Medicare Thieves
Stealing from the government-run health care system is much easier—and potentially more lucrative—than dealing drugs.
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GoogleIf 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.
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Thank you Reason for finally writing too about the biggest problem with Medicare and Social Security. The problem is fraud! Doctors billing for patients that aren't really patients. People using expired social security numbers. These are the problems with the system. Fix this and Medicare and SS will provide like promised to you and me.
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Well, that, and the "fixing the pyramid scheme" problem, and the "Congress spending all the surpluses on unrelated stuff" problem, and the ...
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Yeah, I have to agree: fraud is the least of my concerns with the whole Medicare program. How about trillions of dollars in unfunded liabilities?
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Let's all leech off the state. Gee, the money's really great!
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So instead of reforming Medicare to fight fraud, the government just creates another agency "task force" to address it. Well, I guess that's more jobs, right?
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Its not just fraud, its incompetence.
My mother received some equipment from Medicare that she did not need, the equipment was brand new and unused but it took months of calling to finally get them to take it back and the people picking it up said that it would probably be sold for scrap because they don’t reuse equipment even when its not used.
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I think I see a new career move for me !
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Scot Brown is "shocked" the government can't do better than private industry? Does he know nothing of history? Can he name one single thing the government does better than the private sector?
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Employ people who wouldn’t be able to keep a job in the real world. It does that pretty well.
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And that's all it does well.
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Having once worked for the federal government, I can admit that you got me there. It does do that far too well. And the sad part is they all think they are above average and so much smarter than the rest of us.
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There's a simple solution: a lifetime and yearly cap on benefits. That would more closely align the interest of the patient with the interests of the taxpayer. Of course, the supposedly fiscally conservative tea-party would complain about death panels.
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There's a simple solution: a lifetime and yearly cap on benefits.
Couple that with immunity for any healthcare provider who refuses to provide care to a patient because they can't pay (or for any reason, really), and you've got something.
Without immunity for refusing patients, these people will keep showing up and getting care even after they've busted their cap, and somebody else has to cover the bill.
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Who cares about the fraud? While we're redistributing wealth, medicare fraud is better than putting them in jail, welfare or unemployment; there is no additional overhead!
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It is the 'Tragedy of the Commons' transferred to health care. Why can't government do anything better than private industry? Because the motivations are totally different; duh.
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when i worked in hospital admitting medicare was the most common patient they would come in with doctors orders for tests treatments or what not and we would have to pair the prognosis or diagnosis with the procedure. some patients came in without qualifying ailments so we asked questions until such time as we found one that worked and medicare got paid.
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when i worked in hospital admitting medicare was the most common patient they would come in with doctors orders for tests treatments or what not and we would have to pair the prognosis or diagnosis with the procedure. some patients came in without qualifying ailments so we asked questions until such time as we found one that worked and medicare got paid.
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thanx
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thanx
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Another countervailing factor not mentioned in the article is patient privacy. How do you check whether a patient actually exists or actually has gotten treatment unless you investigate actual people?
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The problem is more about checking whether the people who supposedly own the companies exist. And Medicare does a terrible job of that, then makes honest providers pay for their incompetence.
Last year they instituted a $50,000 bond requirement for most providers, even the ones who have been honestly doing business with Medicare for years. And what the hell is $50,000 going to cover? Do you think they have the resources to catch these fraudulent companies before they run off with $50,000, musch less $500,000? They don't. They're the government. -
The solution is simple: do away with it and let the market figure itself out with private insurers. The gov. should not be in the health care business.
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This is an important topic and I am glad Reason is covering it. I question the premise though. Do we think fraud does not exist in the private sector? I absolutely hate going to the dentist for example, because they milk my insurance company. Auto repair shops practice the same shenanigans. Of course, as consumers we have some tools to fight back with and insurance companies can fight the fraud as well, but it exists.
Just because our congressional reps. are captured by moneyed interests does not mean those same moneyed interests are not going to find ways to milk the system if it is privatized. Fraud is part of human nature (libertarians ought to know that) and the best we can do is to keep exposing it and fighting it. How about stop yelling about "socialized this and that" and start demanding accountability from medicare and helping it run better? Nope, libertarians won't go down that road because they benefit from the fraud. It just fuels their anti-government arguments. But remember, the same fraudsters will be active in the private industry. I would rather have some input through the democratic process than to trust that the corporations and "market competition" will take care of fraud. It ain't going to happen because even if you libertarians get rid of the government the fraudsters will just create more government in order to bilk it. That is the reality we have to deal with.
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Govt is completely different because you can't go down the street and pick another govt. It is a monopoly. With the insurance cos, the investors and patients will punish them if they are insolvent or over-priced (the consequence of fraud), but with the govt nothing ever happens - except the taxpayers get screwed.
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DJF-"My mother received some equipment from Medicare that she did not need"-
someone must have ordered it for her- her physician, a discharge mgr at the hospital, a physical therapist? Companies can't just deliver equipment without an order. Did she sign for it? And it's not "from Medicare"- they may be paying for it, but it's through a medical equipment company. We get orders from doctors all the time, and then the patient refuses it at delivery or does as your mother did- accepts it, then later says she doesn't want it. A lot of times people decide they don't want it when they discover it's not "free", because Medicare only pays 80%, and they are responsible for 20%.
If the equipment truly appeared out of nowhere, you should contact Medicare. But I would check with them concerning who ordered it first. -
The bigger problem is the "all you can eat model" Medicare uses. Just print, print, print! Everything is free!
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The picture is of an obese senior working on developing type 2 diabetes into type 1 while he surfs the net for seedy things. The senior also gets a special unlimited Verizon streaming plan paid for by the taxpayer. See, as seniors get more numerous, as a politian you want to keep them happy so they vote for you. America is truly sick.
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The solution is to quit providing Durable medical goods including Power Chairs, Lift chairs, Diabetes meters, Nebuizers etc. If they purchase them on their own they may apply to Medicarefor reimbursement. Price to Medicare by these organizations is obscene.
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Does anyone ever mention that we pay for this? I pay about $360.00 every 3 months and because I am pretty healthy for my age I do not feel that I am stealing from anyone when I need a prescription. My husband is retired military and his pay was never in the upper income bracket. He paid all of his life for his benefits, and pledged his life for the USNavy. Neither of us has had a free ride, as I paid for teacher retirement insurance all of my working life. Then something called FICA was taken out of my pay, which was taking from me for someone else! The real thieves are the slackers who pay NO income tax and get all of their stuff because the rest of us do pay.
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EXCELLENT ARTICLE, MAYBE VISA OR MASTERCARD SHOULD TAKE OVER MEDICARE
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Should the US do away with large corporations? Apparently it is incredibly easy to defraud stakeholders and the government of millions and millions of dollars through corporate scams too. These corporate thieves cost the American tax payer so much money. If there are laws in place along with enforcement agents designed to prevent these financial loses, and if that is supposed to be a reasonable response, then why is it insufficient when it comes to medicare?
Taking care of any living thing, especially people, is expensive. No parent makes a profit by raising their children.
Governments that extend health support to their citizens benefit by a healthier work force to move the economy. If a government wants to be strong, its people must be strong.
Any corporation, that invests in its employees, and ensures that they are healthy and educated benefits from the strength of its work force. Those that fear losing that investment to other headhunting competitors are narrow minded.
Healthy and educated people will do their best surrounded by others of the same. Everyone must have access to support the full expression of each other's capabilities. It is the same for countries.
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