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PolitiFact.com: Medicare fraud rate is 8 to 10 percent, says Illinois Rep. Peter Roskam

The statement

"Worldwide credit card transactions, the credit card fraud rate is 0.04 percent, compared to almost 8 percent, 9 percent, 10 percent of Medicare fraud."

Rep. Peter Roskam, R-Ill., in an interview

The ruling

When PolitiFact checked the size of Medicare fraud five years ago, we quickly discovered that hard and fast numbers are hard to come by. In this fact-check, we'll examine Roskam's estimate of 8 to 10 percent and see what sources he relies on.

Before we dive into Medicare fraud, a review of credit card studies shows that Roskam is pretty much on the mark when he speaks of a 0.04 percent rate. A 2010 report from the Federal Reserve Bank of Kansas City gives a fraud rate of 0.05 percent for U.S. issued cards, both debit and credit. Roskam's office pointed us to a trade publication, the Nilson Report, that cites an international rate of 0.04 percent rate.

On Medicare, Roskam's office cited a Government Accountability Office report, a watchdog website created by an executive order from President Barack Obama and information from the U.S. Administration on Aging. All three sources found rates that range from 7.9 percent to 8.5 percent for Medicare.

While the rates fall into Roskam's range, none of them is talking about fraud alone. Rather, they address the much broader category of improper payments. If a doctor orders too many tests, or provides a service but submits the wrong payment code, those come under the umbrella of improper payments.

Malcolm Sparrow, professor of public management and a specialist in corruption control at Harvard's Kennedy School, told us that fraud and improper payments are far from identical.

"There is a serious problem with conflating these different types of overpayment," Sparrow said. "They are quite different in origin and require very different types of control mechanisms."

PolitiFact did find a study that restores a measure of credibility to Roskam's estimate. Donald Berwick, a former head of the Centers of Medicare and Medicaid Services or CMS, the agency that runs Medicare, collaborated with an analyst at RAND to produce a landmark paper in 2012 in the Journal of the American Medical Association.

That paper offers three estimates of fraud in the Medicare and Medicaid programs: a low of 3 percent, a medium of 6 percent and a high of 10 percent. CMS told us they have no official estimate of fraud but pointed us to this study, and they cited FBI figures that mirror the numbers in this paper.

If it turns out that the high end of the range in the JAMA article is correct, then Roskam is in the right ballpark.

Of course, nobody knows for sure because fraud is a crime, and criminals don't advertise their work.

Roskam's comparison to credit cards overlooks many key differences between the structures of the health care and credit card industries, and it tends to obscure the systematic nature of fraud in health care, whether public or private. But Roskam is right that credit card fraud is a tiny percentage of all transactions. We rate the statement Mostly True.

JON GREENBERG, Times staff writer

Edited for print. Read the full version at PolitiFact.com.

PolitiFact.com: Medicare fraud rate is 8 to 10 percent, says Illinois Rep. Peter Roskam 06/22/13 [Last modified: Friday, June 21, 2013 6:15pm]
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