The need for health care reform has been one of the most hotly divisive, highly publicized topics on the American political landscape over the last few years. Had another facet of health care come up — the need to crack down on Medicare fraud — for national discussion, we all would surely have been in agreement.
Many Americans may not realize the extent to which crooks are fleecing the program that was created to help those over 65 and younger people with disabilities pay their medical expenses. No one can be certain on the exact amount, but estimates range from $100 billion to $300 billion stolen every year. (For that money, we could fund the education department several times over.)
The following represent some extreme examples of common Medicare fraud schemes that every taxpayer ought to be aware of and demand stricter accountability from those cutting checks with public money.
As anyone who’s ever been to the doctor knows, if a medical professional tells you you need a procedure, you’re going to be inclined to believe him. Therein lies fertile ground for Medicare scammers to capitalize on patient insecurity and/or vulnerability, like old age or a language barrier, to prescribe expensive and unneeded procedures.
New Jersey cardiologist Jose Katz is a recent textbook example of the unnecessary care scam. In April, Katz pleaded guilty to fraudulently billing Medicare and Medicaid for $19 million over seven years. After drumming up Hispanic business by running $6 million worth of advertising on Spanish channels, Katz had used his crop of trusting but na‹ve patients to perform a litany of superfluous diagnostic tests, whose results he falsified to make patients believe they needed treatments like enhanced external counterpulsation (EECP) for heart problems.
Katz may have thought that by prescribing the relatively inexpensive EECP treatment (about $5,000, compared to $50,000+ for coronary bypass surgery), he could fly under the feds’ radar. And by farming out some of the work to a man without a license, Katz saved time administering the EECP treatments. He now stands to receive a maximum of 15 years in prison.
For some hucksters, performing unnecessary procedures is either too time-consuming or not possible because they’re just swindlers in lab coats. In such cases, these people bill Medicare for services that may actually have been necessary, but just weren’t performed. Often patients are willing participants in the fraud, signing off on forms attesting they did receive the care in exchange for cash, pills, or booze. The risk for them is low as Medicare benefits can’t be taken away, and a prosecutor would likely have a difficult time proving a senior citizen intentionally participated in the crime, and didn’t just sign something unknowingly.
A notorious example of this method was the case of Health Care Solutions Network Inc., which operated three community mental health centers in Miami. By kicking money back to operators of assisted living facilities, the company was able to bring in “patients” who could not benefit from their mental health treatment programs due to mental retardation, Alzheimer’s, and other pre-existing conditions. Nevertheless, HCSN employees were billing Medicare for those services, even for days when the centers were closed or that patient wasn’t even there.
All told, the scheme bilked Medicare and Florida Medicaid of $63 million. Ringleader Armando Gonzalez pleaded guilty and received 14 years in prison and was order to pay back more than $28 million. Ten of his associates also pleaded guilty.
When a gangster can’t find willing participants in a fraud, the other option is to steal their Medicare information. Medical identity theft can be every bit as lucrative as the theft of banking information, and even more so (Uncle Sam’s bank account is never overdrawn). Serious criminals go after scores of identities that they can use to get their hands on pills or equipment they can sell for cash, or to bill Medicare outright if they have some kind of facility set up. The con game du jour is to call seniors posing as an employee of the fictitious “Health and Welfare Department” requesting personal information to issue the consumer a new Medicare card.
In April 2013, Helene Michel of Long Island was sentenced to 12 years in federal prison for her brazen Medicare identity theft scheme. The owner of a medical supply company, Michel wormed her way into 20 nursing homes by posing as a nurse or “Dr. Elene Allonce.” Once inside, she lifted private patient information from medical charts and records and used that data to bill Medicare for services and equipment she never provided. If claims were denied, she stole more info and appealed! Michel ran up $10 million in charges before being busted.
Medical equipment scams
From 2009-2012, of the $43 billion the Medicare program paid for what is known as durable medical equipment, more than 60% is believed to have been made in error. This equipment is all the back braces, wheelchairs, orthotics, oxygen tanks, and walkers many seniors need to go about their day. The trouble is, scofflaw medical supply companies target many seniors who don’t need the gear. They harass Medicare recipients on the phone to buy unwanted equipment, or ship more items or more expensive items than what patients agreed upon, or bill entire nursing homes for equipment that was never delivered.
A hefty portion of that $43 billion in equipment fraud allegedly came from one source, The SCOOTER Store. In January 2013, CBS News reported that the store had overbilled Medicare for millions of dollars by “bulldozing” doctors into writing prescriptions for medically unnecessary power wheelchairs by incessantly calling and visiting them. Employees admitted the store even had a program for getting scooter scrips written for patients who had already been determined ineligible by doctors. In February, the FBI raided The SCOOTER Store’s offices, and the company has now declared bankruptcy, with somewhere between $47 million and $87 million having been fraudulently billed.
Upcoding and unbundling
When a doctor provides care that is necessary, but he splits a single procedure up into parts so he can charge more in reimbursement for each piece, it’s known as unbundling. To be considered unbundling, the doctor has to have performed a specific procedure that has a hard-and-fast rate set by Medicare. Upcoding works in a similar way: doctors choose a Medicare billing code based on the complexity of patients’ illnesses and how much time it will take to treat them. However, this is basically done on the honor code, and doctors choosing more expensive codes than necessary cost Medicare $11 billion from 2001-2010.
Upcoding seems to be a difficult Medicare fraud for the feds to catch; it took five years and a whistleblower before Dr. Sushil Sheth was brought to justice. In addition to phantom billing, Sheth upcoded 14,800 billings for intensive cardiac care, the highest and most expensive code level. This rate was more than all the doctors combined in some states; in fact, it required Sheth to work more than 24 hours every day of the year. All told, he robbed taxpayers of between $13 million and $20 million. He was sentenced to five years in prison in 2010.
Who is Affected
Patients: Of course, the people affected the worst and most directly are those who need real medical care and instead receive either too little or too much care, shoddy medical equipment, and knockoff prescriptions, and sometimes even die at the hands of their abusers. These patients are often seniors and immigrants who don’t speak English and are therefore unable to discern the fact that the “care” they’ve received is bogus, and they typically forego seeking legitimate care because they’re relying on the imposters.
What to do about it: There are a number of precautionary and preventative measures Medicare patients can take to make sure they aren’t victims of Medicare fraud, either directly or indirectly.
- Choose a reliable health care provider. The best way to not be caught in the middle of a fraud case is to pick an accredited, trustworthy provider. You can gauge this by finding out whether a particular office screens its employees, whether employees are certified, or how long the provider has been in business. You can also meet with a doctor personally and “go with your gut” on whether he or she is a fit for you.
- Protect your Medicare information. To keep your medical identity from being stolen, don’t store your Medicare card in your wallet. (The AARP recommends carrying a copy with you for all but an initial patient visit.) Never give out personal information over the phone; reputable health organizations will never ask you for it anyway. Make sure you only give personal data to health care professionals who are known to you whom you trust.
- Report suspicious activity. Not only is it the right thing to do, blowing the whistle on Medicare fraud can be rather lucrative. Consult the < a href=”https://www.medicare.gov/fraudabuse/howtoreport.asp”>Medicare website for contact information for the inspector general.
Taxpayers: Medicare is funded by the payroll tax, and when thousands of fraudulent claims begin to bleed the coffers dry, the tax has to be raised to make up the difference. And in 2013 that is exactly what happened. As of January 1, the payroll tax jumped from the 2012 rate of 4.2% to 6.2%, an increase of $700 to the average worker. So to say “everyone is affected by Medicare fraud” is only a slight exaggeration; it’s more accurate to say that Medicare fraud affects everyone who works.
What to do about it: You may have noticed the government has not been very efficient in finding and prosecuting those who commit Medicare fraud. The sheer number of people ripping off the government makes it a difficult problem to address, but not an impossible one, and the potential savings would certainly justify the cost of funding more and better-equipped task forces. Calls for tougher prevention efforts have begun to emerge in Congress, and the Obama administration has made fraud prevention a high priority. Taxpayers need to keep pressure on their representatives in Washington to support these efforts.
Though they go about it different ways, Medicare fraudsters count on bureaucratic sloth and inefficiency to mask their deeds long enough to siphon off a few dozen millions and flee the country, or relatively light sentences if they’re actually caught. Like government waste, there’s never an acknowledgement that this money that’s being stolen is their own money, and ours, and yours. Awareness of the issue is the first step to curbing Medicare fraud; the second is getting mad enough to demand something be done about it.