Medi­care fraud­sters rake in bil­lions

The Washington Times Weekly - - Politics - BY JERRY SEPER AND CHUCK NEUBAUER

Medi­care fraud is a multi­bil­lion-dol­lar busi­ness prey­ing on an ever-in­creas­ing num­ber of re­tir­ing baby boomers who of­ten are be­ing charged for med­i­cal treat­ments and prod­ucts they don’t need and for ser­vices they don’t re­ceive.

The health care re­form leg­is­la­tion pend­ing in Congress — and un­der de­bate in the Se­nate — re­lies on rein­ing in th­ese fraud­u­lent schemes to help fi­nance cov­er­age for the unin­sured. But an­a­lysts in and out of gov­ern­ment ques­tion whether those sav­ings will ever be found.

De­spite bol­stered ef­forts by fed­eral, state and lo­cal law en­force­ment au­thor­i­ties to crack down on fraud­sters, abuse con­tin­ues to grow.

As­sis­tant At­tor­ney Gen­eral Lanny A. Breuer, who heads the Jus­tice Depart­ment’s crim­i­nal divi­sion, told the Se­nate Ju­di­ciary Com­mit­tee’s sub­com­mit­tee on crime and drugs in May that 3 per­cent to 10 per­cent of the $800 bil­lion spent on Medi­care and Med­i­caid each year “is lost to waste, fraud and abuse.”

“As gov­ern­ment spending on health care for the el­derly, dis­abled and poor in­creases, so does the op­por­tu­nity for fraud. Crim­i­nals are de­vis­ing more so­phis­ti­cated ways of steal­ing bil­lions of dol­lars from fed­er­ally ad­min­is­tered health care pro­grams, and they are steal­ing it faster now than ever be­fore,” he told The Wash­ing­ton Times.

Mr. Breuer said the theft of tax­payer money from th­ese pro­grams drives up health care costs and ul­ti­mately dam­ages the econ­omy.

“We have to fight health care fraud in any way we can,” he said. “We are work­ing hard to meet th­ese chal­lenges.”

Much of the dis­hon­esty is in re­gions deemed “high risk for Medi­care fraud,” such as Mi­ami, Los Ange- les, Detroit and Hous­ton. But In­spec­tor Gen­eral Daniel R. Levin­son of the Depart­ment of Health and Hu­man Ser­vices said his of­fice finds fraud “ev­ery­where it looks.”

Even dead peo­ple are re­ceiv­ing ben­e­fits.

Malcolm Spar­row, a fac­ulty mem­ber at Har­vard Uni­ver­sity’s Kennedy School of Gov­ern­ment and a spe­cial­ist on health care fraud, told the same Se­nate panel that heard Mr. Breuer’s tes­ti­mony that the in­spec­tor gen­eral’s of­fice at HHS re­ported in 2000 that $20.6 mil­lion in claims had been made for med­i­cal ser vices per­formed af­ter the Medi­care re­cip­i­ent had died.

In 2006, he said, the of­fice said states made $27.3 mil­lion in Med­i­caid pay­ments for ser­vices af­ter the pa­tient was dead.

Mr. Spar­row said the Se­nate Per­ma­nent Sub­com­mit­tee on In­ves­ti­ga­tions re­ported in July 2008 that “be­tween $60 mil­lion to $92 mil­lion was paid for med­i­cal ser­vices or equip­ment that had been or­dered or pre­scribed by dead doc­tors.”

He told The Times in an in­ter­view that the gov­ern­ment has to in­crease its spending on fight­ing health care fraud by as much as 10 times to re­duce fraud in a mean­ing­ful way.

But he warned: “There is not a lot of po­lit­i­cal will for mas­sive beef­ing-up.”

Medi­care is gov­ern­ment-paid in­sur­ance, pro­vid­ing health care to about 40 mil­lion peo­ple age 65 and older and an­other 7 mil­lion younger re­cip­i­ents who have some type of per­ma­nent dis­abil­ity. The pro­grams, which pay for hospi­tal vis­its, physi­cian ser­vices and pre­scrip­tion drugs, ac­counted for 13 per­cent of the to­tal fed­eral bud­get and 19 per­cent of na­tional health care ex­pen­di­tures in 2008.

Amer­i­cans spend in ex­cess of $2 tril­lion on health care an­nu­ally, and more than $60 bil­lion is lost to schemes that rely on fal­si­fied records, elab­o­rate busi­ness struc­tures and the co­op­er­a­tion of health care providers, sup­pli­ers and even ben­e­fi­cia­ries, ac­cord­ing to HHS of­fi­cials and the Na­tional Health Care An­tiFraud As­so­ci­a­tion, a part­ner­ship of more than 100 pri­vate health in­sur­ers and fed­eral and state gov­ern­ment of­fi­cials.

Mak­ing in­roads

But the fed­eral gov­ern­ment is mak­ing some in­roads, most no­tice­ably through the Medi­care Fraud Strike Force it cre­ated two years ago, which ini­tially tar­geted the Mi­ami area.

Pres­i­dent Bush be­gan that ef­fort in March 2007, and the Obama ad­min­is­tra­tion has since ex­panded it. The task forces are com­prised of HHS and FBI agents and state and lo­cal law en­force­ment of­fi­cials, along with pros­e­cu­tors from the Jus­tice Depart­ment and the U.S. at­tor­ney’s offices.

Their mis­sion is to iden­tify, in­ves­ti­gate and pros­e­cute med­i­cal equip­ment sup­pli­ers and health care clin­ics sus­pected of Medi­care fraud.

Within weeks of its cre­ation, the Mi­ami strike force brought its first case, ac­cus­ing 38 peo­ple of im­prop­erly billing Medi­care for $142 mil­lion in fraud­u­lent ser­vices and pre­scrip­tions. Seized as­sets in­cluded a $200,000 Rolls-Royce Phan­tom and more than $1.2 mil­lion from a cor­po­rate bank ac­count.

Dur­ing a speech ear­lier this year to a joint ses­sion of Congress, Pres­i­dent Obama said Medi­care was sub­ject an­nu­ally to “hun­dreds of bil­lions of dol­lars in waste and fraud” and the fight against fraud was a ma­jor pri­or­ity of his ad­min­is­tra­tion. He called Medi­care a sa­cred trust that must be passed on to fu­ture gen­er­a­tions.

HHS Sec­re­tary Kath­leen Se­be­lius said the ad­min­is­tra­tion was com­mit­ted to “turn­ing up the heat on Medi­care fraud and em­ploy­ing all the weapons in the fed­eral gov­ern­ment’s arse­nal to tar­get those who are de­fraud­ing the Amer­i­can tax­payer.”

Mr. Spar­row de­scribed ef­forts by the Obama ad­min­is­tra­tion to com­bat Medi­care fraud as a “pos­i­tive de­vel­op­ment,” telling The Times that the strike force con­cept was “all good,” but adding that it was “still not enough.” He said the health care in­dus­try has done “a ter­ri­ble job of crime con­trol,” with al­most no pro­ce­dures in place to rou­tinely ver­ify that the claims pre­sented are true or that ser vices pro­vided are med­i­cally nec­es­sary.

“But crim­i­nals, who are in­tent on steal­ing as much as they can and as fast as pos­si­ble, and who are pre­pared to fab­ri­cate di­ag­noses, treat­ments, even en­tire med­i­cal episodes, have a rel­a­tively easy time break­ing through all the in­dus­try’s de­fenses,” he told the Se­nate com­mit­tee.

An­other health care spe­cial­ist, James Frogue of the con­ser­va­tive Cen­ter for Health Trans­for­ma­tion, es­ti­mates that to­tal fraud and waste could ex­ceed $120 bil­lion a year, cit­ing im­proper pay­ments for durable med­i­cal equip­ment as an ex­am­ple of Medi­care’s in­abil­ity to stop fraud.

To­tal in­dif­fer­ence

Mr. Frogue said he was pleased Mr. Obama has made Medi­care fraud a ma­jor is­sue, but that there had been “a to­tal in­dif­fer­ence” at HHS’ Cen­ters for Medi­care and Med­i­caid Ser­vices in deal­ing with fraud of durable med­i­cal equip­ment. He said Gov­ern­ment Ac­count­abil­ity Of­fice stud­ies have doc­u­mented abuse in the durable med­i­cal equip­ment area that are “sev­eral steps be­yond laugh­able.”

Mr. Levin­son’s of­fice also has re­ported on ram­pant fraud in the durable med­i­cal equip­ment in­dus­try, which is sup­posed to pro­vide wheel­chairs, pros­thet­ics, orthotics and sup­plies to pa­tients. It found that 31 per­cent of the sup­pli­ers of such equip­ment in Florida ei­ther did not main­tain offices or were not open dur­ing posted hours.

His of­fice said the Cen­ters for Medi­care and Med­i­caid Ser­vices’ over­sight of durable med­i­cal equip­ment sup­pli­ers was in­ad­e­quate to pre­vent fraud and that sham com­pa­nies had been al­lowed to bill Medi­care for nonex­is­tent or un­nec­es­sary sup­plies. The Cen­ters for Medi­care and Med­i­caid Ser­vices, for­merly known as the Health Care Fi­nanc­ing Ad­min­is­tra­tion, has es­ti­mated that Medi­care im­prop­erly paid $1 bil­lion in a one-year pe­riod for durable med­i­cal equip­ment.

“It is more ef­fi­cient and ef­fec­tive to pro­tect the pro­grams and ben­e­fi­cia­ries from un­qual­i­fied, fraud­u­lent or abu­sive providers and sup­pli­ers up­front than to try to re­cover pay­ments or re­dress fraud or abuse af­ter it oc­curs,” Mr. Levin­son said.

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