President Clinton Monday proposed a set of legislative changes to Medicare that could reduce overpayments and fraud in the program by $2 billion over the next five years.
Under Clinton's proposal, Congress would allow the Health Care Financing Administration, which runs Medicare, to pay lower rates for prescription medications. Under current law, HCFA pays as much as 10 times more than the private sector pays for drugs.
The proposal would also impose reporting requirements on private insurers that would reduce opportunities for overbilling and force Medicare contractors to be more vigilant in the fight against fraud.
"The private-sector health care contractors that are responsible for fighting waste, fraud and abuse too often are not living up to their responsibilities," Clinton said. "We recently learned that one-fourth of those contractors have never reported a single case of fraud."
The Health and Human Services Department inspector general estimates that improper Medicare payments total about $20 billion a year. The improper payments primarily include billings for services that were medically unnecessary, not properly documented, or not covered by Medicare. Health care providers also sometimes bill Medicare for the wrong procedures by entering incorrect codes on claims forms, the inspector general found.
Clinton proposed similar legislative changes last year.
Congress and the Clinton administration have been struggling with how to deal with Medicare fraud for years. Legislation passed in 1996 helped the government recover $1.2 billion from fraudulent health care providers in fiscal 1997. Congress appropriated more than $100 million in 1998 to combat Medicare fraud.
This spring, HCFA will hire special fraud-hunting contractors to help root out improper payments.
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