Stopping Abusive And Unnecessary Medicare Payments

At a time of high federal budget deficits and unsustainable growth in health care costs, there is general agreement on the need to eliminate unnecessary spending in health care--and among the leading candidates are fraud and abuse. Despite ongoing, concerted efforts, making meaningful inroads has not been easy. "Fraud" refers to illegal activities in which someone gets something of value without having to pay for it or earn it, such as kickbacks or billing for services that were not provided. "Abuse" occurs when a provider or supplier bends rules or doesn't follow good medical practices, resulting in unnecessary costs or improper payments. Examples include the over-use of services or the providing of unnecessary tests. (Another area, "waste," refers to health care that is not effective, and will be the subject of a separate Health Policy Brief.) Endowed with new powers under the Affordable Care Act and the Small Business Jobs Act of 2010, the Centers for Medicare and Medicaid Services (CMS) has been adopting new tools to curb fraud and abuse in the Medicare and Medicaid programs. The new approach amounts to a paradigm shift from the earlier model, in which CMS paid providers first, then sought to chase down fraud and abuse after the fact--a process known as "pay and chase." This policy brief focuses on eliminating fraud and abuse in Medicare and Medicaid and explores the challenges involved in putting the new tools into place.