Dwight Eisenhower, an accomplished general and our 34th President, gave a famous speech three days prior to the end of his presidency warning of the “military industrial complex”. Eisenhower felt that the topic was of such importance that he worked on the speech off and on for a period of two years prior to delivery.
Many of the things that we were warned about almost 50 years ago have unfortunately come to pass, but what I am struck by is the fact that Eisenhower was focusing solely on military matters, upon which, as a retired general with the then-recent historical gravitas of being credited with directing the Allied victory in World War II, he was eminently qualified to opine. When I see the changes inflicted upon the United States in the last 50 years, I have come to the conclusion that the warnings could have been expanded to the entire landscape of American business.
Slowly, an unchallenged orthodoxy has developed in our national discourse that states in unwavering fashion that private industry can accomplish all tasks, while at the same time self-regulating, better and cheaper than a government entity. What I’m always struck by when I hear someone state this is that no one asks the person in follow-up to offer a single example that proves this theory to be true. In fact, when specific instances of private industry waste of governmental program funds are illustrated for the many congregants of the Church of Industry, it only appears to strengthen their belief system.
Being on the administrative side of health care, and facing the current audit climate, I am more than happy to offer a glaring example of how this idea can be proved patently false, and I do so knowing the response it will elicit from the high priests of the orthodoxy. I put forth as evidence the entire system of claims payment for the Medicare Program.
The Obama Administration is focusing on fraud in the Medicare program as a focal point to reducing costs, and I am completely in support of this. Having said that, with the current model of “pay-and-chase” embraced by the program, fraud can only be detected if the criminally desired financial transaction is completed. At that point, mere discovery becomes a “maybe-maybe not” proposition.
At the root of all problems in the Medicare program is the fact that bad claims are paid. It doesn’t seem to matter what guidance is provided by CMS. Claims that shouldn’t have any hope of passing the most rudimentary tests of probability are paid often and repeatedly.
It is at this point that I point out the obvious to everyone inside and outside the medical reimbursement field; the Medicare Administrative Contractors are private companies, they are doing an abysmal front line job of upholding the economic integrity of the Medicare program and in doing so are making a killing at the public trough. For your reading and analytical enjoyment, I now bring forth a wrinkle that you’ve been programmed not to expect. I can actually provide you with a credible example.
In the last week, I came across a story regarding an OIG report that confirmed what everyone in our industry with two eyes and triple-digit IQ’s already knew. When it comes to fraud perpetrated against the Medicare program, no other area of the country does it like Miami-Dade County in Florida. The OIG report was specific to outpatient therapy services being more than three times the national average, but as someone who is dialed into the industry, not a week goes by where someone in Florida is busted for either Medicare or Medicaid fraud. Durable medical equipment, particularly power mobility devices, are a large source of fraud in this part of the country of late, but that is just one of many examples.
With the numerous societal references about just how many elderly citizens live and drive (slowly) in the State of Florida, one would expect that controlling Medicare spending and claims adjudication in this particular environment would be at the top of the list. Sadly, not so much.
Let’s take a look at the Medicare Administrative Contractor in Florida, which is First Coast Service Options (FCSO). This subsidiary of Blue Cross and Blue Shield of Florida (a “non-profit” entity with $2 billion in revenue in 2009) has been in charge of Medicare claims processing for Florida since 1966, despite the enormous amount of fraud that surrounds them. In the Keystone Kops production that continues to be the Medicare Contracting Reform Project, FCSO was re-awarded the MAC contract for Florida (along with Puerto Rico and the U.S. Virgin Islands). This was done without so much as either a redrawing of the borders of Jurisdiction 9 or a serious competing bid. This area is expected to be placed up for competitive bidding again in September of 2012.
Internalize that thought for a moment. The entity cutting the checks for fraudulent claims in the area of the country easily identified as the highest target-rich environment for criminal activity against the Medicare program was handed another four years as the keeper of the regional Medicare checkbook with virtually no questions asked.
Now let’s take the example one step further. In order to reign in spending caused by the rank incompetence of an entrenched regional contractor, the solution brought forth 5 years ago is to hire yet more private industry contractors to chase the over-payments retroactively, and thus the RACs were born.
The jury is still out regarding the effectiveness of the RACs as improper payment control entities, with the final numbers from the Demonstration Project leaning heavily to “ineffective”, but the focus of containing Medicare fraud to this point is avoiding the elephants in the room that are the MACs. I find it very hard to digest the idea that when improper payments from Medicare alone are estimated at $36 billion for 2009 ($12 billion of which was caused by Medicare Advantage plans, but that’s another topic) that the Medicare Administrative Contractors are getting a free pass for issuing the checks.
Privatization for privatization’s sake has consequences. A few months from now, a shouting match will erupt about raising the national debt ceiling, and the first salvos of that heated argument are being lobbed by all sides at Social Security as the root of all deficit evils. In actuality, Medicare is exponentially more damaging to the nation’s financial health than Social Security. Medicare spending can be controlled, but up to this point, the front line gatekeepers of Medicare funds, the MACs, have escaped accountability for the damage they cause to the Medicare program, and by extension the country as a whole. It is neither unorthodox nor heretical to suggest that the time has come to determine whether the privatization of Medicare claims payment needs to end.