Medicare Fraud: A $60 Billion Crime

A.G. Holder Tells 60 Minutes More Oversight Is Needed; Scammer Explains How Easy It Is To Steal Millions

(CBS)  Of all the problems facing the United States right now, none are more important than health care.

President Obama says rising costs are driving huge federal budget deficits that imperil our future, and that there is enough waste and fraud in the system to pay for health care reform if it was eliminated.

At the center of both issues is Medicare, the government insurance program that provides health care to 46 million elderly and disabled Americans. But it also provides a rich and steady income stream for criminals who are constantly finding new ways to steal a sizable chunk of the half trillion dollars that are paid out each year in Medicare benefits.

In fact, Medicare fraud - estimated now to total about $60 billion a year - has become one of, if not the most profitable, crimes in America.

This story may raise your blood pressure, along with some troubling questions about our government's ability to manage a medical bureaucracy.

StopMedicareFraud.gov

If you want to find Medicare fraud, the first place you should look is South Florida, where 60 Minutes and correspondent Steve Kroft were told it has pushed aside cocaine as the major criminal enterprise.

It's a quiet crime - there are no sirens or gunfire. The only victims are the American taxpayers, and they don't even know they are being ripped off.

FBI Special Agent Brian Waterman, who 60 Minutes rode with for several days, told us the only visible evidence of the crimes are the thousands of tiny clinics and pharmacies that dot the low-rent strip malls.

You don't even know they're there because there's never anyone inside. No doctors, no nurses and no patients.

"This office number should be manned and answered 24 hours a day," Waterman explained, standing outside one of those small, unstaffed businesses.

The tiny medical supply company billed Medicare almost $2 million in July and a half million dollars while 60 Minutes was there in August, but we never found anybody inside, and our phone calls were never returned.

Sometimes, they don't even have offices: we went looking for a pharmacy at 7511 NW. 73rd Street that billed Medicare $300,000 in charges. It turned out to be in the middle of a public warehouse storage area.

"They've already told us that there's no offices here," Waterman told Kroft. "There are no businesses here. In fact they are not even allowed to have a business here."

Waterman is the senior agent in the Miami office in charge of Medicare fraud. And Kirk Ogrosky, a top Justice Department prosecutor, oversees half a dozen Medicare fraud strike forces that have been set up across the country.

The office Kroft visited operates out of a warehouse at a secret location in South Florida and includes investigators from the FBI, Health and Human Services, and the IRS.

"There's a healthcare fraud industry where people do nothing but recruit patients, get patient lists, find doctors, look on the Internet, find different scams. There are entire groups and entire organizations of people that are dedicated to nothing but committing fraud, finding a better way to steal from Medicare," Waterman explained.

"Is the Medicare fraud business bigger than the drug business in Miami now?" Kroft asked.

"I think it's way bigger," Ogrosky said.

Asked what changed, Ogrosky told Kroft, "The criminals changed."

"Sophistication," Waterman added.

"They've figured out that rather than stealing $100,000 or $200,000, they can steal $100 million. We have seen cases in the last six, eight months that involve a couple of guys that if they weren't stealing from Medicare might be stealing your car," Ogrosky explained.

"You know, we were the king of the drugs in the '80s. We're king of healthcare fraud in the '90s and the 2000's," Waterman added, speaking about South Florida.

[LStansbury]

The scammers are so busted! Louisiana Senior Medicare Patrol is already signing volunteers up to find the bad guys and has had calls that are under investigation alreadyy...you can sign up at www.stopmedicarefraudla.org

[OregonJames]

It would be a simple task to offer a substantial reward to those that turn in those committing fraud. A few well publicized million dollar rewards and a few lengthly prison sentences might shrink that 60 billion in frauds substantially in a short time.

[cbsblogger]

A little common sense and incentive is all it would take to put a huge dent into Medicare Fraud, just as it would have done for stopping illegal immigration. Implement new checks before payments are made, provide very harsh criminal penalities, increase dedicated staff to ferret out fraud, and encourage the public to report and get rewards.

The answer is that Congress is being influenced by the beneficiaries such as the Mafia, Russian/Jewish mob and big business to do nothing.

[mosquitoreport]

Widespread Fraud and corruption starts with the Judiciay members taking full control of our government who is to protect the people! The 60 minute report on Heath care fraud is the tip of the ice berg.

"The accumulation of all powers, legislative, executive, and judiciary, in the same hands, whether of one, a few, or many, and whether hereditary, self-appointed, or elective, may justly be pronounced the very definition of tyranny" (James Madison, Federalist No. 48, Feb. 1, 1788).

Think about how extensive this could be. Every aspect of our country is being preyed on by one group of people. If we lived back in the 1700s we would have a tea party and take up arms to fightback. Today we are singled out and surpressed by the judicial system.

For the record I submmitted testimony to the Senate Judiciary for effective stratigies against health care fraud on Oct.28, 2009. If you think health care fraud is bad look deeper at this issue and these numbers. All our propsed laws have to go past the U.S. Senate committee on the Judiciary and guess who controls it. This might be a good time to get to get pissed.

United States Senate Committee on the Judciary is made up of 19 total members of which 13 are lawyers and 6 not lawyers the american people are being screwed! This effectively gives total control of our government to one group of people the judicial members. They currently control all branches 1) executive branch " controlled by Lawyer" 2) legislative branch controlled by lawyers "committee on the Judiciary controlled by 13 lawyer 3) Judiciary "All legal professionals" No wonder why we have such wide spread corruption and fraud there is no one to to protect the people!!! Less than 1% of attorneys are ever prosicuted for misconduct or crimes they committ placing them above our laws.

We the people need protection and oversight of our Judicial Branch members to truly stop corruption and fraud.

[e-mail]

[rocketjl]

Mr. Holder, if the bad guys are stealing $60B from us, don't you think we should go ahead and put a stop to it? Let's see, I'll use some Alabama math to help you. We can hire ten thousand sharp people at a $100K each at a cost of $1B to save $59B of our tax dollars. If I can figure this much out, I wonder why all the people in the government cannot. I guess the light switch in this case is Obama's health care public option. All the problems already known cannot be fixed until we get a public option health law. ?????

[hockeyeast]

...and we want these fools(gov.) to run our health care...god help us.
Imagine that fraud!!!!

[SheilaGC]

I have written my Senators asking for a finger value law. We have always valued information. Anyone has a vast amount of information at their finger tips with the use of the Internet. I think a fair value to the information on the Internet would be the last three fingers from the hand of someone found guilty of an Internet crime be cut off from their hand. I encourage anyone who reads this to also write your Senators and ask for finger value laws for Internet Crime.

[WonderingY]

And these people are cutting payments to hospitals and doctors who actually take care of people. Think of the healthcare we could have!

[worried_grandparent]

Your story?s focus should have been on the government?s inability to efficiently administer any programs that compete with the private sector. I?ve never read about massive fraud occurring at Blue Cross or any other private health insurance program. Our politicians have proved themselves incapable of repairing Medicare and Social Security and to think the government could even consider piling a third financial disaster on our children and grandchildren is mind-boggling.

[ccrolius]

Medicare fraud can easily be prevented by simply entering the address for each new Medicare provider into Google Maps and use the street level view to determine if it is a legitimate business. If the address looks like a Mail Box store, a self storage business or a residence, then immediately put a hold on all payments and send an FBI agent to investigate. Millions of dollars in fraud could be prevented with zero additional cost to the taxpayer.

[American_Assn_forHomecare]

While the segment correctly assigns responsibility for stopping fraud to the federal agency in charge (Health and Human Services? Centers for Medicare and Medicaid Services), it did not mention that the vast majority of home medical equipment providers, who follow every rule and serve their communities extremely well and cost-effectively, are also victims of this Medicare fraud because they are unfairly smeared with a broad brush by the media, by Congress, and by Medicare.

60 Minutes did not mention the new federal accreditation and surety bond requirements that should go far toward excluding criminals from operating phony durable medical equipment companies and billing Medicare. 60 Minutes failed to mention that the amount of Medicare fraud that can be attributed to the medical equipment sector cannot possibly account for more than one or two percent of the $60 billion in Medicare fraud cited in the headline. Where is the hard-hitting investigative reporting of the other $59 billion in fraud? This "shocking" 60 Minutes segment is a warmed-over story that has been aired for many, many years now. Why is there so little focus on actually fixing the problem instead of the breathless narration, as if this were a new story?

Nearly a year ago, the home medical equipment sector itself proposed tough, new anti-fraud measures that would help stop fraud at the front end of the Medicare payment process, rather than relying on the current pay-and-chase system of catching criminals. See www.aahomecare.org/stopfraud to view the American Association for Homecare anti-fraud legislative action plan. The Association is working with Congress to get these proposals enacted into law. Shouldn't that have merited a few words?

[usorname]

Does anyone know how to get the names of local medical supply companies registered with Midicare. There is a law that if you file a lawsuit against a company that is defrauding the gov. and the gov picks up the case and recovers money from the company you get a pretty good chunk of the money.

[kdinyari]

And we want to expand the capability, responsibility, and the cost for an organization that has failed so miserably by 10+ fold? Why not fix the smaller problem first and use the saving to expand it later?

[1geri7]

Any legitmate business in this country will have a Federal Tax ID Number. Cross checking the business name with the tax ID number should help. Just a simple program and cooperation amongst agencies.

[lindawis]

As a medical billing specialist, I find it hard to believe that it is so easy to obtain a Medicare provider identifacation number without any investigation. As soon as a durable medical equipment provider application is received a red flag should appear, Medicare should be able to confirm with the IRS if this is a legitimate business or a fraud.

[investi206]

The Government DOES NOT pay claims. They hire private insurance companies all across the country to pay Medicare, Medicaid, Tricare and Federal Employees medical claims. Those same private insurance companies that protect their own bottom lines against fraud, do very little to protect the Government against bogus fraud claims. Those private insurance companies pay pay pay on the Government claims with Government money, but deny deny deny claims when it comes to their own private policyholders. And best yet, they use the same claim payment system for both!!! They get paid millions and millions of taxpayer dollars to process the Government backed claims with taxpayer money. But when it comes to their own bottom line, they protect against bogus fraud claims. The Governments only recourse is to use HHS, FBI, DOD IG, and US Attorney investigators to recover the fraudulent funds that shouldn't have been paid out by these private insurance companies. That is why the private insurance companies have a lower fraud ratio, they don't pay it in the first palce, but they do for the government claims.

[syndiesel]

I agree with Clara. Obviously she is on that list that "Tony" bought as well as others. Flag her account and call her everytime a charge appears. If not legite then inform the fraud investigators and nab the crooks before they cash any checks. How hard can that be to implement? This does worry me about a public health care option. Does the same type of fraud occur to health insurance companies in the private sector?

[jcam78]

To avoid a missed patient appointment some Doctors/Hospitals call their patients a day before an appointment to remind the patient of the appointment's time and place.
Before paying the submitted claim Medicare could call the patient to confirm that the medical product being billed is actually being ordered for the patient.
This call verfication can either be done by a call center agent or be completely automated via computer call processing(predictive dialer). A fully automated computer verfication call would be well under a dollar a call.
This 60 minute report mentions that Medicare pays out over a billion claims a year for over $430 billion. This would be less that a billion dollar solution that would make a serious reduction in the $60 billion Medicare fraud problem.
At the very least any new medical supply company that begins billing Medicare should have should have all their claims confirmed with the patients receiving the medical products for at least the first few months.
Also Medicare should examine how other countries that provide public health care prevent billing fraud.
Why this Medicare fraud has been going on for so long should be examined. It makes you wonder if there aren't some possible reasons why Medicare doesn't want to take some significant steps in reducing the $60 billion dollars a year loss to fraud. Note the 60 minute report mentions the experience of Clara Mahoney who was trying to inform Medicare for 6 years that Medicare was being billed on her behalf for products she never ordered or received.
How ironic: before I could post this message CBS required that I first create an account login and provide my email address. CBS then emailed me a message with a link to click to confirm that my entered email address was legit in order to complete my CBS news account registration -- All this verfication just to post a message? I think Medicare can at least verify that their patients are receiving the claimed medical products and that the medical supply companies are legit before our tax money is spent - no excuses.

[to_john]

Maybe there is fraud because there is no universal health care? Maybe if health care were managed like it is in Europe and there is not a profit motive for health care, there would not be reason for fake claims? Maybe the health care INDUSTRY doesn't care if there is fraud because they make money on it whenever a claim is made instead of focusing on eliminating sickness and disease? Wake up people. Universal health care is the only way to eliminate our idiotic system of profiteering from YOUR health. Universal health care is the only way to REDUCE fraud and costs across the board. Universal PUBLIC RUN health care is the only way to change our system for the good of EVERYONE.

[MPHgrad]

very enlightened point to_john. I attended a conference a couple of months ago and the speaker was the president of a major hospital system in Atlanta. He supports reform, but more importantly, he advocates for a non-profit system. He's been in the health care industry for decades in this capacity and for insurance companies. Prior to that he worked in finance. I concur with both of you. This is a broken system and morally corrupt in that the profit is at the sacrifice of illness.

[SocietysNightmare]

.... And people want a public healthcare option in the new legislation currently stalled in Congress.