WASHINGTON – Sen. Charles Grassley (D-Iowa) has introduced legislation that would allow the government to delay payments to Medicare providers until suspected instances of waste, fraud or abuse are cleared.

Federal law currently requires that Medicare issue payments within a very short time frame, even when there is risk of fraud, waste or abuse.

"Because of this prompt payment rule, the government puts itself in a position of having to pay and chase Medicare fraud, instead of working to prevent it in the first place," Grassley said in introduction the new legislation on Monday. "That doesn't make any sense, and it's no way to manage Medicare's resources."

Last year, approximately $2 trillion was spent on healthcare in the United States, and Medicare spending accounted for about $470 billion, according to Grassley. Conservative estimates say that $60 billion of Medicare spending each year is lost to fraud, waste and abuse. Medicare expenditures are projected to increase at an average annual rate of 7.1 percent through 2018.

"As Medicare spending continues to skyrocket, everything possible must be done to protect Medicare dollars from being lost to fraud, waste and abuse," Grassley said.

Grassley's Fighting Medicare Payment Fraud Act of 2009 would give the Secretary of Health and Human Services the authority to extend the time period in which payments must be made under the prompt payment rule if the secretary determines there is a likelihood of fraud, waste or abuse.

Under the proposed law, the government could delay payments to individual providers or suppliers by "whatever time is necessary" to engage in more in-depth reviews.

The Grassley bill would also require the Office of Inspector General to recommend, on at least an annual basis, categories of providers or suppliers where additional scrutiny is needed before payments are made. 

"We've seen in reports revealed this fall how the Department of Health and Human Services turned a blind eye for many years to alerts from the Inspector General about Medicare fraud," Grassley said. "This provision in the bill is intended to make sure the Department of Health and Human Services can't get away with ignoring those kinds of alarms."

Grassley has been key in drawing attention to Medicare fraud and exposing management problems at the Centers for Medicare and Medicaid Services. Legislation authored by him in 1986 to fight fraud by government contractors has become the federal government's most effective tool against healthcare fraud, he claims. He was also sponsor to the qui tam amendments to the False Claims Act to empower whistleblowers, which have returned $22 billion to the federal treasury. The largest settlements under the law for the last decade have been in cases involving Medicare fraud.