Medicare fraud

In the United States, Medicare fraud is the claiming of Medicare health care reimbursement to which the claimant is not entitled. 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.^[1] The Congressional Budget Office estimates that total Medicare spending was $528 billion in 2010.^[2]

Types of Medicare fraud

Medicare fraud is typically seen in the following ways:

1. 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.
2. 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.
3. 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."^[3]

The Affordable Care Act of 2009 provides an additional $350 million to pursue physicians who are involved in both intentional/unintentional Medicare fraud through inappropriate billing. Strategies for prevention and apprehension include increased scrutiny of billing patterns, and the use of data analytics. The healthcare reform law also provides for stricter penalties; for instance, requiring physicians to return any overpayments to CMS within 60 days time.^[4]

In recent years regulatory requirements tightened^[5] and law enforcement has stepped up.^[6][7][8]

Law enforcement and prosecution

Jimmy Carter signs Medicare-Medicaid Anti-Fraud and Abuse Amendments into law

The Office of Inspector General for the U.S. Department of Health and Human Services, 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.^[9] 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.^[10] FBI Director Robert Mueller stated that the FBI and HHS OIG has over 2,400 open health care fraud investigations.^[11]

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.^[12] 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.

The Justice Department has used the False Claims Act to recover more than $7.7 billion from January 2009 to June 2012 in cases involving fraud against federal health care programs.^[13]

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.^[14] 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,^[15] 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.^[16] 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.^[17] In all, civil lawsuits cost HCA more than $1.7 billion to settle, including more than $500 million paid in 2003 to two whistleblowers.^[16]

Medicare fraud reporting by whistleblowers

The DOJ Medicare fraud enforcement efforts rely heavily on healthcare professionals coming forward with information about Medicare fraud. Federal law allows individuals reporting Medicare fraud to receive full protection from retaliation from their employer and collect up to 30% of the fines that the government collects as a result of the whistleblower's information.^[18] According to US Department of Justice figures, whistleblower activities contributed to over $13 billion in total civil settlements in over 3,660 cases stemming from Medicare fraud in the 20-year period from 1987 to 2007.^[19]

Omnicare fraud

In November 2009, Omnicare paid $98 million to the federal government to settle five qui tam lawsuits brought under the False Claims Act and government charges that the company had paid or solicited a variety of kickbacks.^[20] The company admitted no wrongdoing.^[21] The charges included allegations that Omnicare solicited and received kickbacks from a pharmaceutical manufacturer Johnson & Johnson, in exchange for agreeing to recommend that physicians prescribe Risperdal, a Johnson & Johnson antipsychotic drug, to nursing home patients.

Starting in 2006, healthcare entrepreneur Adam B. Resnick sued Omnicare, a major supplier of drugs to nursing homes, under the False Claims Act, as well as the parties to the company’s illegal kickback schemes. Omnicare allegedly paid kickbacks to nursing home operators in order to secure business, which constitutes Medicare fraud and Medicaid fraud. Omnicare allegedly had paid $50 million to the owners of the Mariner Health Care Inc. and SavaSeniorCare Administrative Services LLC nursing home chains in exchange for the right to continue providing pharmacy services to the nursing homes.^[22]

In 2010, Omnicare settled Resnick's False Claims Act suit that had been taken up by the U.S. Department of Justice by paying $19.8 million to the federal government, while Mariner and SavaSeniorCare settled for $14 million.^[23][24]

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.^[25][26] Charges were filed in Baton Rouge (31 defendants charged), Miami (24 charged) Brooklyn, (21 charged), Detroit (11 charged) and Houston (four charged).^[25] By value, nearly half of the false claims were made in Miami-Dade County, Florida.^[26] The Medicare claims covered HIV treatment, medical equipment, physical therapy and other unnecessary services or items, or those not provided.^[27]
• In October 2010, network of Armenian gangsters and their associates used phantom healthcare clinics and other means to try to cheat Medicare out of $163 million, the largest fraud by one criminal enterprise in the program’s history according to U.S. authorities^[28] The operation was under the protection of an Armenian crime boss, known in the former Soviet Union as a “vor,” Armen Kazarian.^[29] 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.^[30][31]

2011 Medicare Fraud Strike Task Force Charges

In September 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.^[32]

2012 Medicare Fraud Strike Task Force Charges

In 2012, Medicare Fraud Strike Force operations in Detroit resulted in convictions^[33] against 2 defendants for their participation in Medicare fraud schemes involving approximately $1.9 million in false billing.

Victor Jayasundera, a physical therapist, pleaded guilty on January 18, 2012 and was sentenced in the Eastern District of Michigan. In addition to his 30-month prison term, he was sentenced to three years of supervised release and was ordered to pay $855,484 in restitution, joint and several with his co-defendants.

Fatima Hassan, co-owned a company known as Jos Campau Physical Therapy with Javasundera, pleaded guilty on August 25, 2011, for her role in the Medicare fraud schemes and on May 17, 2012, was sentenced to 48 months in prison.

2013 Medicare Fraud Strike Task Force Charges

In May 2013, Federal officials charged 89 people including doctors, nurses, and other medical professionals in eight U.S. cities on Tuesday with Medicare fraud schemes that the government said totaled over $223 million in false billings.^[34] The bust took more than 400 law enforcement officers including FBI agents in Miami, Detroit, Los Angeles, New York and other cities to make the arrests.^[35]

2015 Medicare Fraud Strike Task Force Charges

In June 2015, Federal officials charged 243 people including 46 doctors, nurses, and other medical professionals with Medicare fraud schemes. The government said the fraudulent schemes netted approximately $712 million in false billings in what is the largest crackdown undertaken by the Medicare Fraud Strike Force. The defendants were charged in the Southern District of Florida, Eastern District of Michigan, Eastern District of New York, Southern District of Texas, Central District of California, Eastern District of Louisiana, Northern District of Texas, Northern District of Illinois and the Middle District of Florida.^[36]

See also

• Benefit fraud
• Zone Program Integrity Contractor

References

External links

• Stop Medicare Fraud site by US Government
• Fraud Overview at Medicare.gov site
• FBI.gov