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 Angeles, 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 services 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 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.
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.
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.