If the polls are to be believed, most American seniors love Medicare. It’s easy to understand why: When seniors are sick, they get care, and the bills get paid. When a senior citizen walks into a storefront health clinic and seeks treatment—a prescription drug, say, or some sort of physical therapy—the service is performed and the patient walks away feeling better, if only because he knows that whatever the bill might be, the taxpayers will pay for it.
Doctors generally don’t love Medicare as much as seniors, mostly because the program’s reimbursement rates to health care providers are somewhat lower than the rates paid by private insurers. But doctors do love one thing about socialized health care for the elderly: its certainty. Seniors seek medical assistance, doctors respond with whatever treatment they deem necessary, and Washington picks up the tab. The providers must pass through a few cursory procedural requirements and complete some paperwork, but for the most part the government doesn’t ask questions; it just sends money. What’s not to like?
For taxpayers, this arrangement leaves much to be desired. What if the treatment wasn’t necessary or the patient didn’t want it, but the provider billed the government for it anyway? What if the storefront clinic didn’t exist at all?
This is exactly what’s happening all across the country, as schemers, career criminals, and unscrupulous providers take advantage of the government’s lax controls over Medicare payments. Taxpayers are lining the pockets of health care criminals.
No one knows for sure exactly how much fraud exists in the Medicare system, but most experts agree that it costs billions of dollars each year. Between 2007 and early 2011, the federal government reports having won convictions against 990 individuals in fraud cases totaling $2.3 billion. In 2010, it recovered an additional $4 billion through collection of non-criminal penalties on health providers who improperly billed the government. But that’s just a fraction of the total problem.
According to a 2011 report from the Government Accountability Office, Medicare makes an estimated $48 billion in “improper payments” each year, an estimate that’s almost certainly lower than the actual amount since it doesn’t include bad payments within the prescription drug program. Some of that money, perhaps a lot of it, is fraud, but experts differ on exactly how much. On the very low end, the National Health Care Anti-Fraud Association has estimated that about 3 percent of all U.S. health care spending is fraud. Assuming fraud is distributed equally across payment systems, that would mean Medicare’s share is roughly $15 billion a year. But almost all analysts believe fraud is much more common in Medicare than in it is in payments by private insurers. Toward the high end, Sen. Tom Coburn (R-Okla.) once suggested the number could be as much as $80 billion a year. In March, the executive director of the National Health Care Fraud Association told members of Congress that total health care fraud losses likely range from $75 billion to $250 billion each year.
With $36 trillion in unfunded liabilities just over the horizon, and with Medicare’s own actuaries projecting insolvency by 2024, Medicare is a fiscal nightmare. It’s the single biggest driver of the long-term federal debt, and just about everyone in Washington is looking for ways to cut back on health spending without trimming legitimate services. Last year the program paid out slightly more than $500 billion in reimbursements to doctors and other providers. Paring it back by $48 billion a year—or even half that amount—by attacking criminal behavior would be a major accomplishment and could go a long way toward reducing the program’s unsustainable fiscal burden.
Every politician with a pulse talks a big game about eliminating Medicare “waste, fraud, and abuse,” yet nothing much seems to get done. The bigger the government’s role in paying for Americans’ health care, the easier it becomes to divert that revenue stream into the bank accounts of criminals.
Florida: The Medicare Fraud State?
Fred E. Dweck was 74 when he was arrested in December 2009. Dweck, a top surgeon at two Broward County hospitals, was the director of Courtesy Medical Group, a health care business in Miami that, among other things, sent patients to home health clinics via referral. In the four years before his arrest, according to multiple news accounts, Dweck had bilked Medicare out of $24 million and falsely billed the government for an additional $15 million that was never paid. Dweck’s gimmick, like the payment system he was manipulating, was simple: He gave the go-ahead to official orders for prescription drugs, staff-assisted insulin injections, in-home visits by nurses, and an assortment of other treatments for an estimated 1,279 different patients, none of whom actually needed treatment. With the help of five nurses who faked bundles of official patient records and payment forms, Dweck raked in cash on the taxpayer tab. Less than a year after his arrest, he pleaded guilty.
Dweck’s case is not unusual, especially in the region of South Florida he called home. Thanks to a larger-than-average senior population, which provides a larger-than-average potential pool of Medicare dollars from which to steal, the region is widely considered the epicenter of Medicare fraud. In 2009 the state’s rehabilitation facilities billed Medicare $310 million, roughly 140 times what similar facilities billed in New York, another state with a large senior population. The state’s mental health clinics charged $421 million, according to a Miami Herald investigation. That’s roughly four times the amount by Texas, another major fraud center that boasts a substantially larger overall population and a comparable number of Medicare enrollees.
In January 2009, the Department of Health and Human Services (HHS), which oversees Medicare and its administrators at the Centers for Medicare & Medicaid Services (CMS), started a regularly updated Web page devoted to nothing but news stories about fraud in Florida. Several times a month, a new story appears with shocking numbers: $200 million in claims for unnecessary mental health services, $24 million for a scheme built around AIDS injections, $61 million in real money paid to a man running a network of fake health clinics, another $21 million in fraudulent payments to a health company senior vice president who administered considerably less care to HIV-positive patients than he claimed. The fraudsters used their ill-gotten gains to live the good life, buying horses, Mercedes, and Ferraris. One bought $500,000 worth of jewelry. Meanwhile, an already overburdened program continues to bleed taxpayer dollars.
For years, Florida’s league of health care fraudsters operated with minimal federal interference. They forged medical records, bought and sold patient ID numbers, billed for treatments not provided, and ran criminal enterprises out of fake storefronts. In 2006 investigators from the HHS inspector general’s office made unannounced visits to 1,581 Medicare suppliers in South Florida and found that more than one-third didn’t even maintain a business office at the address listed on Medicare’s payment files.
In 2007 the federal government set up its first ever “Medicare strike force” in Miami, assigned to target high-dollar fraud cases. As the news reports compiled by HHS show, there were plenty to be found. According to Alex Acosta, the former U.S. attorney for the Southern District of Florida, the newly created Medicare team charged more than 700 individuals with more than $2 billion in fraud between its inception and the middle of 2009.