I was reading an article in the Dec. 2011/ Jan. 2012 issue of fast company magazine titled: “The $10 Billion Scam,” which I finally came to the conclusion that the government doesn’t try hard enough to stop the frauds that are costing the government hundreds of billions of dollars yearly.

The centers for Medicare and Medical Services (CMS) are defrauded of at least $10 billion yearly. The scam is being conducted by criminals who have a basic knowledge of the billing process. Such criminals purchase patient information, and the NPI (National Provider Identifier) of doctors off of black markets, and use such information to fraudulently bill Medicare.

I understand, as stated in the article, that CMS’ computer systems aren’t as advanced as the credit card industry. However, I also understand that the credit card industry is more complex. Therefore, I’m convinced that CMS’ problem can be fixed with a relatively low investment…

If I had to tackle such a massive problem, I would start by creating a system that would automatically send a verification notice to the Medicare/ Medicaid Recipient at the time of billing or shortly thereafter.

Once the verification system gets to the stage where it’s close to being ready for use, I would start notifying everyone on Medicare and Medicaid, that such a system is about to become operational, and that it would be mandatory that all Medicare and Medicaid recipients take part in such a process.

Everyone on Medicare and Medicaid would have to provide CMS with a primary way in which to send the verification notice to them, and a secondary way.

Once the system is up and running, the following would occur:

(1) Every time CMS received a billing, the computer system would automatically send a notice for verification of services to the recipient named on the billing. If the recipient didn’t respond to such a notice within a certain preset time frame, the notice would be sent to the recipient’s secondary contact listing. If the recipient failed to respond within a certain time frame, their benefits would be revoked. However, if they respond to the verification notice, their benefits would continue uninterrupted.

With the knowledge to know, that not all systems initially run error free, individuals that have their benefits revoked would be able to have their benefits reinstated the next time they attempted to use their benefits card.

Once they try to use their benefits card after its cancellation, the billing service provider would notify them that there is a hold on processing their benefits. And to unlock such a hold they’d have to state whether or not the service(s) within the notification were provided.

As soon as they answer yes or no to the question posed, the service provider would enter a confirmation or a denial of the service(s) mentioned in the verification, on behalf of the recipient. At such a time the hold would be done away with, and the benefits would be reinstated.

The notification reply and a notice of reinstatement of benefits would be forwarded to CMS’ computer system for evaluation.

In order to prevent criminals from circumventing such a system, CMS would have to add certain safeguards to its systems.

Limited provider stampings of recipient verification notices would be one safeguard. Service providers would not be notified of such a limitation, because their business would not be interrupted immediately after passing/ going over such a limitation. The limitation mark would trigger an investigation alarm if passed by a service provider.

If a service provider exceeds such a limitation mark, they would be investigated to see whether or not they are involved in the filing of fraudulent billings, may that be direct or indirect involvement of such billings.

A lot of factors would be considered in the setting of / creation of limitation levels. Such as the number of Medicare/ Medicaid recipients that reside in the general are where the service provider is located, the number of cross stampings between service providers, and the number of self-stampings by service providers.

Cross stampings would be defined as an affirmative response to a service verification notice, on behalf of a Medicare or Medicaid recipient who visited a particular service provider. And such a service provider that’s been vouched for does the same for a recipient that’s been to the other service provider. Regardless if the cross stamping is a result of coincidence, or a deliberate attempt to defraud the government.

Self-stampings would be defined as an affirmative response to a service notification, on behalf of a Medicaid or Medicare recipient who’s’ notification of service verification was pertaining to an earlier visit to the same service provider. Regardless of the positive or negative intentions involved.

I could go on about such a topic, yet, I feel as though I rambled on enough, for anyone reading this to understand what my recommendation entails. Therefore, I’ll close by answering the question that I originally posed (“How much of an investment is required to stop a $10 billion scam?”) My answer/ opinion would be: “substantially less than the $10 billion loss to scammers annually.”

Medical Services

Credit Card Industry

Computer Systems

Benefits