Upwards of 10% of all Medicare spending every year may be fraudulent, says the GAO. That's $50 billion dollars in wasted taxpayer money.

The schemes to defraud Medicare are now being run by huge criminal operations who steal billions at a time. And one or more of those operations may originate in Cuba.

Examiner:

Two U.S. senators and a representative worry that billions of tax dollars could be going to Cuba and other foreign countries via criminal schemes designed to defraud Medicare and Medicaid.

The schemes often involve the use of "nominees," individuals who are paid to be fronts for the actual owners of corporate entities being used in the fraudulent operation. By concealing the identities of true owners, the approach invites its use to funnel tax dollars out of the country.

In a letter made public yesterday to Marilyn Tavenner, acting administrator of the Center for Medicare and Medicaid, senators Orrin Hatch, R-UT, and Tom Coburn, R-OK, were joined by Rep. Peter Roskam, R-IL, said they fear billions of tax dollars are being lost annually as a result.

"Clearly, the program vulnerabilities that facilitate billions of dollars to be stolen from the Medicare program each year also allow for some of that money to be funneled to foreign countries," the three congressmen said.

[...]

Earlier this week, federal officials in Miami charged Oscar Sanchez in connection with a criminal operation that resulted in an estimated $31 million going to Cuban banks.

"Prosecutors say Oscar Sanchez, 46, was a key leader in a group that funneled $31 million in Medicare dollars into banks in Havana - the first such case that directly traces money fleeced from the beleaguered program into the Cuban banking system," the Miami Herald reported Monday.

"Most of the money moved through an intricate web of foreign shell companies before ending up in Cuba, to avoid being detected in the United States, said investigators," the Herald said.

Why can't the federal government emulate private insurers whose rate of fraud is far lower at 1.5%? Forbes looked at the issue recently:

There are no good numbers on how much money private sector health insurers lose in fraud, but working with a well-known health care actuary a few years ago, we estimated that private insurers lose perhaps 1 to 1.5 percent in fraud.  Medicare and Medicaid may be closer to 10 to 15 percent.  And one of the primary differences is that the private sector insurers embrace software and other new technologies that help them find discrepancies and fraud in health care claims.

It's true that politicians routinely claim they are going to get the fraud and waste out of government programs, and almost never do.  The difference here is that HHS's pay and chase model has been an open invitation to fraud - and criminals gladly accepted it.

Catching the scammers after the fact is too late; most of the money is already gone.  The government needs to process claims in a way that identifies questionable and improper claims before they are paid.  If the Obama administration really wants to lower health care spending, Medicare and Medicaid fraud is a good place to start.

Presidents going back to Carter have been trying to change the culture in Medicare disbursements because fraud has been an on-going headache for government since the program came into being. Whatever it takes to protect the taxpayer's money should be done and done quickly. We can't afford this kind of massive fraud any longer.