Health Care Fraud in a Nutshell

Dennis Jay, executive director of the Coalition Against Insurance Fraud (FNC)

This is a rush transcript from "Glenn Beck," July 23, 2009. This copy may not be in its final form and may be updated.

GLENN BECK, HOST: Fraud. Who solved it? Well, certainly the federal government has. Let's take a look at how it is tearing our government's medical system apart right now:

(BEGIN VIDEOTAPE)

BECK (voice-over): Health care fraud in a nutshell.

The Obama administration is looking to drastically increase health care's entitlements, adding an estimated 11 million people just onto the Medicaid rolls, according to the House's figures. But how will the system possibly support all these new clients? After all, it's already tough finding a health provider that will accept Medicaid, since doctors and hospitals don't think that the program reimburses them.

Another factor: fraud. Although the government admits it's impossible to come up with an exact number, estimates are that between 3 percent and 4 percent of the annual health care spending — up to $72 billion — is lost to fraud every single year. The inspector general for health and human services says the federal government loses $18.6 billion a year just on Medicaid fraud.

What's even more shocking, it's how little is being spent on stopping entitlement fraud. Medicare spends less than 1/5th of 1 percent of its budget on anti-fraud measures.

According to Kerry Weems, who is acting administrator of the Centers for Medicare and Medicaid Services at the end of the Bush administration, "Right now, we way, way, way underspend for fraud and abuse."

So, it really shouldn't come as much of a surprise that there are those reports out there that health care fraud is attractive to organized crime, because it's a low-risk, high-reward proposition.

Health care fraud in a nutshell.

(END VIDEOTAPE)

BECK: Dennis Jay, he is the executive director of the Coalition Against Insurance Fraud.

? Video: Watch Beck's interview

Dennis, how much — we have 3 percent to 4 percent fraud in the government medical system. How much — what is the average fraud? Like you take a credit card company or a bank, what's the average fraud there in the regular world?

DENNIS JAY, COALITION AGAINST INSURANCE FRAUD: It's much lower than it is in health care fraud. And, you know, I think, actually, the 3 percent to 4 percent is low. There are estimates that go all the way up to 10 percent.

But when we really take a look at health care compared to other industries, there's only probably tax evasion is greater than health care fraud as far as how much money is lost by the federal government every year.

BECK: I have to tell you, here we have $60 billion — $60 billion to $72 billion — in fraud just in one program and we're about to dump, what is it, 45 million more people into this system, create a system that we all know within 10 years, it will be 350 million people into it. Can you even imagine the amount of fraud?

How does — how does the system — community organizers love to overwhelm the system — how does the system even take 45 million people and dump them into the system, many of them with no records whatsoever, and not be riddled with fraud?

JAY: Well, that's our beef with Congress and the administration right now. To expand the program to this degree and not expand anti-fraud resources to at least the same extent, you might as well send an engraved invitation to organized crime out there to come and plunder the Treasury because you know they're going to do that.

BECK: Of course, they are.

JAY: Right now, there is organized criminals sitting around the country, and maybe even the world, taking a look at the opportunities that are going to present themselves here, and are just rubbing their hands together and waiting for it all to play out, come in, find the weaknesses and plunder.

(CROSSTALK)

BECK: Go ahead.

JAY: I was just going to say, we think this is an opportunity, you know, if this is going to come to pass, Congress has an opportunity to not only to safeguard and build some firewalls for the new program, but maybe even correct some of the old.

Right now, there are some good provisions within the Senate bill we like. For the very first time, the federal government is talking about partnering with private insurers, because the private sector are doing some real interesting effective things with fraud that the government can learn from. And on the House side, they are at least putting some new money into it, not nearly enough. They have $100 million extra to spend on anti-fraud resources, we lost that much today before lunch.

BECK: OK.

JAY: ...if you accept these 3 percent or 4 percent losses in fraud.

BECK: Dennis, thank you very much.

I will tell you, America, I know the number of credit card frauds. Let's just say, let's take the low number for fraud in our medical system. It is 3 percent, the government is acceptable, 3 percent. As Dennis said, it could be as high as 10 percent.

You know what it is for credit card companies — 0.03 percent profit. Somebody is making profit on it; they don't want to be ripped off. Maybe we should rethink that whole profit thing.

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