CBO measures value of healthcare anti-fraud laws

The Congressional Budget Office recently analyzed the budgetary effects of legislation intended to cut fraud in Medicare, Medicaid and the Children's Health Insurance Program. The federal government could cut spending on benefits in these programs if legislation provided more funding or new authority to reduce fraud, the CBO estimated. A return on investment would generally be realized over several years.

That's heartening news for fraud investigators and data miners, Government Executive noted. But the savings may not be applied to federal deficit reduction due to implementation costs, the CBO added.

Of particular note were the agency's comments on the False Claims Act: "On the basis of the number of prosecutions and settlements in recent years, the whistleblower provisions of the FCA seem to be particularly successful in uncovering healthcare fraud and returning significant amounts of money to the U.S. Treasury and state governments," the report stated.

Most proposed anti-fraud legislation relies on four tactics that can have spillover effects on waste and abuse, according to the CBO. First, there's approving more funding for anti-fraud activities. This yields savings, but they don't necessarily surpass the increased spending for purposes of enforcing congressional budget rules.

Secondly, lawmakers have proposed statutory changes that boost the fraud-fighting power of federal agencies or redefine practices permissible in the programs. The CBO analyzes these changes by looking at whether they augment existing laws and regulations.

A third fraud-fighting tactic involves requiring government agencies to perform new types of anti-fraud activities. The CBO analyzes whether the agencies could do this new work under the scope of their current authority. "Programs might reduce spending for healthcare programs if they direct resources away from less effective anti-fraud activities or if they include funding for new activities that would save more than they cost," the agency noted.

Finally, there's the idea of increasing fraud-related penalties. For this type of proposal, the CBO considers how the change would affect individuals and businesses that commit fraud. If the change is too small, for example, it may not deter illegal behavior.

For more:
- read the CBO summary and report (.pdf)
- here's the Government Executive article