Tag Archives: Accounting

What produces more fraud? The free market or government-run programs?

From National Review, an article examining how government programs like Medicare and Medicaid are ripe for fraud and waste.

Excerpt:

The three most salient characteristics of Medicare and Medicaid fraud are: It’s brazen, it’s ubiquitous, and it’s other people’s money, so nobody cares.

Consider some of the fraud schemes discovered in recent years. In Brooklyn, a dentist billed taxpayers for nearly 1,000 procedures in a single day. A Houston doctor with a criminal record took her Medicare billings from zero to $11.6 million in one year; federal agents shut down her clinic but did not charge her with a crime. A high-school dropout, armed with only a laptop computer, submitted more than 140,000 bogus Medicare claims, collecting $105 million. A health plan settled a Medicaid-fraud case in Florida for $138 million. The giant hospital chain Columbia/HCA paid $1.7 billion in fines and pled guilty to more than a dozen felonies related to bribing doctors to help it tap Medicare funds and exaggerating the amount of care delivered to Medicare patients. In New York, Medicaid spending on the human-growth hormone Serostim leapt from $7 million to $50 million in 2001; but it turned out that drug traffickers were getting the drug prescribed as a treatment for AIDS wasting syndrome, then selling it to bodybuilders. And a study of ten states uncovered $27 million in Medicare payments to dead patients.

These anecdotes barely scratch the surface. Judging by official estimates, Medicare and Medicaid lose at least $87 billion per year to fraudulent and otherwise improper payments, and about 10.5 percent of Medicare spending and 8.4 percent of Medicaid spending was improper in 2009. Fraud experts say the official numbers are too low. “Loss rates due to fraud and abuse could be 10 percent, or 20 percent, or even 30 percent in some segments,” explained Malcolm Sparrow, a mathematician, Harvard professor, and former police inspector, in congressional testimony. “The overpayment-rate studies the government has relied on . . . have been sadly lacking in rigor, and have therefore produced comfortingly low and quite misleading estimates.” In 2005, the New York Timesreported that “James Mehmet, who retired in 2001 as chief state investigator of Medicaid fraud and abuse in New York City, said he and his colleagues believed that at least 10 percent of state Medicaid dollars were spent on fraudulent claims, while 20 or 30 percent more were siphoned off by what they termed abuse, meaning unnecessary spending that might not be criminal.” And even these experts ignore other, perfectly legal ways of exploiting Medicare and Medicaid, such as when a senior hides and otherwise adjusts his finances so as to appear eligible for Medicaid, or when a state abuses the fact that the federal government matches state Medicaid outlays.

Government watchdogs are well aware of the problem. Every year since 1990, the U.S. Government Accountability Office has released a list of federal programs it considers at a high risk for fraud. Medicare appeared on the very first list and has remained there for 22 straight years. Medicaid assumed its perch eight years ago.

They waste money because it’s not their money – it’s your money. Private companies minimize waste because it is in their interest to minimize waste – they have to be competitive and be responsive to customers, or they don’t get paid. The profit motive reduces waste and fraud.

Darrell Issa and the Republican plan to clean up corruption

I am happy that Boehner and McConnell are going to push the ban on earmarks, but who is going to fix the corruption, fraud, and lack of transparency elsewhere in government?

Consider this article from Investors Business Daily.

Excerpt:

You may never have heard of Rep. Darrell Issa, but you will soon. Republicans have tasked him with cleaning up four years of Democratic misrule and misconduct. It’s a big job, but somebody simply must do it.

For proof, look no further than Tuesday’s dirty debacle with Rep. Charles Rangel, who walked out of a congressional hearing before being found guilty by the House ethics committee on 11 of 13 charges of misconduct.

[…]As the head of the House Oversight and Government Reform Committee, California Republican Issa has promised aggressive investigations of misconduct, wherever it occurs. We think it’s long overdue.

[…]The list of troubling government activities that should be investigated is a long one. Issa’s already looking into Fannie Mae and Freddie Mac. And he’s been openly critical of the Obama stimulus’ lack of controls and poor accounting practices.

He — or other GOP committees — may also look into AIG and the other bank bailouts, and answer who got money and why.

Then there’s the Countrywide VIP program, in which some Congress members got favorable mortgages. And don’t forget the $700 billion TARP program, the government’s takeovers of GM and Chrysler, the links between the left-wing community organizing group ACORN and the Democrats, and even U.S. Minerals Management Service misconduct prior to the BP oil blowout.

I would really like to see an investigation of where the bailout money and stimulus money went.

Is Planned Parenthood overbilling state and local governments?

Here’s the story on Fox News.

Excerpt:

Two former Planned Parenthood employees-turned-whistleblowers have made stunning allegations regarding the abortion provider’s accounting practices.  In a case now pending in federal court P. Victor Gonzalez alleges that he saw millions in fraudulent overbilling to state and federal governments when he worked as Chief Financial Officer for Planned Parenthood of Los Angeles.

Gonzalez alleges that after he reported the problems internally he was fired.  While Gonzalez was still working for PPLA the state of California launched audits of various Planned Parenthood affiliates, and uncovered more than $5.2 million in overbilling at a single affiliate based in San Diego.  Gonzalez claims that Planned Parenthood lobbyists intervened to stop other audits that were still pending statewide.

In his court filings, Gonzalez has outlined several transactions he alleges show illegal activity.  For example, in one year Gonzalez says PPLA paid $225,695.65 for Ortho Tri-Cyclen birth control pills, yet billed the government $918,084 – for a profit of $692,388.35.

[…]Planned Parenthood tried to have the Gonzalez whistleblower case dismissed on a technicality, but the Ninth Circuit Court of Appeals recently denied that motion.  Walter Weber, who represents Gonzalez, says it could take years to actually get the case to trial.  Weber asserts that the issues outlined by Gonzalez are so wide-spread that they are akin to “ACORN-like corruption” – and that federal agencies, like the U.S. Department of Health and Human Services, should consider de-funding Planned Parenthood of any government money.

[…]The most recent figures available show that the Planned Parenthood Federal of America and its affiliates received $349.6 million dollars in government grants and contracts for fiscal year 2008.

Government audits of Planned Parenthood affiliates in New Jersey and Washington state have uncovered similar billing discrepancies.  In addition, a second California whistleblower claim alleging improper ties between Planned Parenthood and its political arm has reportedly launched an investigation by the criminal division of the Internal Revenue Service, according to the New York Times.

ACORN, Planned Parenthood and teacher unions are three of the Democrats’ biggest special interest groups.