Paying for Fraud

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I’ve written a lot about waste and fraud in government programs. But all that may amount to chump change compared to what’s coming with the most expensive new government program since Medicare.

Starting in November, 29 million Americans will enroll in the prescription drug plan (search). In the first 10 years the program will cost a projected $720 billion! Of course, chances are it’ll end up costing a lot more than that. And chances are a lot of that money is going to be scammed by cheats and fraudulent claims.

Medicare fraud already costs the taxpayer $20 billion a year in false claims, according to the Department of Health and Human Services (search). One settlement alone, against SmithKline Beecham (search), paid out $330 million for alleged fraudulent billings.

So guess who’s been used to monitor fraud in the huge, new prescription drug plan? Believe it or not, some of the same private HMO (search) middlemen who’ve been accused of padding Medicare bills in the past. As Forbes magazine put it in their cover story last week: “the work of guarding the henhouse has been subcontracted to the foxes.”

It’s great that a lot of seniors will now be able to afford medications. But stay tuned for stories of fraud that will make Enron (search) and WorldCom (search) look like peanuts.

And that’s the Observer.

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