September 5, 2010 8:36 PM
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Medicare Fraud: A $60 Billion Crime
According to the FBI, all you have to do to get into this business is rent a cheap storefront office, find or create a front man to get an occupational license, bribe a doctor or forge a prescription pad, and obtain the names and ID numbers of legitimate Medicare patients you can bill the phony charges to.
"There's a whole industry of people out there that do nothing but provide patients," Waterman told Kroft.
Asked what he means by "provide patients," Waterman said, "I'm just talking about lists of patients, people's names, Social Security numbers, addresses, and date of birth. With those four things, you can bill for a patient."
Asked where Tony got his fictitious customers, he told Kroft, "They'll be people that would sell you a list of maybe $10 per patient. And I'll buy 1,000, 10,000 maybe at a time. And then you just fill in the patient's name and you send it. And then I used the same patients with the same company and then the next company I used the same patients and I kept using them, and they'll pay for the same patient every time."
Once the crooked companies get hold of the patient lists, usually stolen from doctors' offices or hospitals, they begin running up all sorts of outlandish charges and submit them to Medicare for payment, knowing full well that the agency is required by law to pay the claims within 15 to 30 days, and that it has only enough auditors to check a tiny fraction of the charges to see if they are legitimate.
If they're not, it's usually people like 76-year-old Clara Mahoney who catch them.
She began to notice all sorts of crazy things turning up on her quarterly Medicare statements back in 2003 - things that Medicare paid for on her behalf that she had never ordered, never wanted and never received.
"Air mattresses, a wheel chair, urine bag for my leg," Mahoney said, listing some of the unwanted items Medicare was charged for on her behalf. "It was getting so I didn't wanna open up the explanation of benefits because you know, it's like, 'Oh, no. Not again.'"
Mahoney, who says she hasn't been sick in 30 years, began calling Medicare to tell them that someone was ripping them off. But the only responses she received were letters saying that someone was looking into it. The bogus charges are still turning up on her statements.
"And I continued to report and I kept saying, 'Can't you flag my account? You know, I'm not getting any equipment or supplies. Nothing,'" she told Kroft.
They have been "looking" into Mahoney's issue for six years.
Once criminals like Tony get their hands on usable patient numbers, they try and charge Medicare for the most expensive equipment possible, which requires having access to a list of Medicare codes.
Asked what some of the best codes were, Tony told Kroft, "Artificial limbs, electric arms, electric wheelchairs. I mean, a regular patient, you can put them on two artificial legs and an artificial arm and they'll pay for it."
And that's what happened to former Federal Judge Ed Davis. He was one of those patients who started getting charges on his Medicare statement for artificial limbs.
"And I looked at it and it had charges for prosthesis. And I knew I had my arms," Judge Davis explained.
Though he has two healthy arms, his statement showed Medicare had been billed for a left and a right arm.
"Didn't anybody in Medicare check to see if any of these charges were valid?" Kroft asked Tony.
"Sometimes they'll do it. But by the time they did it, it was too late," Tony said. "We've already made $300,000, $400,000, $500,000 on it. And then we will never send 'em nothing back. And then at 30 days they'll send an inspector to your office. And by that time…it's all closed down."
They would pay first and send an auditor later.
Copyright 2010 CBS. All rights reserved. "There's a whole industry of people out there that do nothing but provide patients," Waterman told Kroft.
Asked what he means by "provide patients," Waterman said, "I'm just talking about lists of patients, people's names, Social Security numbers, addresses, and date of birth. With those four things, you can bill for a patient."
Asked where Tony got his fictitious customers, he told Kroft, "They'll be people that would sell you a list of maybe $10 per patient. And I'll buy 1,000, 10,000 maybe at a time. And then you just fill in the patient's name and you send it. And then I used the same patients with the same company and then the next company I used the same patients and I kept using them, and they'll pay for the same patient every time."
Once the crooked companies get hold of the patient lists, usually stolen from doctors' offices or hospitals, they begin running up all sorts of outlandish charges and submit them to Medicare for payment, knowing full well that the agency is required by law to pay the claims within 15 to 30 days, and that it has only enough auditors to check a tiny fraction of the charges to see if they are legitimate.
If they're not, it's usually people like 76-year-old Clara Mahoney who catch them.
She began to notice all sorts of crazy things turning up on her quarterly Medicare statements back in 2003 - things that Medicare paid for on her behalf that she had never ordered, never wanted and never received.
"Air mattresses, a wheel chair, urine bag for my leg," Mahoney said, listing some of the unwanted items Medicare was charged for on her behalf. "It was getting so I didn't wanna open up the explanation of benefits because you know, it's like, 'Oh, no. Not again.'"
Mahoney, who says she hasn't been sick in 30 years, began calling Medicare to tell them that someone was ripping them off. But the only responses she received were letters saying that someone was looking into it. The bogus charges are still turning up on her statements.
"And I continued to report and I kept saying, 'Can't you flag my account? You know, I'm not getting any equipment or supplies. Nothing,'" she told Kroft.
They have been "looking" into Mahoney's issue for six years.
Once criminals like Tony get their hands on usable patient numbers, they try and charge Medicare for the most expensive equipment possible, which requires having access to a list of Medicare codes.
Asked what some of the best codes were, Tony told Kroft, "Artificial limbs, electric arms, electric wheelchairs. I mean, a regular patient, you can put them on two artificial legs and an artificial arm and they'll pay for it."
And that's what happened to former Federal Judge Ed Davis. He was one of those patients who started getting charges on his Medicare statement for artificial limbs.
"And I looked at it and it had charges for prosthesis. And I knew I had my arms," Judge Davis explained.
Though he has two healthy arms, his statement showed Medicare had been billed for a left and a right arm.
"Didn't anybody in Medicare check to see if any of these charges were valid?" Kroft asked Tony.
"Sometimes they'll do it. But by the time they did it, it was too late," Tony said. "We've already made $300,000, $400,000, $500,000 on it. And then we will never send 'em nothing back. And then at 30 days they'll send an inspector to your office. And by that time…it's all closed down."
They would pay first and send an auditor later.
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