By: Jane M. Orient, M.D.

http://www.aapsonline.org

All eyes are on the BP gusher in the Gulf, spewing pollution over the shoreline, but there's another big leak that will do even more damage to our economy: the one in the Medicare well.

Ever since 1965, when Medicare was enacted, the federal Treasury has been hemorrhaging dollars. Previously, "10%" was quoted and re-quoted as the amount of fraud. More recently, Senator Tom Coburn (R-OK) alleged it to be 20%.

Like BP's oil containment dome, previous efforts failed to plug the hole. Despite hundreds of millions of dollars shoveled into the Health Care Fraud and Abuse Control Program (HCFAC) by HIPAA (the Health Insurance Portability and Accountability Act), federal prosecutors say they need still more "resources" and "tools."

Attorney General Eric Holder is looking for people to prosecute for both leaks?which will do nothing to stop the pollution.

Containment efforts in new Medicare rules include requiring doctors to "revalidate" their billing privileges periodically. They'll have to show that their name, address, identifying numbers, and organizational status are exactly as registered. They'll have to give Medicare access to their checking account by electronic funds transfer (EFT) so that it can make immediate "adjustments" in case of overpayment.

The Patient Protections and Affordable Care Act ("ObamaCare") imposes additional screening requirements; some providers will have to be fingerprinted.

Ever-more aggressive private bounty hunters called Recovery Audit Contractors (RACs) are descending on doctors' offices, dissecting claims and patients' records, looking for a missing "bullet point" in the documentation, or an inaccurate digit in the billing code. ObamaCare increases the penalties for errors from $11,000 per item to $50,000. The government's burden of proof, already light, has been further decreased. There is no need to prove any intent to defraud, or even to show that any money was ever collected.

Also, the definition of "fraud" is expanded to include "unnecessary" services, "ineffective" services, or those that don't comply with Medicare requirements.

Prosecutors are making examples of "greedy providers." Dr. Ronald Poulin of Virginia was smeared all over the pages of his local newspaper before being convicted of "fraud"?that previously would have been called billing errors. Pictures of his home were posted on the internet?a nice house, bought with decades of hard work, now seized, along with his cars, his bank accounts, his medical license, his reputation, and his liberty. He sits in jail awaiting assignment to a federal prison.

One less oncologist will be prescribing expensive chemotherapy to cancer patients?and there are other effects that we don't see. Deterrence works. Trying to help sick people is becoming very dangerous.

But will these methods end the fraud? Dr. Kenneth Christman, a past president of the Association of American Physicians and Surgeons (AAPS) (www.aapsonline.org), states that the amount of fraud is actually 100%, because Medicare is a Ponzi scheme. Today's soon-to-be-retiring Baby Boomers have been bilked as surely as Bernie Madoff's investors were, and their "trust fund" is full of internal government IOUs that can be redeemed only by borrowing from a bigger sucker.

Leaving ultimate Medicare reform aside, can we eliminate true billing fraud? Eliminating doctors does eliminate billing?of all types, by those doctors. But organized crime is said to be moving in.

As Malcolm Sparrow pointed out in a book by that title, third-party payment is A License to Steal. Payment is made for a "clean claim," not for a messy service. And despite the government's legal advantages, it takes time to go through the process of destroying doctors. So here's the overnight solution.

Make insurance fraud, like credit-card fraud, self-revealing. Do away with "assignment of benefits," which means paying the "provider." Mail all insurance payments to patients, in the form of a dual-payee check.

Dead or fictitious patients don't cash checks. Real people who did not receive a worthwhile service generally do not pay for it.

Fire the RACs, and put prosecutors to work fighting real crime, not creating crimes from arcane codes.  Restore the natural regulatory system of customers reading understandable bills. Don't put medical dollars into a huge bank vault that criminals can open with computer codes, and the practice of medicine into a bureaucratic prison.

Prisons don't stop leaks.

http://www.aapsonline.org

WASHINGTON  - Tuesday, May 25, 2010 - Sen. Chuck Grassley of Iowa, ranking member of the Committee on Finance, with exclusive Senate jurisdiction over taxes, this week joined the committee chairman to introduce tax legislation that would create job opportunities for veterans returning home from military service and help businesses create jobs.  This is the latest in a series of Grassley actions to help veterans and active duty members of the military.

"These men and women are extremely capable," Grassley said.  "They have a lot of skills to offer in the workplace.  This legislation will clear some bureaucratic hurdles and add a financial incentive to encourage employers to seek out veterans.  These steps are a logical follow-up to my effort to increase the IRS' hiring of veterans.  The IRS saw the value of this pool of potential workers and followed through on increased hiring of veterans.  Other employers, including small businesses, should have similar opportunities."

The bipartisan Veterans Employment Transition Act will reward employers who hire qualified veterans who have recently completed their service in the military with up to a $4,800 tax credit for disabled veterans and up to a $2,400 tax credit for other qualifying veterans.  The bill eliminates the administrative burdens that make the current Work Opportunity Tax Credit provision directed toward unemployed veterans difficult for small businesses to use.  As a result, servicemen and women who have been recently discharged will be able to provide documentation from the Department of Defense without having to go through the tax credit's current certification process, which can be lengthy.   Any recently discharged veteran who has discharge paperwork showing 180 days of qualified active duty is eligible. This includes those men and women who were activated by their states as members of the National Guard.  The bill also requires the military to educate service members on how employers may qualify for the tax credit by hiring them.  The bill text is available here.

The introduction of this legislation follows earlier Grassley steps to increase veterans' hiring.  Beginning in 2008, Grassley succeeded in persuading the IRS to increase its hiring of veterans. At Grassley's urging, the agency hired more than 1,000 veterans in 2008, per a verbal commitment Grassley secured from the IRS commissioner, and hired an additional 700 veterans in the first five months of Fiscal Year 2009.  Grassley is seeking an update for the rest of Fiscal Year 2009.  Grassley initiated the effort after realizing that the Treasury Department, including the IRS, lagged behind other federal agencies in hiring newly returned veterans, even though the department had significant vacancies.

In 2008, Congress made permanent several provisions to provide tax relief for American troops and their families that Grassley helped to advance.  The Heroes Earnings Assistance and Relief Tax Act of 2008, the HEART Act, was a bipartisan effort that incorporated most of the provisions in the Defenders of Freedom Tax Relief Act of 2007, which Grassley co-sponsored and promoted.  The HEART Act also made permanent and expanded upon some of the tax relief measures that Grassley coauthored in 2003, while chairman of the Finance Committee.

"Military service makes taxes complicated and sometimes unfair," Grassley said.  "People shouldn't suffer a tax hit to serve our country.  Military men and women should have fair treatment under the tax code. It's a no-brainer."

Last year, Grassley welcomed the enactment of legislation he cosponsored to help members of the military benefit from the first-time homebuyer tax credit.  Before this correction, members of the military were penalized by the credit's structure.  The correction gave military personnel serving outside of the United States more time to qualify for the credit.   It also eliminated the repayment requirement for military personnel forced to sell as a result of official service.  The legislation also excluded from tax any payment to military personnel to compensate them for loss in home value resulting from base closure.

Apart from tax work, Grassley recently has worked to address the ongoing and growing backlog of veterans' claims at the Department of Veterans Affairs (VA).  He also cosponsored successful legislation that will ensure timely, sufficient and reliable funding for the VA health care system.  This legislation was supported by all major veterans' organizations as well as the chairman and ranking member of the Senate Veterans Affairs Committee.  Grassley also has worked to include several beneficial provisions in the Caregiver and Veterans Omnibus Health Services Act.  This new law corrects a number of deficiencies in how the U.S. cares for veterans with traumatic brain injuries, enhances VA support for family caregivers, and expands mental health services.  In 2009, Grassley received the American Legion's Distinguished Public Service Award for his work on issues important to veterans.

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WASHINGTON, D.C. - May 20, 2010 - Senator Tom Harkin (D-IA) tonight issued the following statement after the U.S. Senate passed the Restoring American Financial Stability Act of 2010 by a vote of 59 to 39.

"I voted for this measure because it is a step in the right direction. This bill will create a strong consumer financial protection bureau that will put a stop to a whole range of predatory financial practices targeting ordinary Americans.

"I am particularly pleased that language requiring commercial banks to spin off their derivatives operations remained in the bill in its original form as reported from the Senate Agriculture Committee. This is a very important part of the bill and I hope it remains in the conference-reported bill.

"I am disappointed, however, that other amendments in line with Chairman Lincoln's provision were not included. In particular, Senator Cantwell's proposal to reinstate the Glass-Steagall Act was not even considered. I was one of eight senators to vote against financial deregulation in 1999 that did away with Glass-Steagall. Reconsidering this issue had a place in this debate. Also, Senators Brown and Kaufman offered an amendment that would have dramatically reduced the size of the largest financial institutions. Unfortunately, the amendment was defeated.

"The problem in the financial sector, as with so many areas of our economy, is that the ground rules and oversight have been lax. Too many in the financial industry put profits ahead of people. As a direct consequence, tens of millions of ordinary Americans have lost their jobs, their homes, and, their livelihoods. This legislation will help restore some balance to our financial sector."

Sen. Chuck Grassley, ranking member of the Committee on Finance, with jurisdiction over tax policy, today made the following comment on an Associated Press "fact check" report that the Administration's tax credit purported to help small businesses afford health insurance for their employees won't help some of those small businesses, despite portrayal of the tax credit as broadly available.

"Small business owners have been told to expect help right away, and now some of them are starting to do the math and finding out the help isn't for them.  The authors of the health care reform bill should be clear with people that the tax credit is limited and that only a pretty narrow category of small business owners will see any benefit.  Also, this tax credit, for those it will help, is available for only two more years after the health exchanges are up and running in 2014.  The Congressional Budget Office estimates that in 2016, only three million small business employees out of 159 million Americans with employer-sponsored private coverage would actually benefit from the small business tax credit for health insurance.  That's less than two percent of those with employer coverage benefiting."

The text of the Associated Press "fact check" story follows here.

FACT CHECK: Tax cut math doesn't add up for some

May 20, 2010 - 03:08 AM US/Eastern
By RICARDO ALONSO-ZALDIVAR
Associated Press Writer

WASHINGTON (AP) - Zach Hoffman was confident his small business would qualify for a new tax cut in President Barack Obama's health care overhaul law.

But when he ran the numbers, Hoffman discovered that his office furniture company wouldn't get any assistance with the $79,200 it pays annually in premiums for its 24 employees. "It leaves you with this feeling of a bait-and-switch," he said.

When the administration unveiled the small business tax credit earlier this week, officials touted its "broad eligibility" for companies with fewer than 25 workers and average annual wages under $50,000 that provide health coverage. Hoffman's workers earn an average of $35,000 a year, which makes it all the more difficult to understand why his company didn't qualify.

Lost in the fine print: The credit drops off sharply once a company gets above 10 workers and $25,000 average annual wages.

It's an example of how the early provisions of the health care law can create winners and losers among groups lawmakers intended to help?people with health problems, families with young adult children and small businesses. Because of the law's complexity, not everyone in a broadly similar situation will benefit.

Consider small businesses: "The idea here is to target the credits to a relatively low number of firms, those who are low-wage and really quite small," said economist Linda Blumberg of the Urban Institute public policy center.

On paper, the credit seems to be available to companies with fewer than 25 workers and average wages of $50,000. But in practice, a complicated formula that combines the two numbers works against companies that have more than 10 workers and $25,000 in average wages, Blumberg said.

"You can get zero even if you are not hitting the max on both pieces," Blumberg said.

Hoffman used an online calculator to figure his company's eligibility. At least three are available: from the House Energy and Commerce Committee, which helped write the legislation; from the progressive Center for American Progress; and from the National Federation of Independent Business, which is seeking to overturn the law in federal court. All produced the same result.

"I think (the administration's) intentions are good, but the numbers and applications don't come out to what they intend," said Hoffman, part owner of Wiley Office Furniture, a third-generation family business in Springfield, Ill.

The Treasury Department, which administers the new credit, did not dispute the calculations.

"The small-business tax credit was designed to provide the greatest benefit to employers that currently have the hardest time providing health insurance for their workers?small, low-wage firms," said Michael Mundaca, assistant secretary for tax policy. "Small employers face higher premiums and higher administrative costs than large firms and in many cases cannot afford to provide coverage."

Small business owners are a pivotal constituency in the fall congressional elections, and Democrats are battling to win them over. Major benefits of the health care law?competitive insurance markets, more stable premiums and a ban on denying coverage to those in poor health?don't take effect until 2014. But the health care credit is available starting this year.

It can be a boon for smaller companies paying lower wages. Betsy Burton, owner of The King's English Bookshop in Salt Lake City, estimates that she will get a credit of roughly $21,000 against premiums of about $67,800. She has 11 full-time equivalent employees averaging $26,100.

"What it means is that I can afford to carry this insurance and insure people's families," said Burton. "I was afraid that we were fast approaching a time when I would have to choose between insuring my employees and closing my doors."

Burton believes offering health insurance is the right thing for an employer to do?and also makes good business sense because it helps her retain valued employees. Except at the beginning, she has provided coverage for most of the 33 years the bookstore has been in business.

Slightly more than a third of companies with fewer than 10 employees offered coverage in 2008, down about 10 percent since the start of the decade, according to an Urban Institute analysis.

Hoffman, the furniture store owner whose business missed out on the credit, says he understands that lawmakers writing the health care legislation had a limited amount of money to work with. But his company's premiums rose 15 percent this year, and it's a struggle to keep paying.

To get the most out of the new federal credit, Hoffman said he'd have to cut his work force to 10 employees and slash their wages.

"That seems like a strange outcome, given we've got 10 percent unemployment," he said.