Medicare fraudsters rake in billions

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Medicare is a 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 Anti-Fraud 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 services 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.

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