Medicare Fraud
Encyclopedia
In the United States, Medicare fraud is a general term that refers to an individual or corporation that seeks to collect Medicare
health care reimbursement under false pretenses. There are many different types of Medicare fraud, all of which have the same goal: to collect money from the Medicare program illegitimately.
The total amount of Medicare fraud is difficult to track, because not all fraud is detected and not all suspicious claims turn out to be fraudulent. According to the Office of Management and Budget, Medicare "improper payments" were $47.9 billion in 2010, but some of these payments later turned out to be valid. The Congressional Budget Office
estimates that total Medicare spending was $528 billion in 2010.
The Medicare program is a target for fraud because it is based on the "honor system
" of billing. It was originally set-up to help honest doctors who helped the needy with medical services. There are few safeguards to eliminate false claims. In fact, claims are paid automatically because the goal of Medicare is not to root out false claims, but to pay claims quickly and smoothly.
A 2011 crackdown on fraud charged "111 defendants in nine cities, including doctors, nurses, health care company owners and executives" of fraud schemes involving "various medical treatments and services such as home health care, physical and occupational therapy, nerve conduction tests and durable medical equipment."
In recent years, as regulatory requirements tightened and law enforcement has stepped up, Medicare fraud has shifted away from sectors such as durable medical equipment
and HIV/AIDS infusion injections and into other areas such as ambulance fraud and hospice care fraud. Durable medical equipment or home medical equipment describes medically required equipment and services used in the home such as wheelchairs, hospital beds, nebulizers, and oxygen equipment, and represents less than two percent of total Medicare spending.
Even in other countries, particularly in South-East Asia, there are doctors who over-charge American patients, through Medicare (or Tricare), charging them US rates, much higher than actual medical cost in their respective countries. This is a type of insurance fraud, which, unfortunately, Medicare continually overlooks and fails to take into account.
is under investigation by the United States Department of Health and Human Services
and the California Department of Justice
about concerns over a reported spike in septicemia. The investigation centers around whether the spike in septicemia represents a large public health issue or multimillion-dollar Medicare fraud. Six Prime hospitals ranked in the 99th percentile of U.S. hospitals for septicemia and five were in the 95th percentile.
There is also evidence that Prime Healthcare Service engages in upcoding elderly patients to malnutrition
. In Mount Shasta
, Victorville
and in the Mojave Desert
, Prime has had high rates of kwashiorkor
amongst its elderly patients
. At Shasta Regional Medical Center, Prime reported 16.1% of their Medicare
patients suffered from kwashiorkor
. The state of California
average for Medicare
patients is 0.2% suffering from kwashiorkor
.
Prime also has come under scrutiny by investigators over expenses on luxury items disallowed by Medicare. Authorities have flagged $491,000 in operating costs in relation to a Eurocopter for the Chief Executive Officer, Lex Reddy. The Department of Health Care Services also identified and disallowed $820,000 for the lease and taxes on a home in Beverly Hills and $303,000 in depreciation on the Helicopter and a Bentley
. The funds flagged by auditors do not represent tax dollars that have been sent to Prime. Rather, they signify sums that the state will not recognize when compensating the chain for its corporate office expenses.
Prime maintains that their billing practices are legal and proper and claim that the high rate of kwashiorkor
is a result of proper diagnosis of malnutrition. They also claim that they are the victim of a campaign by SEIU
, but the California Medi-Cal fraud director has stated that his bureau had initiated an investigation before SEIU
released their findings.
The South Florida area has become the epicenter of Medicare fraud in the United States. In 2008, criminals from two Florida counties alone accounted for approximately $400 million in fraudulent Medicare bills. Also in 2008, Miami-Dade County billed Medicare six times more for home health services than Los Angeles County, where the Medicare population is three times larger. In fact, the problem has become so rampant that in 2008, federal investigators found nearly half of all DME suppliers in South Florida were not in compliance with Medicare rules. In response, the authorities required every single medical equipment supplier to re-apply for billing privileges.
In 2005, 72% of all Medicare claims nationwide for HIV/AIDS infusion injections were billed in Miami-Dade County. Many recent immigrants to South Florida open up a company and immediately start billing Medicare for tens of thousands in equipment and services that Medicare beneficiaries never receive.
Many South Florida drug dealers look to Medicare fraud as the new crime of choice. Criminals, now federal defendants, report that (1) there is more money in Medicare fraud than in drug smuggling, (2) there is a lesser chance of being caught and, (3) if caught, defendants are treated like a white collar criminal as opposed to a drug dealer.
In 2001, HCA reached a plea agreement with the U.S. government that avoided criminal charges against the company and included $95 million in fines. In late 2002, HCA agreed to pay the U.S. government $631 million, plus interest, and pay $17.5 million to state Medicaid
agencies, in addition to $250 million paid up to that point to resolve outstanding Medicare expense claims. In all, civil law suits cost HCA more than $1.7 billion to settle, including more than $500 million paid in 2003 to two whistleblower
s.
, as mandated by Public Law 95-452 (as amended), is to protect the integrity of Department of Health and Human Services (HHS) programs, to include Medicare and Medicaid programs, as well as the health and welfare of the beneficiaries of those programs. The Office of Investigations for the HHS, OIG collaboratively works with the Federal Bureau of Investigation
in order to combat Medicare Fraud.
Defendants convicted of Medicare fraud face stiff penalties according to the Federal Sentencing Guidelines
and disbarment from HHS programs. The sentence depends on the amount of the fraud. Defendants can expect to face substantial prison time, deportation (if not a US citizen), fines, and restitution.
In 1997, the federal government dedicated $100 million to federal law enforcement to combat Medicare fraud. That money pays over 400 FBI agents who investigate Medicare fraud claims. In 2007, the U.S. Department of Health and Human Services, Office of Inspector General, U.S. Attorney's Office, and the U.S. Department of Justice created the Medicare Fraud Strike Force in Miami, Florida. This group of anti-fraud agents has been duplicated in other cities where Medicare fraud is widespread. In Miami alone, over two dozen agents from various federal agencies investigate solely Medicare fraud. In May 2009, Attorney General Holder and HHS Secretary Sebelius Announce New Interagency Health Care Fraud Prevention and Enforcement Action Team (HEAT) to combat Medicare fraud. FBI Director Robert Mueller
stated that the FBI and HHS OIG has over 2,400 open health care fraud investigations.
The first "National Summit on Health Care Fraud” was held on January 28, 2010 to bring together leaders from the public and private sectors to identify and discuss innovative ways to eliminate fraud, waste and abuse in the U.S. health care system. The summit is the first national gathering on health care fraud between law enforcement and the private and public sectors and is part of the Obama Administration’s coordinated effort to fight health care fraud.
, (21 charged), Detroit (11 charged) and Houston (four charged). By value, nearly half of the false claims were made in Miami-Dade County, Florida
. The Medicare claims covered HIV treatment, medical equipment, physical therapy and other unnecessary services or items, or those not provided.
Medicare (United States)
Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other...
health care reimbursement under false pretenses. There are many different types of Medicare fraud, all of which have the same goal: to collect money from the Medicare program illegitimately.
The total amount of Medicare fraud is difficult to track, because not all fraud is detected and not all suspicious claims turn out to be fraudulent. According to the Office of Management and Budget, Medicare "improper payments" were $47.9 billion in 2010, but some of these payments later turned out to be valid. The Congressional Budget Office
Congressional Budget Office
The Congressional Budget Office is a federal agency within the legislative branch of the United States government that provides economic data to Congress....
estimates that total Medicare spending was $528 billion in 2010.
The Medicare program is a target for fraud because it is based on the "honor system
Honor system
An honor system or honesty system is a philosophical way of running a variety of endeavors based on trust, honor, and honesty. Something that operates under the rule of the "honor system" is usually something that does not have strictly enforced rules governing its principles...
" of billing. It was originally set-up to help honest doctors who helped the needy with medical services. There are few safeguards to eliminate false claims. In fact, claims are paid automatically because the goal of Medicare is not to root out false claims, but to pay claims quickly and smoothly.
Types of Medicare fraud
Medicare fraud is typically seen in the following ways:- Phantom Billing: The medical provider bills Medicare for unnecessary procedures, or procedures that are never performed; for unnecessary medical tests or tests never performed; for unnecessary equipment; or equipment that is billed as new but is, in fact, used. In which case, every form of billing, phantom or patient, can be prevented through carefully checking.
- Patient Billing: A patient who is in on the scam provides his or her Medicare number in exchange for kickbacks. The provider bills Medicare for any reason and the patient is told to admit that he or she indeed received the medical treatment.
- Upcoding scheme and unbundling: Inflating bills by using a billing code that indicates the patient needs expensive procedures.
A 2011 crackdown on fraud charged "111 defendants in nine cities, including doctors, nurses, health care company owners and executives" of fraud schemes involving "various medical treatments and services such as home health care, physical and occupational therapy, nerve conduction tests and durable medical equipment."
In recent years, as regulatory requirements tightened and law enforcement has stepped up, Medicare fraud has shifted away from sectors such as durable medical equipment
Durable medical equipment
Durable medical equipment is a term of art used to describe any medical equipment used in the home to aid in a better quality of living. It is a benefit included in most insurances. In some cases certain Medicare benefits, that is, whether Medicare may pay for the item...
and HIV/AIDS infusion injections and into other areas such as ambulance fraud and hospice care fraud. Durable medical equipment or home medical equipment describes medically required equipment and services used in the home such as wheelchairs, hospital beds, nebulizers, and oxygen equipment, and represents less than two percent of total Medicare spending.
Even in other countries, particularly in South-East Asia, there are doctors who over-charge American patients, through Medicare (or Tricare), charging them US rates, much higher than actual medical cost in their respective countries. This is a type of insurance fraud, which, unfortunately, Medicare continually overlooks and fails to take into account.
Prime Healthcare
Prime Healthcare ServicesPrime Healthcare Services
Prime Healthcare Services is a hospital management company in Southern California. Founded by Dr. Prem Reddy in 2001, it is based in Ontario, California...
is under investigation by the United States Department of Health and Human Services
United States Department of Health and Human Services
The United States Department of Health and Human Services is a Cabinet department of the United States government with the goal of protecting the health of all Americans and providing essential human services. Its motto is "Improving the health, safety, and well-being of America"...
and the California Department of Justice
California Department of Justice
The California Department of Justice is the department in the California executive branch under the leadership of the California Attorney General.-Description:It has 5344 employees and a budget of $791 million...
about concerns over a reported spike in septicemia. The investigation centers around whether the spike in septicemia represents a large public health issue or multimillion-dollar Medicare fraud. Six Prime hospitals ranked in the 99th percentile of U.S. hospitals for septicemia and five were in the 95th percentile.
There is also evidence that Prime Healthcare Service engages in upcoding elderly patients to malnutrition
Malnutrition
Malnutrition is the condition that results from taking an unbalanced diet in which certain nutrients are lacking, in excess , or in the wrong proportions....
. In Mount Shasta
Mount Shasta
Mount Shasta is located at the southern end of the Cascade Range in Siskiyou County, California and at is the second highest peak in the Cascades and the fifth highest in California...
, Victorville
Victorville
Victorville could refer to:*Victorville, California, a city in San Bernardino County, California, United States*Victorville shoulderband, a species of gastropod in the Helminthoglyptidae family...
and in the Mojave Desert
Mojave Desert
The Mojave Desert occupies a significant portion of southeastern California and smaller parts of central California, southern Nevada, southwestern Utah and northwestern Arizona, in the United States...
, Prime has had high rates of kwashiorkor
Kwashiorkor
Kwashiorkor is an acute form of childhood protein-energy malnutrition characterized by edema, irritability, anorexia, ulcerating dermatoses, and an enlarged liver with fatty infiltrates. The presence of edema caused by poor nutrition defines kwashiorkor...
amongst its elderly patients
Senior citizen
Senior citizen is a common polite designation for an elderly person in both UK and US English, and it implies or means that the person is retired. This in turn implies or in fact means that the person is over the retirement age, which varies according to country. Synonyms include pensioner in UK...
. At Shasta Regional Medical Center, Prime reported 16.1% of their Medicare
Medicare (United States)
Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other...
patients suffered from kwashiorkor
Kwashiorkor
Kwashiorkor is an acute form of childhood protein-energy malnutrition characterized by edema, irritability, anorexia, ulcerating dermatoses, and an enlarged liver with fatty infiltrates. The presence of edema caused by poor nutrition defines kwashiorkor...
. The state of California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
average for Medicare
Medicare (United States)
Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other...
patients is 0.2% suffering from kwashiorkor
Kwashiorkor
Kwashiorkor is an acute form of childhood protein-energy malnutrition characterized by edema, irritability, anorexia, ulcerating dermatoses, and an enlarged liver with fatty infiltrates. The presence of edema caused by poor nutrition defines kwashiorkor...
.
Prime also has come under scrutiny by investigators over expenses on luxury items disallowed by Medicare. Authorities have flagged $491,000 in operating costs in relation to a Eurocopter for the Chief Executive Officer, Lex Reddy. The Department of Health Care Services also identified and disallowed $820,000 for the lease and taxes on a home in Beverly Hills and $303,000 in depreciation on the Helicopter and a Bentley
Bentley
Bentley Motors Limited is a British manufacturer of automobiles founded on 18 January 1919 by Walter Owen Bentley known as W.O. Bentley or just "W O". Bentley had been previously known for his range of rotary aero-engines in World War I, the most famous being the Bentley BR1 as used in later...
. The funds flagged by auditors do not represent tax dollars that have been sent to Prime. Rather, they signify sums that the state will not recognize when compensating the chain for its corporate office expenses.
Prime maintains that their billing practices are legal and proper and claim that the high rate of kwashiorkor
Kwashiorkor
Kwashiorkor is an acute form of childhood protein-energy malnutrition characterized by edema, irritability, anorexia, ulcerating dermatoses, and an enlarged liver with fatty infiltrates. The presence of edema caused by poor nutrition defines kwashiorkor...
is a result of proper diagnosis of malnutrition. They also claim that they are the victim of a campaign by SEIU
Service Employees International Union
Service Employees International Union is a labor union representing about 1.8 million workers in over 100 occupations in the United States , and Canada...
, but the California Medi-Cal fraud director has stated that his bureau had initiated an investigation before SEIU
Service Employees International Union
Service Employees International Union is a labor union representing about 1.8 million workers in over 100 occupations in the United States , and Canada...
released their findings.
South Florida
In 2005, 72% of all Medicare claims nationwide for HIV/AIDS infusion injections were billed in Miami-Dade County. Many recent immigrants to South Florida open up a company and immediately start billing Medicare for tens of thousands in equipment and services that Medicare beneficiaries never receive.
Many South Florida drug dealers look to Medicare fraud as the new crime of choice. Criminals, now federal defendants, report that (1) there is more money in Medicare fraud than in drug smuggling, (2) there is a lesser chance of being caught and, (3) if caught, defendants are treated like a white collar criminal as opposed to a drug dealer.
Columbia/HCA fraud case
The Columbia/HCA fraud case is one of the largest examples of Medicare fraud in U.S. history. Numerous New York Times stories, beginning in 1996, began scrutinizing Columbia/HCA's business and Medicare billing practices. These culminated in the company being raided by Federal agents searching for documents and eventually the ousting of the corporation's CEO, Rick Scott, by the board of directors. Among the crimes uncovered were doctors being offered financial incentives to bring in patients, falsifying diagnostic codes to increase reimbursements from Medicare and other government programs, and billing the government for unnecessary lab tests, though Scott personally was never charged with any wrongdoing. HCA wound up pleading guilty to more than a dozen criminal and civil charges and paying fines totaling $1.7 billion. In 1999, Columbia/HCA changed its name back to HCA, Inc.In 2001, HCA reached a plea agreement with the U.S. government that avoided criminal charges against the company and included $95 million in fines. In late 2002, HCA agreed to pay the U.S. government $631 million, plus interest, and pay $17.5 million to state Medicaid
Medicaid
Medicaid is the United States health program for certain people and families with low incomes and resources. It is a means-tested program that is jointly funded by the state and federal governments, and is managed by the states. People served by Medicaid are U.S. citizens or legal permanent...
agencies, in addition to $250 million paid up to that point to resolve outstanding Medicare expense claims. In all, civil law suits cost HCA more than $1.7 billion to settle, including more than $500 million paid in 2003 to two whistleblower
Whistleblower
A whistleblower is a person who tells the public or someone in authority about alleged dishonest or illegal activities occurring in a government department, a public or private organization, or a company...
s.
Law enforcement and prosecution
The Office of Inspector General for the U.S. Department of Health and Human ServicesOffice of Inspector General, U.S. Department of Health and Human Services
Office of Inspector General , for the U.S. Department of Health and Human Services is charged with identifying and combating waste, fraud, and abuse in the HHS’s more than 300 programs, including Medicare and programs conducted by agencies within HHS, such as the Food and Drug Administration, the...
, as mandated by Public Law 95-452 (as amended), is to protect the integrity of Department of Health and Human Services (HHS) programs, to include Medicare and Medicaid programs, as well as the health and welfare of the beneficiaries of those programs. The Office of Investigations for the HHS, OIG collaboratively works with the Federal Bureau of Investigation
Federal Bureau of Investigation
The Federal Bureau of Investigation is an agency of the United States Department of Justice that serves as both a federal criminal investigative body and an internal intelligence agency . The FBI has investigative jurisdiction over violations of more than 200 categories of federal crime...
in order to combat Medicare Fraud.
Defendants convicted of Medicare fraud face stiff penalties according to the Federal Sentencing Guidelines
Federal Sentencing Guidelines
The Federal Sentencing Guidelines are rules that set out a uniform sentencing policy for individuals and organizations convicted of felonies and serious misdemeanors in the United States federal courts system...
and disbarment from HHS programs. The sentence depends on the amount of the fraud. Defendants can expect to face substantial prison time, deportation (if not a US citizen), fines, and restitution.
In 1997, the federal government dedicated $100 million to federal law enforcement to combat Medicare fraud. That money pays over 400 FBI agents who investigate Medicare fraud claims. In 2007, the U.S. Department of Health and Human Services, Office of Inspector General, U.S. Attorney's Office, and the U.S. Department of Justice created the Medicare Fraud Strike Force in Miami, Florida. This group of anti-fraud agents has been duplicated in other cities where Medicare fraud is widespread. In Miami alone, over two dozen agents from various federal agencies investigate solely Medicare fraud. In May 2009, Attorney General Holder and HHS Secretary Sebelius Announce New Interagency Health Care Fraud Prevention and Enforcement Action Team (HEAT) to combat Medicare fraud. FBI Director Robert Mueller
Robert Mueller
Robert Swan Mueller III is the 6th and current Director of the United States Federal Bureau of Investigation .-Early life:...
stated that the FBI and HHS OIG has over 2,400 open health care fraud investigations.
The first "National Summit on Health Care Fraud” was held on January 28, 2010 to bring together leaders from the public and private sectors to identify and discuss innovative ways to eliminate fraud, waste and abuse in the U.S. health care system. The summit is the first national gathering on health care fraud between law enforcement and the private and public sectors and is part of the Obama Administration’s coordinated effort to fight health care fraud.
2010 Medicare Fraud Strike Task Force Charges
In July 2010, the Medicare Fraud Strike Task Force announced its largest fraud discovery ever when charging 94 people nationwide for allegedly submitting a total of $251 million in fraudulent Medicare claims. The 94 people charged included doctors, medical assistants, and health care firm owners, and 36 of them have been found and arrested. Charges were filed in Baton Rouge (31 defendants charged), Miami (24 charged) BrooklynBrooklyn
Brooklyn is the most populous of New York City's five boroughs, with nearly 2.6 million residents, and the second-largest in area. Since 1896, Brooklyn has had the same boundaries as Kings County, which is now the most populous county in New York State and the second-most densely populated...
, (21 charged), Detroit (11 charged) and Houston (four charged). By value, nearly half of the false claims were made in Miami-Dade County, Florida
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...
. The Medicare claims covered HIV treatment, medical equipment, physical therapy and other unnecessary services or items, or those not provided.
2011 Medicare Fraud Strike Task Force Charges
In Septemer 2011, a nationwide takedown by Medicare Fraud Strike Force operations in eight cities resulted in charges against 91 defendants for their alleged participation in Medicare fraud schemes involving approximately $295 million in false billing.Organized crime
Medicare has been defrauded in a larger medical scam involving a criminal ring's attempt to steal $163 million dollars from various healthcare organizations. Of the 73 individuals indicted for this scheme, more than 50 people were arrested on October 13, 2010 in New York, California, New Mexico, Ohio and Georgia.External links
- Stop Medicare Fraud site by US Government
- Fraud Overview at Medicare.gov site
- Medicare Fraud Reporting Center Information about Medicare fraud and how to report it.