The Center for Public Integrity

Medicare spent $47.9 billion in one year for health care treatments and equipment that were not medically necessary, miscoded by providers, or lacked proper documentation.

Only a small amount of the $47.9 billion in improper payments reported in 2010 was due to fraud, according to Daniel Levinson, inspector general for the Health and Human Services Department.

Some 94 percent of the improper payments were made to durable medical equipment suppliers, hospitals, skilled nursing facilities, home health agencies and physicians, Levinson told a U.S. House Oversight and Government Reform subcommittee on Thursday.

For example, 57 percent of claims for wheelchairs were either not medically necessary or did not have the required documentation, he said.  As a result, Medicare paid $95 million over a six-month period for wheelchairs that the government insurance plan should not have paid.

Additionally, 60 percent of claims submitted to Medicare for power wheelchairs were not documented properly, resulting in $112 million in improper payments over six months, he said.

The inspector general said his office plans to examine a group of what he described as “error-prone” providers who have submitted a number of incorrect claims in the past four years. The internal watchdog is also taking a closer look at bills submitted by power wheelchair providers, nursing homes, home health care agencies and hospitals to prevent incorrect payments, he said.

The American Academy of Family Physicians this week declined to drop out of a little-known committee that wields powerful influence over Medicare payment to doctors,  despite pressure from some of its members to leave the group.

Late last month, Dr. Roland Goertz, the president of the academy, said its board planned to discuss giving up membership in the American Medical Association/Specialty Society Relative Value Update Committee, or RUC, a committee the family physicians’ group has long criticized for under-valuing the work of family doctors. Goertz said then the RUC issue could be decided in a board vote.

In an interview Friday, however, Goertz said the board met this week and was unable to reach a decision about its participation in the RUC. He said the issue is still on the table, but was unsure of the timetable for resolving it.

“AAFP's continued participation in the RUC is a serious decision that cannot be made lightly,” Goertz said. “We want to make sure we have investigated every conceivable impact on family medicine and primary care physicians and the patients we serve.”

The RUC is a group of 29 physicians nominated by medical specialty societies that advises the Centers for Medicare & Medicaid Services (CMS) on the relative values of medical procedures. Technically, the group simply recommends procedure values, but CMS accepts the RUC’s recommendations more than 90 percent of the time, which has led to criticism that the arrangement is a conflict of interest  allowing physicians a key role in determining what Medicare pays them. The workings of the RUC and the controversy over its practices were detailed in a Center for Public Integrity piece last November.

Pay is at root of the conflict between family physicians and the RUC.

Efforts to open Medicare billing records by doctors and other medical providers are gathering steam in the Senate. Sen. Dick Durbin, D-Ill., has introduced the third bill this session calling for a wide release Medicare billing data, a move vigorously opposed by the American Medical Association.

The Durbin bill, S-856, the Medicare Spending Transparency Act of 2011, differs from two bills introduced earlier this session by Sen. Charles Grassley, R-Iowa, and jointly by Grassley and Sen. Ron Wyden, D-Ore. Durbin’s bill would require Centers for Medicare & Medicaid Services to create on its website a list of Medicare service providers and suppliers and detailed aggregate data of their billing.

The bill would require CMS to publish the number of patients a doctor saw during the previous year, the average number of billing codes a doctor filed for each patient encounter, and how much they were paid by Medicare. It would also require CMS to publish the top 50 procedure billing codes each provider billed Medicare and the top 50 diagnosis and procedure code pairs they used. The bill would also make raw Medicare billing data available to “qualified individuals and groups.”

Public access to Medicare billing data would be a breakthrough for patients, said Rosemary Gibson, co-author of “The Treatment Trap,” a book critical of medical care overuse. “If you have someone living in a town and they see their hospital is the top hospital that bills for back surgery, they might think twice about if that hospital is performing unnecessary services,” Gibson said. “The data is out there and nobody is acting on it. The public is bearing the consequences.”

Journalists at iWatch News are conducting an investigation into the nation's Medicare system, highlighting some of the questionable spending that occurs in the program through our ongoing series, Manipulating Medicare.

To get a better understanding of the data we’ve obtained jointly with The Wall Street Journal, reporter Fred Schulte is interested in learning more about the process involved for patients who see doctors for the first time after being enrolled in Medicare.

Have you seen a new doctor recently? Tell us more about your experience.

Your insights will help us understand some of the billing practices and procedures for doctors who are seeing new Medicare patients, and will guide our reporting for a new story. The information you share will remain confidential to our newsroom and our trusted partners within the Public Insight Network.

Interested in learning more about the Public Insight Network? Read about how you can assist award-winning investigative journalists by sharing your expertise. If you have any questions, email Cole Goins: cgoins@publicintegrity.org.

A little-known but powerful American Medical Association committee that strongly influences how much Medicare pays doctors is catching heat both from lawmakers and family physicians who believe the panel is not representing their interests.  

In late March, Rep. Jim McDermott, D-Wash., introduced legislation targeting the American Medical Association/Specialty Society Relative Value Scale Update Committee, or RUC, a group of doctors that the Centers for Medicare and Medicaid Services (CMS) has relied on since 1991 for information it uses to price Medicare payments to physicians.

Critics of the close industry-government partnership have said that since CMS accepts more than 90 percent of the RUC’s medical procedure value recommendations, the arrangement represents a conflict of interest that essentially allows a physician interest group to set the prices its members receive from Medicare. The workings of the RUC and the controversy over its practices were detailed in a Center for Public Integrity piece last November.

McDermott’s bill, H.R. 1256, the Medicare Physician Payment Transparency and Assessment Act of 2011, would reduce the AMA committee’s influence by requiring CMS to use independent contractors to identify physician services that are believed to be incorrectly valued. The bill would also require an annual review of medical procedures that are potentially over or undervalued.

Speaking in March at a House Ways and Means health subcommittee hearing,  McDermott,  a psychiatrist himself, slammed the RUC, calling it  the “least known committee in the medical industrial complex,” and questioning why a group of doctors should be “setting their own fees.”  

Two senators – one Democrat and one Republican – have introduced legislation that would open Medicare billing records from doctors and other health providers to increased public and media scrutiny.

The Medicare Data Access for Transparency and Accountability Act, was introduced Thursday by Sens. Ron Wyden, D-Ore., and Charles Grassley, R-Iowa, who are both  members of the Senate Finance Committee. The bill would require the U.S. Department of Health and Human Services (HHS) to create a free searchable Medicare payment database the public can use to track billing by health care providers.

The bill also clarifies that Medicare payments to doctors and medical suppliers would not be exempt from provisions of the Freedom of Information Act.

Grassley spokeswoman Jill Gerber said the measure is a response to reporting on Medicare fraud, waste and abuse by the Center for Public Integrity and The Wall Street Journal, which together acquired a limited portion of Medicare billing data from the Centers for Medicare and Medicaid Services, a component of HHS.

“Medicare is a $500 billion program with billions of dollars going out in error each year,” Grassley said in a statement. “The bad actors are getting bigger and bolder all the time. They’re able to stay out of law enforcement’s reach too often. It’s time to try new things. The bad actors might be dissuaded if they knew their actions were subject to the light of day.”

In 2009, the Center for Public Integrity sued the CMS for access to Medicare billing information. Partnering with The Wall Street Journal, the Center for Public Integrity subsequently acquired a sampling of eight years of the data.