CMS Proposes $10 Million Bounty on Medicare Scammers

April 25, 2013

The Centers for Medicare & Medicaid Services (CMS) has proposed increasing its reward for reporting Medicare fraud from a maximum $1000 to nearly $10 million in a bold move to encourage more seniors to tip off the government about crooked healthcare providers and suppliers.

The Obama administration has stepped up efforts to prosecute Medicare and Medicaid chicanery ranging from fictitious office visits to power wheelchairs for the able-bodied, and its campaign recovered a record $4.2 billion in fiscal 2012 as a result. However, only a tiny fraction of that amount represents fraudulent activity reported by tipsters through Medicare's Incentive Reward Program (IRP). Since its inception in 1998, through 2012, the program has recovered less than $3.5 million while paying out less than $16,000 in rewards, according to CMS.

CMS believes IRP could receive more leads on fraud — and garner far more in criminal fines, civil settlements, forfeitures, and other actions — if the bounty were higher. Right now, CMS offers a reward equal to 10% of fraud collections, but not to exceed $1000, to anyone who passes on information that leads to the recovery of ill-gotten Medicare payments. Under proposed regulations that CMS released on April 24, the reward would be 15% of the recovered amount up to $66 million, for a maximum reward of $9.9 million.

In the proposed rule, CMS noted that the new bounty formula is modeled roughly after one used by the Internal Revenue Service (IRS) to reward individuals who report tax fraud. Between 2007 and 2012, the IRS paid out $193 million in rewards for almost $1.6 billion in recoveries.

HHS Pumping More Money Into Senior Medicare Patrol

The plan to raise the bounty on Medicare scammers coincides with other federal efforts to persuade seniors to report suspicious activity. In March 2012, CMS began posting online a new, easy-to-read version of its explanation-of-benefit statement or "Medicare Summary Notice (MSN)" that instructs beneficiaries on how to spot fraud. This year, CMS will begin mailing these new MSNs to beneficiaries every quarter.

In addition, the US Department of Health & Human Services (HHS) is seeking to expand the so-called Senior Medicare Patrol, a program in which trained volunteers teach beneficiaries how to recognize Medicare fraud — on those MSNs, for example. An HHS agency called the Administration for Community Living (ACL) funds Senior Medicare Patrol projects in each state as well as the District of Columbia, Puerto Rico, Guam, and the Virgin Islands. In fiscal 2011, the last year for which information is available, almost 5700 volunteers educated 430,000 beneficiaries.

The 54 Senior Medicare Patrol projects can apply for an additional $7.3 million in ACL funding to reach more beneficiaries, according to an HHS press release issued yesterday.

The proposed CMS regulations to increase the fraudster bounty are scheduled for official publication in the Federal Register on April 29. CMS will accept comments on them for 60 days from that date and then issue a final version of the regulations. The proposed regulations explain how the public can submit comments.


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