OIG has recommended that hospitals adopt uniform policies to address the issue.

The report also noted that Medicare policy has permitted duplicate pay for physician therapy services during home health visits. The OIG has recommended that Medicare eliminate the duplication beginning in 2014, when home health payments will be rebased.