Another Day, Another Payout For Obamacare Cronies

About six-and-a-half years ago, on a pleasant Friday in May, the American Hospital Association put its name on the line for Obamacare. It was, it turns out, a highly profitable decision.

On that day, May 15, 2009, the well-funded lobbying heavyweight announced its backing for healthcare “reform” along with a slew of other special interests and union groups. A few months into President Barack Obama’s term, the statement underscored momentum for his effort to fundamentally transform the United States.

This photo of part of the HealthCare.gov website is photographed in Washington, in this Nov. 29, 2013 file photo. Newly released federal figures, as of Nov. 30, 2013, show more people are picking private insurance plans or being routed to Medicaid programs in states with Democratic leaders who have fully embraced the federal health care law than in states where Republican elected officials have derisively rejected what they call "Obamacare." (AP Photo/Jon Elswick, File)
This photo of part of the HealthCare.gov website is photographed in Washington, in this Nov. 29, 2013 file photo.  (AP Photo/Jon Elswick, File) 

Contemporaneous documents show industry officials terrified they would miss the Obamacare train and eager to lock in favorable terms by sidling up to the negotiating table first. Meanwhile, Obama pulled a wink-and-nod routine with the public, like blasting pharmaceutical companies in a speech while relaying to their top lobbyist the bluster was just for show.

When word leaked that AHA officials were chafing at the terms of an early draft bill, Obama’s health reform “czar” Nancy-Ann DeParle emailed one of the group’s top hired guns, Linda Fishman: “I know you understand that you are much more likely to end up where you want to be if you don’t box us in.”

In other words, simmer down, we’ve got you.

After the law passed, AHA funded a million-dollar ad campaign in the districts of 16 House Democrats thanking them for their votes, one of many efforts the group undertook to help the Democratic party electorally.

From this, it’s sadly not surprising the AHA got pretty much exactly what it wanted out of Obamacare. But it’s six years later that some of AHA’s “investments” are really beginning to mature.

Late last week we learned that the Department of Health and Human Services will be severely curtailing an audit program that has recovered billions in Medicare fraud, waste and abuse over the past several years from – guess who? – AHA’s members.

In 2013, the program recovered $3.7 billion in illegal Medicare payments. In 2014, that number was down more than a third to $2.4 billion thanks to onerous restrictions on the auditors trying to identify fraudulent payments.

Next year, it will be down further.

At issue is the Recovery Audit Contractor (RAC) program, which pays private companies a portion of the funds they help the government recover. It’s something of an oasis of common sense in a desert of rampant federal government waste, and one that should be emulated across the federal government. Taking a page from the laws of supply and demand, the RAC program aligns the incentives of the auditors to identify as much fraud as they can, while keeping in place careful reviews to stop any abuse of the process.

The RACs are already significantly hindered. The current rules allow them to review only 2 percent of payment claims from each hospital or provider. The news last week was that the Obama administration will be lowering that threshold further to 0.5 percent — yes, less than 1 percent — of all their payments.

This comes on top of recent actions like extending an enforcement “moratorium” on a key billing loophole and other actions that have kept hospitals shielded from accountability.

The dirty secret of the medical profession is hospitals count on these fraudulent Medicare payments to pad their profits.

But while $3.7 billion the RACs found in 2013 is, by any measure, a significant amount of money, it’s actually chump change compared to the actual amount of illegal payments going out the door.

Last month, the Government Accountability Office testified that across the board, the federal government paid $125 billion in improper payments, up from $105 billion the year before. Medicare and Medicaid are roughly two-thirds of that total, or somewhere in the neighborhood of $75 billion per year.

As DeParle put it, “you are much more likely to end up where you want to be if you don’t box us in.” Obamacare cronies like the AHA are continuing to learn just how lucrative their alliance can be.

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