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Cleaning up Medicare fraud will be key to paying for President Barack Obama’s proposed health care overhaul. Federal officials have allocated more money and manpower to fight fraud, setting up strike forces in seven cities with a plan to expand to a dozen more. So far, the operations are responsible for more than 720 indictments that collectively billed the Medicare program more than $1.6 billion.

Around the country, the schemes have morphed from the typical medical equipment scam in which clinic owners billed Medicare dozens of times for the same wheelchair. Now, officials say, Medicare fraud involves a sophisticated network of doctors, clinic owners, patients and patient recruiters.

Violent criminals and mobsters are also tapping into the scams, seeing Medicare fraud as more lucrative than dealing drugs and having less severe criminal penalties, officials said.

For decades, Medicare operated under a system that paid providers first and investigated later. That pay and chase method was a boon for crooks, giving them 90 days lag time to milk the system and flee with millions before authorities were aware a crime had been committed.

Sebelius toured vacant storefronts in Miami on Friday where Medicare fraudsters set up shop, including bogus clinics operated by Cuban immigrants Carlos, Luis and Jose Benitez. The brothers are the agency’s most-wanted fugitives, charged with bilking $119 million for costly HIV drugs that patients never received — and buying hotels, helicopters, boats and even a water park with their spoils. They allegedly fled to Cuba, where authorities believe they remain.

A new joint effort by HHS and the Department of Justice enables law enforcement to view Medicare claims in real time and flag suspicious patterns. More stringent screening methods, including more comprehensive background checks, have also been put in place. The agency gets roughly 18,000 applications daily to become a Medicare provider. Now they can put a moratorium on new applications in certain areas, like physical therapy, if they notice a spike in fraudulent activities.

The changes are paying off.

Investigators visited 1,600 providers in Miami in the past few months, making sure legitimate businesses were operating at the addresses. In 2008, authorities required all medical equipment providers in Miami to apply for new certification, hoping the paper hurdle would deter scammers. The number of claims dropped by $1.6 billion.


Hays reported from New York.