$70 billion in health care fraud foreseen

May 07, 1992|By Nelson Schwartz | Nelson Schwartz,Contributing Writer

WASHINGTON -- Health care fraud and abuse could cost Americans $70 billion this year and may cost even more in the coming decade unless Congress takes steps to control it, according to a government study to be made public at a hearing on Capitol Hill today.

A draft copy of the report, prepared by the General Accounting Office (GAO), also found examples of private companies and doctors who submitted phony documents and ordered unnecessary tests, collecting billions in fees from private insurance companies as well as public programs like Medicare and Medicaid.

"Health care fraud and abuse, left uncurbed, will make the

savings and loan crisis look like a penny-ante scandal by the year 2000," said Rep. Ted Weiss, a New York Democrat who chairs the Government Operations subcommittee, which is holding today's hearing.

Mr. Weiss, who requested the report last September, wants to create a national commission to investigate fraud cases and make recommendations to Congress, one of the GAO report's (( suggestions.

In the last several years, health care has become one of the country's leading political issues, and medical costs are expected to eat up a larger and larger portion of the federal budget in the future.

The GAO warns that that health care costs will exceed $1 trillion dollars or 15 percent of the gross national product by 1995, and fraudulent claims could total at least $100 billion. Roughly 40 percent of health care costs are paid through public programs.

"The costs of fraud in Medicare and Medicaid are passed on to taxpayers and the costs of fraud in the private insurance industry are passed on to consumers," said one congressional aide on the investigation. "Americans get hit twice."

The study cited several cases of illegal billing, including a treatment center in New York that stole more than $16 million from the Medicaid program and programmed its computer to generate thousands of phony claims. Another case involved a California company that operated under 600 different names and made more than $1 billion on unnecessary laboratory tests.

Little of the money has been recovered so far though the company's owners have been indicted.

The report states that, while the cost of false claims is growing, safeguards are weak, and fraud is hard to detect. There is little collaboration among insurance companies, it says, and "increased cooperation is fraught with privacy concerns and complicated by incompatible claims data." The report concludes that without more coordination between the insurance industry, public programs like Medicare, and law enforcement agencies, stamping out fraud will be impossible.

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