Feds Focus on Fraud in FY 2011 Budget Proposal


The Obama administration wants to combat waste, fraud, and abuse in the Medicare and Medicaid programs and plans to spend more than $500 million to do it.

As part of the administration's budget proposal for fiscal year 2011, the Health and Human Services department is proposing to invest $561 million in discretionary funding to fight health care fraud, a $250 million increase over FY 2010. Specifically, the department plans to expand the Health Care Fraud Prevention and Enforcement Action Team (HEAT), which brings together high-level officials at HHS and the U.S. Department of Justice to spot trends and develop new fraud prevention tools.

HHS said the new funding also will be used to minimize inappropriate payments, pinpoint potential weaknesses in program oversight, and target emerging fraud schemes. Department officials estimate that the efforts to fight fraud and abuse will save $9.9 billion over the next decade.

HHS also expects to squeeze more savings out of the Medicare and Medicaid programs by giving more scrutiny to the provider enrollment process, increasing oversight of claims, improving the data analysis within Medicare, and reducing the overutilization of prescription drugs in Medicaid.

“This budget sends a clear message to those who commit fraud: Stop stealing from seniors and tax payers or we'll put you behind bars,” Kathleen Sebelius, HHS Secretary, said during a press conference to release the HHS budget proposal.

The FY 2011 budget proposal focuses on fraud prevention, wellness, and building the public health infrastructure. While the budget documents note that the HHS proposal lays the “groundwork” for health reform, it is a stark contrast to last year's proposal, which included a $635 billion “reserve fund” dedicated to health reform over the next decade. With the prospect for passing comprehensive health reform legislation waning, there was a much smaller emphasis on health reform in the current budget proposal.

Ms. Sebelius said that while the current budget proposal tries to increase coverage and curb costs, it would do little to affect the overall trajectory of health care costs if it is not accompanied by health reform legislation. The FY 2011 budget aims to invest in wellness, health information technology, and comparative effectiveness research, but it won't significantly alter the rise in health care costs, fill the coverage gap, or provide security to those with coverage that they can remain insured.

Overall, the Obama administration is seeking $911 billion in funding for HHS in FY 2011, an increase of $51 billion over the current fiscal year. Since the bulk of HHS's funding is tied up in mandatory obligations including Medicare and Medicaid, the budget includes $81 billion in discretionary program spending, an increase of $2.3 billion over last year.

The Obama administration's budget request assumes that Congress will step in to correct the Medicare physician payment formula, known as the Sustainable Growth Rate. At press time, physicians were scheduled to face a 21% across-the-board cut to their Medicare payments on March 1, unless Congress passed legislation to avert the cut. The budget proposal assumes no growth in Medicare physician payment over the next 10 years, at a cost of $371 billion, Ms. Sebelius said.

The budget request also calls for a $290 million investment in community health centers, bringing their funding to $2.5 billion. The increase should allow the health centers to continue to serve the new patients they began caring for when the centers got an infusion of funding under the American Recovery and Reinvestment Act (stimulus bill) last year. HHS estimates that community health centers will be able to serve more than 20 million patients in FY 2011.

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