Loose With Numbers: Medicare Fraud Report a Fiction

I haven't watched CBS' "60
Minutes" in years. But it was one of those stories that stops you in
your tracks: Medicare fraud is "a $60 billion crime." Medicare is the
$456 billion government health insurance program serving 46 million
elderly Americans. Its credibility as a government-run program is at
the heart of the health-care reform debate. If Medicare isn't doing the
job, the government certainly can't.

Except that the fraud claim
is not true. "60 Minutes"' amateurish journalism wouldn't get past your
average small-town copy editor's fact-checking.

The first thing I
did after watching the show was get in a big funk: Maybe conservatives
are right. Government can't run anything. And this is "60 Minutes," not
some tabloid sap like "Dateline." The second thing I did was apply the
first lesson of the trade: verify the facts. It didn't take long for
the story to unravel. There are no facts. "60 Minutes" doesn't know how
much Medicare fraud there is. You don't know. I don't know. The federal
government doesn't know. Nobody knows, because Medicare fraud as a
whole isn't tracked. That's why "60 Minutes" correspondent Steve Kroft
said fraud is "estimated now to total about $60 billion a year."
Estimated. Fine. By whom? You'd think Ed Murrow's ghost at the Columbia
Broadcasting System might still compel his descendants to attribute
colossal estimates to a reliable source. Not this time.

I called
"60 Minutes." I asked to speak to one of the two producers of the
segment. I was patched through to a spokesman instead, who said the $60
billion figure came from Kirk Ogrosky, a Justice Department prosecutor
in charge of Medicare fraud. But it didn't. Nowhere in the "60 Minutes"
broadcast or its written report does Ogrosky mention the figure. Nor is
the figure attributed to him or Attorney General Eric Holder, who makes
a cameo on the show. The spokesman's best explanation: Ogrosky was
cited in the piece, "60 Minutes" got the figure from him, and the
Justice Department didn't call the next day to dispute the figure (as
if the Obama administration were going to start a credibility war with
yet another network). I was welcome, the spokesman said, to check with
Ogrosky's office at Justice.

I did, asking if Ogrosky or anyone
at the department had given "60 Minutes" that $60 billion figure, and
if it stood by it. After cutting through the initial bureaucratic
hurdle, Charles Miller, one of the Department of Justice's spokesman,
wrote me: "This sounds like a good question for HHS," meaning the
federal Department of Health and Human Services. I let Charles know the
buck-passing was getting old. He tracked down Ian McCaleb, the
spokesman for the department's criminal division, who worked with "60
Minutes" on the segment. McCaleb's answer: "The estimate range in the
Attorney General's Q and A was $27 to $90 billion, but that is using
National Healthcare Anti-Fraud Association and General Accounting
Office estimates on total federal expenditures."

McCaleb and the
attorney general were wrong, too. GAO has never estimated total
Medicare fraud. It investigates targeted programs within Medicare,
finding fraud in the millions, not billions. And it's not total federal
expenditure that those estimates McCaleb referred to are based on. It's
total public and private expenditure on health care. The
National Health Care Anti-Fraud Association, a partnership between
private insurers and the federal government, says that it "estimates
conservatively that 3 percent of all health care spending -- or $68
billion -- is lost to health care fraud." The association bases that
figure on 2007 total health care spending of $2.27 trillion in
the United States. It's an unscientific, very dubious way of making
estimates. But even if you go with it, well over half that spending is
private sector. Medicare in 2007 was a $436 billion program. Applying
the association's 3 percent standard, that works out to an estimated
$13 billion in Medicare fraud. For argument's sake, throw in Medicaid's
$191 billion spending in 2007. You're up to $19 billion in fraud.

Steve
Kroft and his producers never bothered to trace their facts to the
source for viewers, relying instead on the slob-journalist's cheapest
cop-out: attribution by estimates. Nor did they make the equally
important point: Insurance fraud isn't unique to Medicare or
government-run programs. If anything, it affects the private sector
more. Shame on "60 Minutes" and the Justice Department for throwing
around wild numbers. Those are the numbers -- the fictions -- shaping
public opinion across the country and public policy in Washington.

Medicare
fraud is a serious problem. But singling it out and exaggerating it
beyond credibility won't fix it, although it may help doom any
government expansion of health care. In that regard, the "60 Minutes"
segment did its death-panel best.