KHN Morning Briefing

Summaries of health policy coverage from major news organizations

Medicare Fraud: One Of The Most Profitable Crimes In U.S.

Several news outlets report on Medicare and insurance fraud.

Medicare "provides a rich and steady income stream for criminals who are constantly finding new ways to steal a sizable chunk of the half trillion dollars that are paid out each year in Medicare benefits," 60 Minutes reports. "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." Medicare fraud leaves little evidence: an FBI agent in South Florida said "the only visible evidence of the crimes are the thousands of tiny clinics and pharmacies that dot the low-rent strip malls. You don't even know they're there because there's never anyone inside. No doctors, no nurses and no patients." Yet one of those offices, a "tiny medical supply company" charged Medicare "almost $2 million in July and a half million dollars while 60 Minutes was there in August, but we never found anybody inside, and our phone calls were never returned."

Kirk Ogrosky, a top Justice Department prosecutor, says the Medicare fraud business is now larger than the drug business in Miami. "But it's not just Miami: in March, the FBI arrested 53 people in Detroit, including a number of doctors, and charged them with billing Medicare more than $50 million for unnecessary medical procedures. And in Los Angeles, the City of Angels Medical Center recruited homeless people off the street to fill their empty beds, offering them cash and drugs plus clean sheets and three square meals a day, while billing Medicare tens of millions of dollars for their stay." 60 Minutes also spoke with U.S. Attorney General Eric Holder as well as a Medicare fraudster who bilked the system of about $20 million (Kroft, 10/25).

Minnesota Public Radio: Medicare fraud is difficult to find and prosecute without whistleblowers, says Minnesota federal prosecutor Gerald Wilhelm. "'Medicare cases are often what I call the death of a thousand ankle bites,' Wilhelm said. 'Every bad claim is a dollar, but there are a billion bad claims so it's a billion dollars, and so to look at all of those claims is impossible.'" While some cases are obvious, "many cases fall into a gray area that mean second-guessing a physician's decisions." But "[t]he Medicare statute itself prohibits the government from interfering with the practice of medicine. Wilhelm said the question with Medicare is often whether a clinic billed the government for a more complex procedure than it performed or than the patient needed. He said it's like buying a Chevrolet and charging the government for a Cadillac" (Stawicki, 10/26).

The Minneapolis Star Tribune reports on another type of insurance fraud. One couple in East Bethel says they were 'royally duped' into buying health coverage that wasn't insurance," which is not uncommon. No one knows how many customers have fallen into this trap. But dubious health plans are "spreading like poison oak all over the country," says James Quiggle of the Coalition Against Insurance Fraud, a nonprofit watchdog in Washington, D.C. Consumer advocates say companies are taking advantage of the recession and the growing number of uninsured people -- 1 in 5 American adults under age 65 -- to sell 'health coverage' that evaporates when customers try to use it, or provides far less than promised" (Lerner, 10/25).

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