Funding Hikes to Combat Health Care Fraud Could Pay Off, CBO Says

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Fraud investigators and agency data-miners charged with curbing improper health care payments might take heart from a new Congressional Budget Office report on “program integrity” efforts in Medicare, Medicaid and the Children’s Health Insurance Program.

In a Monday report describing the budgetary impact of anti-fraud efforts by the Justice and Health and Human Services departments, the legislative cost-scoring agency said it has estimated that additional funding for anti-fraud activities “would yield savings that exceed the cost of carrying out those activities.”

Such savings might not always be applied to reducing the federal deficit, CBO cautioned, because of the cost of implementation. But increasing funding for an HHS-Justice Health Care Fraud and Abuse Control Program “would result in reductions in direct spending for health care that exceed the amount invested; that return on investment would generally be realized over several years,” CBO said.

The extent of improper payments in the three major health entitlement programs has not been precisely estimated, CBO noted, though the Centers for Medicare and Medicaid Services is preparing an estimate for release soon. Spending on such fraud prevention has been “limited,” the budget agency said, amounting in fiscal 2014 to “about $1.4 billion, equal to about 0.2 percent of the federal government’s spending for the program’s benefits.”

CBO analyzed program integrity tools such as penalties on deceptive doctors and insurance companies, noting that if future legislation “mandated—without sufficient additional funding—a new enforcement activity of uncertain value that CMS could undertake within its authority under current law, CBO might estimate that the legislation would have no budgetary effect or could increase costs because CMS might have to give up an activity of demonstrated value in favor of a new approach of uncertain value.”

The report continued: “Although CBO does not usually have any basis for determining which activities CMS might forgo to meet the new requirements, it would expect CMS to forgo some high-value activities and some activities of lesser value, possibly resulting in a lower average return on investment, leading to a net increase in costs.”

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