Ohio, Chicago, Maine, Miami, Mississippi, and Detroit newspapers all published similar stories last week about blatant Medicare scams that make you wonder why the country’s not deeper in debt.

None of these stories were identical, but there was a common thread that is becoming more and more common:   ‘healthcare professionals’ stealing taxpayer money. In suburban Chicago, a surgeon created false reports to receive higher Medicare reimbursements. In Mississippi, a doctor and two of her employees billed for additional chemotherapy treatments their cancer patients hadn’t received. In Detroit, a physician billed Medicare for services provided to dead patients, an eerily similar fraud committed by a Canton, Ohio doctor. The stories go on and on; it makes one shudder to think about the number of frauds that haven’t been uncovered yet.

While these schemes undermine Medicare and our entire healthcare system, they represent a mere sliver of the total fraud in the Medicare system. Unfortunately, the criminals are exploiting a payment system designed to be exploited, affectionately called ‘Pay-and-Chase’.

In the Pay-and-Chase model, Medicare doesn’t verify the patient’s identity, the service provider’s identity or even that a service was actually provided before sending out a payment. True to its name, Medicare ‘Pays’ the bills first and then ‘Chases’ the criminals once they think they’ve been hoodwinked. The only problem is that most of the fraudsters are smart enough disappear into the night once they’ve looted Medicare (unlike the hapless, hubristic doctors noted above).

Needless to say, this dynamic makes it exceptionally easy to defraud the Medicare program. Coupled with the easy access to Medicare provider numbers, criminals of all sorts are able to create hundreds of fake identities   and a correspondingly bewildering number of fictional medical practices. Astute criminals can bill Medicare for fake services rendered to fake patients by fake providers and get real money that should be going to provide real care to real people.

Estimated to cost taxpayers between $60 - $100 billion a year, eradicating even a fraction of the Medicare fraud plaguing this country could help put millions of Americans back to work.
Thankfully, there is a very simple solution to this very expensive problem.  By verifying Medicare providers’ identity and the services they provide before paying the bill, government can take a giant step towards stopping fraudulent payments saving American taxpayers tens of billions of dollars every year. For more information on how smart card technologies can inexpensively facilitate verifying providers and services provided, please click here.