The REAL Costs of Health Fraud

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Carol S. Miller

By Carol Miller RN MBA

The Cost of Health Fraud

There is no question that real fraud, waste and abuse exists in healthcare today. The Office of Inspector General of the Department of Health and Human Services (HHS) saved American taxpayers a record $21 billion a dozen years ago, according to Inspector General Janet Rehnquist. Savings were achieved through an intensive and continuing crackdown on waste, fraud and abuse in Medicare and over 300 other HHS programs for which the Office of Inspector General (OIG) has oversight responsibility.

More recently, according to the Centers for Medicare and Medicaid Services [CMS] and under the tenure of Eric Himpton Holder, Jr., 82nd Attorney General of the United States and more recently Loretta Lynch, Recovery Asset Contractors [RACs] collected almost $1-B in improper payments during their beta testing period in 2009-10.

Of these payments; 96% were over-payments, 4% were under-payments; and 77% of providers failed to appeal, 7% appealed successfully and 15% appealed unsuccessfully.

And, by Fiscal Year 2016, recovery auditors collectively identified and corrected more than 1,532,249 claims for improper payments, which resulted in more than $3.75 billion dollars in improper payments being corrected. The total corrections identified include more than $3.65 billion in overpayments collected and $102.4 million in underpayments repaid to providers and suppliers.




After taking into consideration all fees, costs, and first level appeals, the Medicare FFS Recovery Audit Program returned over $3.0 billion to the Medicare Trust Funds.

More Costs

These savings did not take into account program costs and administrative expenses incurred at the third and fourth levels of appeal (Office of Medicare Hearings and Appeals (OMHA) and Medicare Appeals Council within the Departmental Appeals Board (DAB), respectively), as these components do not receive Recovery Audit Program funding for those appeals.


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2 Responses

  1. REAL COSTS: How Much Does A Hip Or Knee Replacement Cost?

    WSJ: Average cost of hip or knee replacement-surgery package

    1. Long-term hospital care – $74,000
    2. Inpatient rehab facility – $41,000
    3. Skilled-nursing facility – $36,000
    4. Home health care – $20,000
    5. Home – $17,000
    6. Other – $32,000

    Source: Remedy Partners


  2. New Medicare Cards Offer Greater Protection to More than 57.7 Million Americans

    The Centers for Medicare & Medicaid Services (CMS) is readying a fraud prevention initiative that removes Social Security numbers from Medicare cards to help combat identity theft, and safeguard taxpayer dollars. The new cards will use a unique, randomly-assigned number called a Medicare Beneficiary Identifier (MBI), to replace the Social Security-based Health Insurance Claim Number (HICN) currently used on the Medicare card.

    CMS will begin mailing new cards in April 2018 and will meet the congressional deadline for replacing all Medicare cards by April 2019. Providers and beneficiaries will both be able to use secure look up tools that will support quick access to MBIs when they need them. There will also be a 21-month transition period where providers will be able to use either the MBI or the HICN, further easing the transition.

    Source: CMS [5/30/17]

    Editor: Related SSN:


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