Criminals find Medicare easy to defraud

Mark Potter Correspondent • E-mail

MIAMI, Florida - On July 30th, 1965, President Lyndon Johnson led a delegation of dignitaries to Independence, Mo., where he officially brought Medicare into law with the stroke of a pen.

Sitting to his left was former President Harry S. Truman, who years before had begun efforts to create a national health insurance program. In honor of Truman's leadership and foresight, Johnson enrolled him as the program's first beneficiary and presented him with the nation's first Medicare card. 

It was a moment of great hope and promise in American history, and a time when few could have ever imagined that years later Medicare would fall prey to an array of aggressive criminals.

Through a variety of billing schemes, phony medical supply companies and payoffs to unscrupulous doctors and patients, these thieves now steal an estimated $60 billion a year in taxpayer money that is supposed to finance health care for 43 million American seniors and the disabled.

"The legitimate Medicare recipient is hurt— the legitimate business that's dispensing this and serving patients is hurt, every taxpayer is hurt, and we need to come down on this with both feet," said U.S. Secretary of Health and Human Services Michael Leavitt.

Another official, putting it more bluntly, said, "The system is broken."  And referring to the level of fraud, he added, "It's an epidemic."

False billing continues despite complaints
One of the patients dramatically affected by the widespread fraud is 82-year-old Muriel Sherman. During the last three years, Sherman received dozens of statements from Medicare indicating that the system was billed for tens of thousands of dollars in medicine and medical equipment in her name — care and equipment she never got and didn't need. It began after someone stole her Medicare patient identification number. She suspects the theft occurred at a facility where she went for treatment.

Flipping through page after page of Medicare benefits statements, Sherman insisted that none of the charges were real. "It's all phony," she said. Among other things, the bills indicate she is taking medicine for AIDS, a disease she doesn't have. "The FBI says if I was getting this amount of medicine, I'd be dead," she said. On her behalf, Medicare was also billed for a wheelchair, artificial knees, ankles and an eye, plus other medicines for diabetes. "None of it is real."

Sherman's biggest gripe is that her repeated complaints to Medicare were not acted upon quickly. "They don't want to know you when you call on the telephone," said said.  She also complained that discussions with law enforcement officials never resulted in the prosecution of any of the fraudulent billers. "For these people to do this and not be apprehended is an absolute insult to me and to everyone else," she exclaimed. 

A federal official familiar with her case admitted Sherman had a valid complaint, because some of the billing continued after she alerted authorities and there were no prosecutions.

Raul Lopez, the president of the Florida Association of Medical Equipment and Services and the director of a legitimate medical supply company, said he, too, made fraud complaints that he felt were ignored. "We've been reporting these issues for five years at a minimum and it seems like our reporting these issues falls on deaf ears."

Another complaint voiced by industry experts and federal law enforcement officials is that The Centers for Medicare and Medicaid Services -- known as CMS -- which administer Medicare is too lax in allowing new medical supply companies to start billing, without first doing proper background checks.

"How did they get that supplier number?" asked Tyler Wilson, the President and CEO of The American Association for Home Care, a national industry group representing medical equipment companies. "Somehow they dropped the ball in not imposing the up-front control in order to prevent these sham operations from being able to bill."

Bernardo Rodriguez, a supervisor in Miami's Office of Inspector General for the Department of Health and Human Services, said preventing illicit companies from being allowed to start in the first place will go a long way toward cutting down on much of the high-level fraud. "It's very important that we scrutinize the people coming into the program," he said.

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