Crackdown Proposed to Prevent Illegal Immigrants From Obtaining Medicare

WASHINGTON — The Obama administration is planning new steps to prevent people in the country illegally from obtaining Medicare after finding that tens of thousands were improperly receiving benefits.

In President Obama’s budget for 2015, to be unveiled on Tuesday, and in new regulations, the administration proposes to remove illegal immigrants from the Medicare rolls and explicitly require citizenship or lawful presence in the United States as a condition of getting Medicare.

Under a 1996 law, the administration said, immigrants are generally ineligible to receive federal benefits if they are “unlawfully present in the United States.” But, officials said, many illegal immigrants have received benefits because the Medicare agency did not update its rules or policies to carry out the restrictions imposed by Congress.

In his budget, expected to total roughly $3.8 trillion, Mr. Obama steers clear of structural changes in social welfare programs, which make up about 60 percent of the budget. But he proposes substantial savings in Medicare, including cuts in payments for nursing homes and home health agencies.

Although Medicare costs have been growing slowly in recent years, the number of beneficiaries is expected to grow 35 percent in a decade, to 70 million in 2024. And the cost of Medicare drug benefits is expected to shoot up to $170 billion, from $70 billion this year.

The administration said its proposal to have illegal immigrants “involuntarily disenrolled” would save at least $67 million over five years, mainly by requiring private Medicare Advantage plans and prescription drug plans to deny or revoke coverage for people who are in the country illegally.

The inspector general at the Department of Health and Human Services, Daniel R. Levinson, said Medicare had improperly paid tens of millions of dollars a year to hospitals, doctors, nursing homes and pharmacies that had provided services to illegal immigrants.

Mr. Levinson found that the Medicare agency and private Medicare plans were incorrectly treating people in the country illegally as eligible for drug benefits and had done little to block payment of their drug claims.

In response to the findings, Marilyn B. Tavenner, the administrator of the Centers for Medicare and Medicaid Services, said she would try to recoup some of the money. And she said that Medicare computers would be instructed to deny claims for illegal immigrants enrolled in the traditional Medicare program.

But nearly 30 percent of the 52 million Medicare beneficiaries are in private Medicare Advantage plans, not traditional Medicare. And Medicare’s outpatient drug benefit is delivered entirely by private insurers, subsidized by the government.

Jenny Rejeske, a health policy analyst at the National Immigration Law Center, a legal advocacy group, said: “There’s no suggestion of fraud here. The real fraud in Medicare is by health care providers. Payments for immigrants are just a drop in the bucket compared with provider fraud.”

Medicare relies mainly on information from Social Security to identify people in the country illegally. Social Security obtains data from the Department of Homeland Security and other federal agencies. Even if immigrants have worked in the United States and paid taxes, Medicare is not supposed to pay their medical bills if they are not here legally on the days they receive care.

The new White House budget director, Sylvia Mathews Burwell, is highlighting “investments in the health care work force” to help treat millions of people expected to gain insurance under the Affordable Care Act.

The president’s budget would provide $5.2 billion over 10 years to train 13,000 new doctors, mainly primary care physicians. Mr. Obama will also seek $4 billion to expand the National Health Service Corps, increasing the number of its providers in underserved areas by two-thirds, to 15,000, from 8,900.

Dr. Atul Grover, the chief lobbyist at the Association of American Medical Colleges, welcomed the proposals to increase the supply of doctors. But, he said, “They could be offset by cuts in Medicare support for graduate medical education.” The White House contends that Medicare overpays teaching hospitals for treating sicker patients who require specialized services.

Mr. Obama also wants to reduce scheduled Medicare payments to nursing homes and home health agencies, which the administration says have high profit margins on their Medicare business. In addition, he would impose financial penalties on nursing homes that send large numbers of Medicare patients to hospitals with preventable illnesses and injuries.

The president’s budget also includes a proposal to encourage nursing homes and home health agencies to coordinate care for patients discharged from hospitals. Medicare would make a single “bundled payment” for post-hospital care of a patient lasting two or three months. This is part of the administration’s effort to move away from paying providers separately for each service, officials said.

Mr. Obama also recycles a proposal that has languished in Congress for several years, requiring drug companies to provide additional discounts, or rebates, to Medicare for prescription drugs bought by low-income beneficiaries. This proposal is strenuously opposed by drug makers.