Medicare Fraud: A $60 Billion Crime Wave;

Medicare Fraud is a $60 billion industry for criminals, who find Medicare “easy” to rip off using fake storefront addresses and using stolen medicare patient information

Prelude: October 26 - According to a CBS “60 Minutes” report last night, which I reproduce below. Medicare now spends $430 billion a year. Of this, $60 billion, or 14%, flows to criminals operating out of unoccupied store fronts with addresses and using Medicare information stolen from hospitals, drug stores, doctors’ offices, and patients themselves.

This is frightening. The public option, after all, may be nothing but a ploy to extend Medicare to all. Medicare prides itself on paying claims within 30 days without intervening based on provider and patient claims information. Yet Medicare is no model for reform. In a September 11 WSJ article Grace-Marie Turner, president of the Galen Institute, and Joseph Antos, senior fellow at the American Enterprise Institute, give 5 reasons why Medicare is a failed model:

1) Medicare is going bankrupt;

2) Private payers are bailing out hospitals and doctors, keeping them in business despite 30% lower Medicare payments;

3) Expansion of entitlement programs threatens national economic security;

4) Low Medicare administration costs are a mirage and fantasy and don not reflect true costs;

5) Medicare is rife with fraud;

6) Medicare shortchanges seniors by exposing them to unmanageable costs;

7) Medicare business model is obsolete and contains no innovations for disease management or wellness and prevention;

8) Medicare payments are too low, and many doctors are not accepting new Medicare patients;

9) Medicare decisions are being made in Washington by nonmedical bureaucrats;

10) No one is running show’ Obama administrations has yet to name an administrator for Centers of Medicare and Medicaid, which cover over 100 million Americans.
Criminals are aware of the ease with which a headless Medicare administration can be ripped off, and are moving accordingly. The following should be required reading for those who support a government run public option.

Medicare Fraud: A $60 Billion Crime CBS 60 Minutes, October 25, 2009

STEVE KROFT, CBS: Of all the problems facing the United States right now, none are more important than healthcare. 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 a 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.

We caution you that this story may raise your blood pressure, along with some troubling questions about our government's ability to manage a medical bureaucracy.
Kroft spoke with FBI special agent Brian Waterman and Kirk Ogrosky, a top justice department prosecutor:

BRIAN WATERMAN, FBI: 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

KROFT: Is the Medicare fraud business bigger than the drug business in Miami now?

KIRK OGROSKY, JUSTICE DEPARTMENT: I think it's way bigger.

KROFT: What changed?

OGROSKY: The criminals changed...

WATERMAN: Sophistication.

OGROSKY: 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.

WATERMAN: 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.

Kroft also spoke to Attorney General Eric Holder:

ERIC HOLDER, ATTORNEY GENERAL: We have to understand this is a major fraud area.

KROFT: Why do you think it's been so attractive for the criminals?

HOLDER: Because I think it's been pretty easy. I think that they have found a way in which they have been able to get pretty substantial amounts of money with not a huge amount of effort and at least until now, without the possibility of great detection.

KROFT: With much fewer risks.

HOLDER: Much fewer risks. You'll see some of these people and they'll say "You know there is not a chance that you are going to have some other drug dealer shooting at you." The chances of being incarcerated were lower, the amount of time that you would spend in jail was smaller. All of which is different now.

Kroft then spoke to a man who claimed to have defrauded Medicare out of $20 million, after which Kroft said, "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."

WATERMAN: There's a whole industry of people out there that do nothing but provide patients.

Kroft narrated, "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."

Later, Kroft asked Waterman, "There's something I don't understand. I mean, you're saying essentially people just fill out the phony paperwork, they send a bill to Medicare and they pay it."

WATERMAN: That's why you have companies that can run for 60, 90 days, and bill for ridiculous things. Because there are very few checks and balances to even determine whether these things a, were medically necessary, b, were ever given, or c, even physically possible for a patient with the kind of conditions they have.

A bit later in the segment, Kroft spoke with Kim Brandt, Medicare's director of program integrity. After he shared with her some of the scams he'd previously witnessed or been told about, he asked how crooks get away with it:

KIM BRANDT, MEDICARE DIRECTOR: We're as frustrated by that as the law enforcement officials that you went out with. And in fact, our primary focus over the past years has been to tighten our enrollment standards to make it so it's much harder for people like that to be able to get in the program, and to be able to commit that kind of fraud.

KROFT: Look, I'm sure that you're aware of these problems. But it doesn't seem like you're doing a very good job. I don't mean you personally, but I mean, the government. This is still like a huge problem, and getting worse, right?

BRANDT: Well, it really does come down to the size and scope of the Medicare program, and the resources that are dedicated to oversight and anti-fraud work. One of our biggest challenges has been that we have a program that pays out over a billion claims a year, over $430 billion, and our oversight budget has been extremely limited.

Just imagine what the fraud will be like if the government is responsible for everyone's healthcare.

As the segment drew to a close, Holder told Kroft something that should scare the heck out of everyone who wants government run insurance for all Americans: "I think people I don't think necessarily thought that something as well intentioned as Medicare and Medicaid would necessarily attract fraudsters. But I think we have to understand that it certainly has."

Yes we do.