By Tom Kertscher on Friday, April 19th, 2019 at
12:00 p.m.
At a town hall in New Hampshire, U.S. Rep. Tim Ryan of Ohio, one of the many Democrats running for president in 2020, was asked
how he would stop the federal government from wasting taxpayer money.
"This has got to be a major initiative for Democrats; we
don’t talk enough about waste in the government," Ryan replied. "If
you look at the Medicare program, for example, there is $50 billion a year
wasted in the Medicare program. That’s a billion dollars a week."
It’s a claim the 45-year-old Youngstown-area resident, a moderate
who has been in Congress since 2003, has made going back to at least 2017.
Waste is enough a problem that it is part of an acronym used by
the federal Centers for Medicare & Medicaid Services: FWA, for fraud, waste and abuse. In a training manual
for employees, CMS says with bold type and an exclamation point that
"combating FWA is everyone’s responsibility!"
Ryan’s figure is solid. But let’s see whether it’s really
"waste."
Estimate from a solid
source
Medicare is health insurance primarily for people
65 and older, but it also helps millions of citizens with disabilities. It
is massive: The program spends about $700 billion per year
serving some 58 million Americans and making payments to 1 million entities.
Lately, some Democrats who have announced or are pondering
a run for president have made claims about huge cuts to Medicare. Those
statements haven’t fared all that well on our Truth-O-Meter.
To back Ryan’s statement, his campaign cited 2018
testimony to a congressional subcommittee from a gold-standard
source, the U.S. Government Accountability Office, which is a nonpartisan
auditing and investigative agency that serves Congress.
The testimony from Seto Bagdoyan, a GAO director of audit services, was on
recommendations for handling fraud in Medicare. He said that during fiscal year
2017 — Oct. 1, 2016 through Sept. 30, 2017 — the Department of Health and
Human Services, which administers Medicare, reported "improper
payments" for Medicare of $52 billion. He noted that the figure could
include payments that were a result of fraud, but that there are no reliable
estimates of fraud in Medicare.
The figure for fiscal year 2018, Badoyan told us, is $48.5
billion.
Now to "waste" vs. "improper payments."
‘Improper payments’
Under federal law, an improper payment is one "that
should not have been made or that was made in an incorrect amount, including
overpayments and underpayments." These could range from coding errors in
the billing process to fraud, such as companies billing Medicare for services
that were never provided.
Of the $52 billion Ryan alluded to, $45 billion consisted
of overpayments and $7 billion, underpayments, Badoyan told us.
So, that was money "wasted," in the general sense of
the word, in that much of it, at least, was spent unnecessarily.
Some Medicare experts think the word "waste" goes too
far. "I wouldn't call this waste — some may be, but it is difficult
to tell," said Joseph J. Doyle Jr., a professor of management and
applied economics at Massachusetts Institute of Technology and faculty
director of MIT’s Sloan Initiative for Health Systems Innovation.
But other experts said Ryan’s claim is essentially on target,
given the common understanding of what waste means.
One of them, Malcolm Sparrow, a professor of the practice of public
management at Harvard, said that in a general, non-technical sense, Ryan’s
claim is accurate. He added that the audit protocols that Health and Human
Services uses to produce the estimates are weak, "so the actual levels of
overall waste, or overpayments, are undoubtedly much higher than these
government estimates."
Finally, Joseph Antos, a Medicare expert at the conservative
American Enterprise Institute, offered a different view. The real waste, he
said, is not what is measured by the improper payment estimates, but Medicare
providing services that aren’t necessary, or aren’t delivered well, such as
poor follow-up after a patient is hospitalized, resulting in that patient
having to return to the hospital.
Our ruling
Ryan said: "There is $50 billion a year wasted in the
Medicare program."
The statement is correct in that in the past two years, the
federal agency that administers Medicare reports that $52 billion and then
$48.5 billion in "improper payments" were made — ranging from
payments made with bookkeeping errors to fraud. Ryan goes a bit too far in that
some of those payments are underpayments and some were for payments in which
there wasn’t sufficient documentation to determine whether the payment was
improper.
On balance, we rate his statement Mostly True.
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