With the health care debate in full swing, CBS's 60 Minutes television program recently aired a story in which it claims that Medicare fraud is now a $60 Billion dollar a year crime (I capitalized the "B" in billion to emphasize the enormousness of this number). It is utterly unbelivable. You can view the story as it aired in the video below:
The Medicare program, which now servers about 46 million senior and disabled American citizens, has become an easy and incredibly profitable target for criminals.
According the the 60 Minutes story, Medicare fraud is now a more popular crime in the city of Miami than Cocaine drug dealing among criminals. This is due to lighter prison sentences, lesser law enforcement on their trail, the non-violent nature of the crime and the high profitability and simplicity of the scheme.
In the story, 60 Minutes correspondent Steve Kroft rode along with law enforcement in the city of Miami and found Medicare contracted business after business who had charged Medicare for thousands or millions of dollars in inventory, but were basically vacant buildings with no sign of ownership or customers. The assumption was made that these businesses truly had no customers. They were simply billing Medicare using stolen patient information and collecting the money without providing any medical equipment or services.
As a matter-a-fact, most of these businesses were in the middle of warehouse districts where elderly or disabled consumers would rarely go.
Later in the story, Kroft interviewed an anonymous former Medicare Miami-area fraudster who is now serving a 12 year federal prison sentence. In the segment, he was simply referred to the man as "Tony".
Tony told Kroft that he stole about $20 million dollars from American taxpayers through Medicare fraud. He said it was ridiculously easy to do and that he is not a criminal mastermind. He actually estimated there were 2000 to 3000 or even more criminals in the Miami area alone working Medicare fraud schemes. (Please note: this problem is not relegated to Florida. The FBI has busted Medicare fraud rings in Detroit, LA and many other cities across the country).
Tony also said he normally purchased information about real Medicare recipients for about $10 each and then used this information to complete false invoices and claim forms and then wait 2-4 weeks for the direct deposit to hit his bank accounts. He said he commonly purchased 1,000 or even 10,000 of these real Medicare recipients information at a time. That's how profitable the data was to him.
Tony said he normally sorted through Medicare materials to find the most expensive items to bill for. These items included prosthetic arms and legs, electric arms, power wheelchairs and more.
Later in the story, Kroft interviewed a woman who runs Medicare's fraud prevention department. She said that due to low resources and legal issues, Medicare is simply not able to stay ahead of the problem like it would like.
According to the Medicare website, if you feel you are a victim of Medicare fraud you are supposed to either call the Medicare claims processing company or complete an online form providing the following data from your Medicare Summary Notice (MSN) Form:
The provider's name and any identifying number you may have.
The item or service you are questioning.
The date on which the item or service was supposedly furnished.
The amount approved and paid by Medicare.
The date of the Medicare Summary Notice.
The name and Medicare number of the person who supposedly received the item or service.
The reason you believe Medicare should not have paid.
Any other information you may have showing that the claim for the item or service should not have been paid by Medicare.
The frustrating thing is that even if you do this, the fraud is not guaranteed so stop. In the news segment, Kroft interviewed Clara Mahoney, a 76-year old Medicare fraud victim. She said she has been reporting suspicious and outright fraudulent items on her MSN since 2003. Items including air mattresses, wheelchairs and urine bags have been charged and she has never received any of the items. She said the fraud continues to this day (six years later) even though she has reported it many times and has requested that Medicare "flag" her account.
Another Medicare recipient, Ed Davis - a former federal judge, said he has been charged for two artificial limbs, even though both his arms work fine.
As frustrating as it may be, if you are a victim of Medicare fraud you should alert Medicare to any suspicious items on your statements and document any conversations or correspondence you have with Medicare. This will ensure you are not denied a claim at a later time for an item you legitimately need that was billed previously by one of these criminals.
Aside from war, the economy and taxes, Medicare is a glaring issue on the agenda of both Barak Obama and John McCain who are running for president. There has been a tremendous amount of information being tossed about,especially Medicare coverage and he costs related to them.
We have been carefully checking statements and information that both candidates have put out for the public. Even if the new president can successfully address the issues of war, the economy and taxes, as well as lost jobs and a budget that is a mess, one of the difficult issues that will still need to be dealt with is Medicare. Health care costs are rising rapidly and Baby Boomers are beginning to look at Medicare for coverage which will add to the number of people Medicare must cover.
John McCain has said that repairing the Medicare system will be extremely difficult. It will be more difficult to fix than reforming the Social Security System. He has also said that he wants to see changes in the Medicare system to pay providers for disease prevention and care coordination. If he becomes president he would also like to see a zero tolerance policy to deal with Medicare fraud and would not pay for preventable medical mistakes or mismanagement. He has said, “What we have to do with Medicare is have a commission – have the smartest people in America come together and come up with recommendations.”
Barak Obama, on the other hand, proposes a plan to increase Social Security taxes on people earning more than $250,000 per year. The change would not be immediate, but would take a decade or possibly more to implement. Obama feels that a program like this would keep the Social Security program stable and sound financially.
In addition, Barak Obama opposes proposals that would give a portion of Social Security money in personal investment accounts. This type of privatization is not a good idea. Obama does, however, want to reduce Medicare costs. He wants the federal government to be able to negotiate with pharmaceutical companies for lower, much more affordable prescription drug prices. He wants the “donut hole” in Medicare prescription coverage to be closed. Currently there is a coverage gap called the donut hole that leaves seniors very vulnerable by forcing them to pay for their prescriptions once they reach a certain limit. Often, this leaves vulnerable seniors on limited incomes to often pay out thousands of dollars that they cannot afford. As a result, many of these seniors are not able to afford their medications, so they just go without.
Obama has stated : "Privatizing Social Security was a bad idea when George Bush proposed it, and it is a bad idea today."
Medicare fraud is not a new thing. It has, unfortunately, been going on for years. The problem is that years ago the amount of money at stake was not nearly as high and the Medicare system was not in nearly as much trouble financially. When you put those two factors together in today’s system, fraud is hitting Medicare harder during its most difficult time in the last 60 years.
For one thing, Medicare fraud has become a multi-billion dollar business. There are people making multiple millions of dollars defrauding Medicare every year. With Medicare funding being cut and with lawmakers trying to keep payments to doctors and healthcare professionals competitive enough so that they can afford to continue treating Medicare patients, just eliminating part of the fraud could provide the funding for the shortfall.
CMS, the Centers for Medicare and Medicaid Services, has been looking into the situation for quite some time now and is in the process of enhancing its anti-fraud efforts. They have announced that they will be implementing some aggressive new steps in cracking down on fraud.
Some of the changes CMS will be making include enlisting program integrity contractors who will study billing trends throughout the Medicare system. In doing so, when it finds providers whose billing is higher than or otherwise out of sync with the majority of other providers in their region, these providers will be audited. Since it is impossible for Medicare to look behind every claim, this is a cost effective way to look at any red flags that are going up.
In addition, another way that CMS will fight fraud will be to actually contact beneficiaries to be sure that they received the equipment or supplies that Medicare is being billed for and that these were the right equipment and were in good condition. Billing will be reviewed before and after payment and physicians who order an unusually high number of the same or related item(s) will be audited and/or reviewed as well.
These ideas alone, when implemented, should save Medicare millions of dollars. They should also discourage some individuals from engaging in fraud, as the penalties will be quite stiff and will be handled by local, state and federal law enforcement agencies, including the FBI if necessary. With this new program and the strength of law enforcement, hopefully fraud will decrease and the money saved by Medicare will be used to help the beneficiaries who need it.
Medicare is an essential program that was designed to help the elderly and the vulnerable. Presently, Medicare covers over 44 million people so that they can receive medical care.
Fraud has long been an issue regarding Medicare. There have been too many loopholes, a system that is designed in a manner that makes fraud easy, and too little oversight of the billions of budget dollars intended for legitimate Medicare expenses.
In addition, there have been – and still are – unscrupulous business people out there who have designed ways to defraud the Medicare system. It is one thing to make a mistake, it is quite another to intentionally set up a business network for the express purpose of taking money from the most vulnerable of our citizens, especially when that money is scarce to begin with.
The latest in a series of fraud-based businesses to take advantage of the lax oversight over Medicare dollars is a scheme involving HIV/AIDS clinics in south and mid-Florida. These clinics have made so much money that officials are asking the public for help in stopping the fraud.
Officials have announced a new “Infusion Fraud” hotline, asking the public to call and report phony HIV/AIDS treatment in an effort to stop clinic operators from receiving millions for services and treatments not provided. These unscrupulous clinic operators have been most prevalent in south Florida and purchase Medicare lists or pay patients to come into their offices, and then bill Medicare for millions of dollars in fraudulent claims for treatments never provided. Last week a couple who ran a billing service was sentenced to 14 years in prison for billing nearly $150 million in fraudulent claims for 85 different clinics.
There are several ways that Medicare is trying to combat fraud in that area. They have set up a hotline that people can call to report fraud if they become aware of it. The fraud does not have to be HIV/AIDS related; it can involve any fraudulent issues or scams with Medicare.
Medicare is also sending out Medicare statements to recipients in southern Florida on a monthly basis instead of quarterly in hopes that people will look at their statements and report any treatments or charges listed that were not received or don’t look legitimate. By doing this monthly instead of quarterly, there is less of a time lag, giving Medicare a better chance of catching the perpetrators while they are still up and running and in business.
Records show that last year HIV/AIDS claims for treatment totaled $1.5 billion in south Florida as compared to only $300 million in New York City. This is an obvious imbalance that is receiving attention.
The phone number to report suspected Medicare fraud is 866-417-2078.
It seems like Medicare continues to have more problems when it comes to keeping records, fraud and audits. We recently reported that there had been an inspection by the Inspector General’s office regarding overpayments, payments for false claims and fraud. That investigation, by the Human Services inspector general’s office originally uncovered what seemed to amount to about $700 million.
The Medicare Officials that conducted the investigation gave these figures. There is only one problem – the information was based on faulty statistics. In fact, the way that Medicare officials conducted the investigation went directly against Medicare rules.
What was supposed to happen was that the billing be matched against purchases, medical records and orders from doctors. They were not handled this way. They were matched against purchases, but limited medical records in only some of the cases and they were essentially not matched against orders from doctors at all. The end result is that many phony purchases were matched against phony billing, leaving much of the substantiating information out of the equation.
As a result of the way that this was handled (remember the fox watching the hen house), Medicare officials investigated their own information and came out with a faulty figure. They determined that the $700 million in fraud that they gave as their figure amounted to about a 7.5% fraud rate.
When looking at the true figures, however, it is actually estimated that the total amount in fraud is actually over $1 billion. The federal report said that if the Medicare officials had made the auditors abide by the rules, the amount of incorrect or fraudulent billing would have been much higher, resulting in the $1 billion mentioned.
With Medicare having the financial problems that we continue to hear about, $700 million was bad enough. Now we are looking at $1 billion. It seems that $1 billion would pay for a lot of prescriptions that the Medicare Advantage donut hole is swallowing up.
Reports have recently revealed that Medicare prescription drug supplements are not being watched very carefully. In fact, there is a fraud prevention program that is supposed to be in effect to deal with the prescription drug coverage offered by private insurance companies.
The Government Accountability Office holds CMS responsible for monitoring and auditing the $39 billion prescription drug programs. That is a great deal of money that could easily be misused. The GAO examined five plans that are unnamed and created a report detailing the shortcomings regarding what CMS is responsible for.
Some of the oversight responsibilities that have not been adhered to by CMS include establishing training programs for employees so that they can recognize fraud and misuse of relevant laws. Only two of the five programs have established such training.
CMS states that though they did not have the training in place, the programs did establish written standards for detection and prevention of fraud and waste. The GAO has strongly suggested that CMS should conduct audits of the prescription drug programs.
CMS says that they have asked the programs to produce self-assessments – (remember the fox watching the hen house, again?) – and said they would use the self-assessment surveys in place of audits for now. They said that they are focusing on complaints, especially since their audit budget was capped at $720 million, stating that this restricted amount makes it difficult, if not impossible, to conduct proper auditing.
This attitude toward auditing fraud, coupled with the fact that CMS has not developed even a streamlined auditing system, might be saving Medicare some tightly budgeted money in the short term, but the billions that are being taken out of Medicare while officials are ignoring the problem, could be saving the country and its Medicare beneficiaries billions. This might be enough to eliminate some of the unaffordable and superfluous supplemental programs and create a Medicare system that is affordable and works for everyone.
As if there wasn’t enough fraud in the world today – especially in Miami – the FBI has uncovered even more. This is not your garden variety every day fraud, this fraud has been big business and cost the government and taxpayers billions – yes BILLIONS – of Medicare dollars.
While many honest citizens are working hard to pay billions of dollars for a war and other conflicts that they may or may not agree with, these individuals have stolen money that could help bolster the Medicare system, which is having some serious financial issues, in case they hadn’t heard.
It brings to mind the old question about whether you would steal from your own parents or grandparents. Apparently, these fraudsters would. In fact, not only have they done that, but by taking BILLIONS away from a system that is so badly needed by our most vulnerable citizens, they are also stealing from their own children and grandchildren. Of course, when you think about it, their parents, grandparents, children and grandchildren may not need the benefits since they will have all the money that was stolen – unless it gets confiscated by the FBI.
The way this particular scam worked, “patients” were recruited to see particular doctors. They were paid each time they went to an office visit. The clinics that these doctors work for then billed Medicare for all sorts of fraudulent services, including AIDS treatment that is not even used any more in the United States.
Medicare does not combat fraud as effectively or aggressively as private insurance companies do, even though they have received funds to do so. One of the primary reasons that Medicare is not effective at preventing fraud is that they do not have a system that prevents fraud before money is dispensed. Without a containment system at the beginning of the claims process, it is impossible to stop fraud because once the money has been paid out, it is much more difficult to get it back – especially because most of the time, the fraudsters have already left the country.
Medicare is a huge agency with an enormous budget and over 44 million people who depend on it. Fraud costs Medicare over $60 million per year. Surely there are ways to eliminate at least some of that fraud. Eliminating even half of it would fix the Medicare budget and the education budget, too.
Unfortunately, Medicare fraud is not a new thing. It has been around for years, though it has grown over the years to a multi-million dollar business. Whether it is unscrupulous sales people selling bogus supplemental policies to unsuspecting seniors or whether it is people sending in claims with dead doctors’ identification numbers or other creative ways to cheat and defraud the Medicare system, there are many ways that the system has been bilked out of millions of dollars – in fact, researchers say that it is now over a billion dollars.
In California, three hospitals have stooped to a new low. The hospitals are accused of picking up homeless people from the skid row area of downtown Los Angeles and bringing them to the hospitals with fake conditions. Once these people were admitted and served their usefulness by being set up for fake treatment for the fake illnesses, they were then shoved back into the ambulance and dumped back off on skid row.
Skid row is a very poor area of downtown Los Angeles where there are quite a large number of homeless individuals, so it was an easy place to perpetrate this hoax. “Runners” working for the hospitals as recruiters would get homeless people to go to a center near the hospital where they were assessed and where their Medicare and Medi-Cal were verified. Once this was done, the recruiters created the information regarding the conditions for these individuals – conditions which would get them into the hospital and get Medicare to pay the bill to the hospital.
The biggest problem is that these homeless individuals didn’t really realize what was happening and didn’t really get treated for those fraudulent conditions, when they may have actually had some actual conditions that needed to be addressed and treated. Sadly, the recruiters actually guaranteed certain numbers of these “patients” to the hospitals and once these individuals were treated – minimally – and released, everyone got paid to the tune of millions of dollars. Each of the homeless individuals was paid $20 to $30 after being released from the hospital.
One thing that the hospitals and their administrators – who were indicted on various charges – did not realize is that they were being closely watched by the FBI. This became their undoing. The FBI and local law enforcement raided the hospitals within the past few days and arrested administrators and others involved in the schemes.
With fraudulent schemes like these and some of the other issues that plague the Medicare system it’s no wonder that overhauling the system and prosecuting fraud to the full extent of the law is essential and needs to happen right now, as this situation in California shows.
We all keep hearing about the problems with the Medicare system including mistakes and underbilling, overbilling and the like. We also hear about fraudulent claims, but things are a lot worse than we have been aware of, and it is costing billions of dollars that could be going toward benefits rather than cuts. The government has been authorizing reimbursements to fraudulent companies for wheelchairs and other equipment, and these reimbursements have cost over a billion dollars. Most of these payments have been made to fake doctors and fake medical supply companies. In fact, the Government Accountability Office (GAO) has been investigating the Centers for Medicare Services (CMS) over the past year and found that CMS had granted billing privileges to two phony companies based in Maryland and Virginia who were supposed to be suppliers of equipment for Medicare recipients, but had no supplies whatsoever to provide to these individuals. In setting up this investigation, the GAO provided CMS with false and sketchy information, and CMS still provided them with the ability to bill for services. This put the fake companies into a situation where not only could they bill for millions of dollars, but they could have also gotten a doctors’ identification code fraudulently and started submitting claims, costing CMS even more money in payments. This “sting” by the GAO proves that there are issues with the enrollment process for Medicare suppliers and that there need to be changes so that fraudulent suppliers don’t take advantage of these issues and loopholes. As a result, the GAO has recently made some changes in enrollment procedures including the requirement that suppliers must be certified and meet other quality standards before they are allowed to do any billing. In addition, some other changes include making it mandatory for suppliers to keep all paperwork from doctors, limiting the use of pagers and cell phones as primary contact numbers for suppliers, and setting up new competitive bidding procedures for suppliers of medical equipment. CMS has been promising since 2005 that they would eliminate much of the fraud in the system, especially in approving fraudulent suppliers. This latest study by the GAO shows that there are still too many problems costing the system, the taxpayers and Medicare recipients too much, with the potential to cost them even more. Had there been real companies behind this sting, rather than fake companies, it could have cost many more millions of dollars. With Medicare benefits in jeopardy of continuing to be cut, it is time to make sure that CMS is doing its job rather than giving money that is already too scarce away. Perhaps if that happened, cuts would not be necessary and Medicare recipients could receive the benefits that they truly need.
It is becoming too common to hear about fraudulent and dishonest individuals trying to either frighten or trick Medicare recipients – especially seniors – into either changing their coverage to inferior plans or giving out personal and sensitive information so they can use it for various types of fraud.
Yesterday, in Pocatello, Idaho there was an NBC news story stating that such a group was targeting individuals in the area by calling them up and telling them that their Medicare was at stake. They would offer a discount Medicare card that was intended to replace the valid Medicare card they already have.
The person that called one woman was a male, who told her about the discount card and stated that he needed some information first. It is interesting that he already had her bank routing number and her address, which is unsettling in itself, but he then asked for her Social Security number and her bank account number.
Fortunately, the woman had a clue. She knew that something wasn’t right, and she had already heard that there was a scam, so she did not give the individual the information he was asking for. Then the man told her that she would lose her benefits for three months, since she would not give the requested information. Instead of continuing the conversation, she called the police.
Unfortunately, other individuals who are Medicare recipients have not fared so well. As a result, the Pocatello police have warned seniors about this scam. They have told seniors in the area to be extremely careful about relaying any personal information, especially over the phone. It is also important to note that there are certain ways to verify that the individual is truly from Medicare. If you have caller I.D., the number will show up or the name Medicare or CMS will come up on the I.D. In addition, it is rare that you would be asked for your bank account number unless you call them and ask for direct deposit. Also, they will not usually ask for your Social Security number because they have it. They will often read it to you and have you verify it.
If you are not comfortable with the person who is calling or the questions they are asking, get their name, their employee identification number and their phone number, plus their extension and the city they are in. They should readily give you that information so that you can call back, or they will give you the main number to call and tell you that you can talk to anyone there. If they won’t give you the information you request or if they hang up when you ask, they are probably not legitimate. If this happens to you, report it to your local police as well as the agency they say they are from, such as Medicare or Social Security.
It is important to be aware of people and situations that could jeopardize your benefits or finances. Trust your instincts, and be cautious. Don’t give information out unless you are sure who you are speaking to. Stay on guard and keep yourself safe.
In the story, 60 Minutes correspondent Steve Kroft rode along with law enforcement in the city of Miami and found Medicare contracted business after business who had charged Medicare for thousands or millions of dollars in inventory, but were basically vacant buildings with no sign of ownership or customers. The assumption was made that these businesses truly had no customers. They were simply billing Medicare using stolen patient information and collecting the money without providing any medical equipment or services.
