Pentagon Health Care Faces Fraud Threat

identity theft of Pentagon health records
AP / CBS
The system for providing health care to Department of Defense employees remains vulnerable to fraud overseas, years after a Philippines company swindled taxpayers out of $100 million, a recent report warned.

Pentagon officials say they are taking several steps to implement tighter controls over the program in the coming months and years. But a spokesman acknowledged this week that identifying and correcting problems in the Tricare program "is time consuming and complex" given its mission to provide benefits all over the globe.

The Sept. 30 report by the Department of Defense Office of Inspector General found lax controls in paying claims to overseas doctors and hospitals who treat active and non-active duty military personnel.

Overlapping responsibilities for claims meant Department of Defense employees, military contractors and military bases accidentally made duplicate payments for the same services, auditors found.

Auditors said they could not determine how many duplicate payments were made because records were poorly kept. However, they said their limited review identified 90 instances between 2004 and 2006 in which multiple organizations paid for the same health care benefits, totaling $50,000 in overpayments.

Each organization has no way of knowing whether a specific claim has already been paid and may calculate benefits differently, leading to overpayments, the report said.

The report found no evidence that fraudulent claims had been submitted but warned of a "substantial risk" that overseas patients, employees and providers could get away with ripping off the program if they tried.

Similar weaknesses allowed widespread abuse by Health Visions Corp., a Philippines company that submitted fraudulent and inflated claims to bilk the U.S. government of by $100 million between 1998 and 2004, the report noted. "Health care providers and patients could similarly exploit the weaknesses we identified in this report," it said.

The most recent audit looked at the overseas component of the Supplemental Health Care Program, which covers services civilian doctors provide to certain active duty service members, reserve personnel, ROTC students and others.

In response, the Pentagon said it would award a contract to have one company process and pay all overseas claims. That should eliminate duplicate payments when the changes go into effect as early as next year, officials said.

Program spokesman Austin Camacho said each military service has had its own approach for paying overseas claims and replacing them with a single contract should be more efficient.

"Paying claims within the continental U.S. is complicated," he said. "Doing the same overseas with multiple nations is even more so."

In the meantime, commanders at military treatment centers are now being given information on claims paid and must verify that no duplicate payments are being made. The Pentagon also will try to recoup the $50,000 in overpayments identified by auditors.

Federal prosecutors in Madison have spent years investigating overseas fraud in the Tricare program because Madison-based WPS Health Insurance is the subcontractor that pays most overseas claims. About three dozen U.S. military veterans and foreign workers have been charged. Most of the fraud has centered in the Philippines.

In June, a former Health Visions executive was sentenced to five years in prison for helping the company bilk $100 million from the program. U.S. District Judge Barbara Crabb called the amount of the fraud "horrifying."

She also has ordered the company to pay $99.9 million in restitution and liquidate all of its assets including land, hospitals and office buildings, within 10 months. The proceeds will be used to pay restitution, although prosecutors acknowledge they will only likely recover a fraction of the full amount.

Last month, Crabb dismissed charges against a Filipino doctor accused of submitting an estimated $2 million in fraudulent claims to the Tricare program in 1999 and 2000. She ruled his constitutional right to a speedy trial had been violated because investigators waited four years to arrest him after his indictment.