Who Will Audit the Auditors?

The inspector general, that's who. In an upcoming report, "a draft of which was obtained by The New York Times" (a copy of which was discovered by me in my driveway yesterday), the inspector general for the Department of Health and Human Services discredits recent boasts that the government is finally cracking down on Medicare fraud. According to the report, auditors working for AdvanceMed, a company hired by Medicare to examine medical equipment claims, found only a fraction of the fraud because Medicare officials told them not to look too hard. The auditors were instructed to "examine only the documents submitted by the companies selling the medical equipment, rather than verify those documents against physicians' records." Since a common scam is to charge Medicare for equipment that was never recommended by a doctor (some of which is delivered but never actually used), this circumspection allowed a substantial amount of phony billing to slip through:

Medicare reported to Congress that, for the fiscal year of 2006, AdvanceMed's investigations had found that only 7.5 percent of claims paid by Medicare were not supported by appropriate documentation. But the inspector general's review indicated that the actual error rate was closer to 31.5 percent.