Friday, June 26, 2015

Even When The Feds Get It Right They Still Get It Wrong

Even when the Federal government and the Washington political class do something good for taxpayers, they cannot help themselves but step right back into another screw up that overwhelms whatever good their first good deed did. Consider the recent announcement of good news that the Feds had busted 46 doctors and other healthcare professionals across the country for bilking the government, and the American taxpayer, out of $712 million.

Details of the fraud and bust include the following, as reported by CNN:
  • This was the largest Medicare bust ever.
  • In total, 243 people were arrested in 17 cities for Medicare billing of $712 million worth of patient care that was either unnecessary or never given.
  • In one case, owners of a mental health facility in Miami billed tens of millions of dollars for psychotherapy sessions based on treatment that was little more than moving patients to different locations. 
  • Four other people are charged for mass-marketing a talking glucose monitor, shipping the monitors to Medicare patients across the country who didn't need or order them, and then billing Medicare for the devices to the tune of more than $22 million.
  • Health care providers got in on the scam by paying kickbacks to fraudsters who got their hands on Medicare patients' personal information which they would then use to bill Medicare for care never given. 
  • These fraudsters often got the patient information by preying on the down and out in society by canvassing places like homeless shelters and soup kitchens.
  • A Los Angeles doctor allegedly billed $23 million for 1,000 power wheelchairs and home health services that were not medically necessary and often not provided. 
  • In a Florida case, a health care provider received $1.6 million from Medicare for prescription drugs that were never purchased and never given.
  • "In these cases, we followed the money and found criminals who were attracted to doctors offices, clinics, hospitals and nursing homes in search of what they viewed as an ATM," said FBI Director James B. Comey.
  • The DOJ's Medicare Fraud Strike Force team led the investigations which since 2007 it has charged 2,300 people who have falsely billed the Medicare program for more than $7 billion. 
  • In recent years, the Strike Force team has expanded from two cities to nine.
Great news, criminals ripping off the American taxpayer might finally be brought to justice. But let’s consider some of the downside to this whole, less than comprehensive law enforcement effort:
  • These people were arrested for ripping off $712 million. However, there is no mention of how much of that $712 million will actually be recovered, much of it is likely to already have been spent and is gone forever.
  • We have previously reported many times that credible, nonpartisan analyses and sources estimate that Medicare loses anywhere from $40 to $60 billion a year to waste and criminal activity. Thus, if we assume that the $712 million was all ripped off in one year, unlikely, than the recovery rate from the “biggest bust in Medicare history” is a measly 1.8% on $40 billion or 1.2% on $60 billion.
  • Since the $712 million was probably obtained over a period of years, then the recovery rate is highly likely to be well below 1%. And this is the biggest bust in history, meaning other busts likely got far less.
  • The strike force has been in operation for nine years, 2007 to 2015 and has busted criminals who had illegally collected $7 billion in Medicare funds. If we assume the lower end of annual Medicare ripoffs and waste is $40 billion, nine years worth of such behavior is about $360 billion. That means the task force has recovered a staggering...only 1.9% of the criminal activity and waste.
Look, I am happy that hundreds of people were busted and hundreds of millions of dollars were identified as stolen (not recovered). If some of that money can be recovered and funneled to reducing the national debt, helping the homeless and unemployed, feeding the hungry, then great. 

But come on, a measly 1.9% rate for nine years. Seems the taxpayers are still being abused by a government that cannot get out of its own way when it comes to wasting taxpayer wealth. 

But the story somehow gets a little worse. Even if the Feds can collect the $712 million that these 243 people stole, it will get wiped out by the embarrassing findings of a recent inspector general report relative to Obama Care. That Federal audit report found that the Department of Health and Human Services cannot find out what happened to about $2.8 billion of Obama Care subsidies that have already been paid out.

This should not come as a surprise. The entire Obama Care data processing effort has been a disaster from day one. The online exchanges failed to work properly for weeks. The systems security features were almost non-existent, subjecting millions of Americans to identity theft risk. The interface between the exchanges and insurance companies were chaotic.

Thus, we should not be surprised when the inspector general’s report shows that those systems now cannot track almost $3 billion in just the first four months into the Obama Care world. Apparently the whole system was launched without finishing and checking the accuracy of the back end processes that would communicate between the Federal exchange and insurance companies. 

The audit went onto say that HHS did not have an internal system to ensure that subsidies went to the right enrollees, or in the correct amounts: “[The Centers for Medicare and Medicaid Services] CMS’s internal controls did not effectively ensure the accuracy of nearly $2.8 billion in aggregate financial assistance payments made to insurance companies under the Affordable Care Act during the first four months that these payments were made,” the inspector general said. Furthermore, “CMS’s (HHS) system of internal controls could not ensure that CMS made correct financial assistance payments.” 

Other findings in the report show that HHS did not have a process in place at the time money was being paid out to “prevent or detect any possible substantial errors” in Obama Care subsidy payments and could not “ensure that financial assistance payments were made on behalf of confirmed enrollees and in the correct amounts.”

Great, the Justice Department may have recovered upwards of $712 million that were likely stolen over a period of years from HHS’s Medicare program and then HHS goes out and likely lost almost $3 billion, in just four months, by being totally inept when it comes to Obama Care subsidies. Even when the Federal government and the political class that operate it give us good news they still manage to overwhelm us with bad news.

There are only two solutions to this incredible criminal waste and theft of taxpayer wealth, a short term and long term solution:

- Short Term: Nine years after trying to track down criminals that are stealing from taxpayers via the Federal government and it is safe to say that hundreds of billions of dollars went unaccounted for and the recovery rate is incredibly small, less than 2%. Thus the better short term solution is to offer rewards for anyone who turns in anyone who is scamming the government. Give them a 10% reward of what ever is recovered from their tip.

Police departments have been using this tip process for decades to have the community help them apprehend street criminals. Why not use the same theory to apprehend white collar criminals who rip off taxpayers? Get the whole citizenry involved with the potential of a large financial reward, a cut of what money is recovered. Waiting nine years for the task force to put a substantial dent in the criminal activity is not working, time to try something new and creative.

- Long term: this is just another example of a government beast that is out of control and totally dysfunctional. As we have pointed out a number of times, the Federal government today is no different than Jabba The Hutt from the Star Wars stories. Jabba was a large, formless blob that fulfilled no worthwhile function but who consumed massive amounts of resources via tyranny. 

Severely downsize the Federal government and have it work on far fewer efforts that might actually work rather than what they do today, work on way too many efforts that are either not needed, too expensive, are criminally infected, or plain just do not work.

Because even when the Federal government gets it right (finds the criminals involved in $712 million worth of fraud over years), it still gets it wrong (loses almost $3 billion in just four months).

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