Hatch knocks 'helter-skelter' Medicaid fraud fighting approach

A number of physician groups asked CMS in January to revise the "perverse incentive structure" of the RAC program. Last month, the agency decided to postpone the program's implementation until "later in the year."

"Out of consideration for state operational issues and to ensure states comply with the provisions of the final rule, we have determined that states will not be required to implement their RAC programs by the proposed implementation date of April 1, 2011," said a Feb. 1 CMS bulletin.

Fraud in federal health programs is a major problem for the government, costing tens of billions of dollars a year.

The healthcare reform law made significant changes to the fraud fighting programs, testified Peter Budetti, director of program integrity. These include: 

• Shifting to fraud prevention instead of paying suspicious claims and investigating them later;

• Focusing on bad actors instead of adopting a monolithic approach to fraud fighting;

• Using technology;

• Adopting new performance measures; and

• Creating public-private partnerships.

Other changes in the law include new ways to screen healthcare providers before they're accepted into the program, and the creation of a single database for Medicare billing information to help HHS and the Justice Department work together to identify fraudsters. 

The Obama administration says the new tools have already had a real impact, helping HHS recover a record $4 billion in 2010.

Still, lawmakers on both sides of the aisle said HHS should do much more.

Finance Chairman Max Baucus (D-Mont.) testily pressed HHS's Inspector General, Daniel Levinson, for an estimate of how much fraud costs. When Levinson was unable to offer specifics — "it's a significant dollar figure," he said — Baucus requested that he submit quarterly reports to the committee with specific benchmarks.