It seems the folks in DC are very good at spending money, but not so good at accounting for how it is spent or why they do what they do. 

It is too costly to erect a fence at the Mexican border but not too costly to care for every physical need of those who cross over illegally.

Medicare and Medicaid dollars are in the crosshairs as DC tries to convince the voting public they want to provide health care that is efficient and effective.

When it comes to patient care under Medicaid (and Medicare) the rules are quite simple. 

The more care the provider can justify the more they are paid. Given the paltry sums that are paid to doctors is it any wonder why some of them may be tempted to "pad" their bill?
I get paid by Medicaid to see patients. How much?
Exactly $52.28 if it is an easy patient issue, like a cold, and $78.54 for a harder one, like a kidney stone. Who decides when the issue is easy and when it is hard? I do.
I have had a cold, and a kidney stone and from a patients perspective Dr. Mom can probably diagnose and treat a cold as well as anyone with a diploma.
Kidney stones are generally easy to diagnose (and now that I have first hand experience I can probably tell you what the problem is if there is a next time).
The initial diagnosis of a stone is a bit more complicated, and more costly, since confirmation requires imaging of some sort (usually an MRI).
These rules are followed by Medicare (a national program), Medicaid (a state program), and every private insurance company. This system was intended to pay more when you do more complicated work, but over time it has evolved into a backwards game of doing more complicated work in order to get paid more. Of course the government has hired folks to chase doctors who are flagrantly upcoding.
Hard to believe doctors are not satisfied with $52 and change for a routine office visit.
This is the health care over utilization that you hear about, how doctors and hospitals are incentivized by the amount of visits, tests, prescriptions, and procedures, rather than by the quality of care. In the last few years, there have been many initiatives to reform this system. In Colorado Medicaid, the initiatives are called the accountable care collaborative (ACC). In the ACC, I am the primary doctor of about 800 Medicaid patients, and my office gets a monthly bonus of $3 per person ($2,400 per month) just for participating in the program.
The ACC goals are to reduce the number of ER visits, reduce the number of people who leave the hospital and return a few days later (readmissions), reduce the number of CT scans and MRIs, and increase the number of annual child checkups. Each of these goals are proxies for reducing health care spending. If I can achieve all of these goals to some extent, then my $3 bonus goes up to $4, and my office gets about $800 more per month.
Can you hear the cash register drawer opening?