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The Future of Medicare: 15 Proposals You Should Know About

Pros and cons of options on the table in Washington

12. Increase Penalties for Health Care Fraud

Estimates show that waste and fraud in the health care system cost taxpayers tens of billions of dollars every year. Proposals to reduce fraud include increasing the penalties for fraudulent activities, such as the illegal distribution of Medicare patient and provider information.

PRO: Increasing penalties on providers and others who commit fraud can reduce such behavior and lead to substantial savings. Dollar for dollar, addressing fraud in this way is an effective strategy compared to other approaches. For every dollar spent on such activities over the past three years, the federal government has collected more than seven dollars in return. (Avalere Health)

CON: There is little evidence that fraud is deterred by harsher sanctions. People who commit fraud may not care about sanctions or may gamble that the payoff is worth the risk — even if the penalty for fraud is substantially increased. In addition, the threat of harsher sanctions may intimidate physicians and other providers who fear they may be prosecuted for innocent mistakes. Some providers may stop participating in Medicare or other health care programs to avoid the hassle and expense of an audit. (Avalere Health)

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