Fight Against Financial Fraud Needs Funding

A recent piece in the Boston Globe discussed the serious problem of government fraud and noted that lawmakers on the national level need to do more than just give the problem lip service. Rather than simply talk about the importance of reducing fraud, legislators need to put their money where their mouths are and fund the fraud investigators who work tirelessly to save taxpayers billions of dollars.

Though reducing fraud appears to be an idea that everyone can come together in agreement about, in reality there is a lack of political will to fund programs that fight such fraud. Just last year, the sequester cut more than $40 million from fraud prevention efforts at Medicare and Medicaid. As the new budget continues to be discussed, there is no indication that lawmakers will give investigators the money they need to fight fraud and abuse.

In the case of fraud prevention programs, never has the phrase "paying dividends" been more true. Though it may seem hard to fork over millions now, the simple fact is that the money spent funding the programs comes back many times over. In fact, a study by the OMB found that for every $1 spent on fraud investigators, another $8 is recovered. Not only do the programs pay for themselves, they pay for themselves many times over.

So how big of a problem is government fraud? Massive is about the only way to describe it. Estimates guess that among government health care programs, between three percent and 14 percent of total expenditures go towards fraudulent claims. This means that anywhere from $22 to $102 billion each year is wasted in the Medicare and Medicaid programs.

One expert with Harvard's Kennedy School has said that between $200 and $300 billion are lost to fraud every year across all areas of the government, an incomprehensible sum that warrants serious attention. So serious is the problem that many believe fraud could be one of the reasons that health care costs have continued to rise at such a rapid rate over the past several decades.

The examples of fraud are stunning and should outrage lawmakers enough that they are willing to fund efforts to hold the crooks accountable. In one case last year, reports revealed that a ring of doctors and pharmacists in Detroit recruited low-income individuals into receiving drugs they did not need which were then resold on the black market. In another case, $100 million was stolen by a Russian crime ring after they stole the identities of doctors and patients and submitted phony bills to Medicare.

Reports from the Office of the Inspector General found that in past years as much as $27 million was paid to patients that were already dead. An investigation in 2008 revealed that $60 million had been paid to dead doctors for procedures they had supposedly performed.

To end the epidemic fraud and abuse, the reality is that investigators with the Department of Justice and Department of Health and Human Services need more money and resources. More investigators need to be hired, more employees need to review claims forms and more money should be invested in creating software designed to detect suspicious claims. Though much work needs to be done, it remains to be seen whether politicians will stand up and provide the funding these people need to do their jobs.


Funding the Fight Against Medicare Fraud, by Farah Stockman, published at on February 18, 2014.

Budget Cuts Force Scale Back of Health-Care Fraud Investigations, by Fred Schulter, published at on July 25, 2013.

See Our Related Blog Posts:
IRS Whistleblower Payouts Increase Dramatically In 2012
Expanding Whistleblower Protections