Medicare fraud
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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 The Office of Management and Budget (OMB) is the largest office within the Executive Office of the President of the United States (EOP). OMB's most prominent function is to produce the president's budget, but it also examines agency programs, pol ...
, Medicare "improper payments" were $47.9 billion in 2010, but some of these payments later turned out to be valid.politifact.com
(2011-01-04). Retrieved on 2011-01-05.
The
Congressional Budget Office The Congressional Budget Office (CBO) is a federal agency within the legislative branch of the United States government that provides budget and economic information to Congress. Inspired by California's Legislative Analyst's Office that manages ...
estimates that total Medicare spending was $528 billion in 2010.


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. # 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." The ''
Affordable Care Act The Affordable Care Act (ACA), formally known as the Patient Protection and Affordable Care Act and colloquially known as Obamacare, is a landmark U.S. federal statute enacted by the 111th United States Congress and signed into law by Presid ...
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. In recent years, regulatory requirements tightened and law enforcement has stepped up. In 2018, a CMS rule intended to limit upcoding was vacated by a judge; it was later appealed in 2019.


Law enforcement and prosecution

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 The Federal Bureau of Investigation (FBI) is the domestic intelligence and security service of the United States and its principal federal law enforcement agency. Operating under the jurisdiction of the United States Department of Justice, ...
in order to combat Medicare Fraud. Defendants convicted of Medicare fraud face stiff penalties according to the
Federal Sentencing Guidelines The United States Federal Sentencing Guidelines are rules published by the U.S. Sentencing Commission that set out a uniform policy for sentencing individuals and organizations convicted of felonies and serious (Class A) misdemeanors in the Unit ...
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 The United States Department of Justice (DOJ), also known as the Justice Department, is a federal executive department of the United States government tasked with the enforcement of federal law and administration of justice in the United State ...
created the Medicare Fraud Strike Force in Miami, Florida.Feds Fight Rampant Medicare Fraud in South Florida
NPR. Retrieved on 2010-11-04.
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 Swan Mueller III (; born August 7, 1944) is an American lawyer and government official who served as the sixth director of the Federal Bureau of Investigation (FBI) from 2001 to 2013. A graduate of Princeton University and New York ...
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. 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.


Columbia/HCA fraud case

The
Columbia/HCA HCA Healthcare is an American for-profit operator of health care facilities that was founded in 1968. It is based in Nashville, Tennessee, and, as of May 2020, owns and operates 186 hospitals and approximately 2,000 sites of care, including sur ...
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 Richard Lynn Scott ( Myers, born December 1, 1952) is an American politician serving as the junior United States senator from Florida since 2019. A member of the Republican Party, he was the 45th governor of Florida from 2011 to 2019. 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 in the United States is a federal and state program that helps with healthcare costs for some people with limited income and resources. Medicaid also offers benefits not normally covered by Medicare, including nursing home care and pers ...
agencies, in addition to $250 million paid up to that point to resolve outstanding Medicare expense claims. In all, civil lawsuits cost HCA more than $1.7 billion to settle, including more than $500 million paid in 2003 to two
whistleblower A whistleblower (also written as whistle-blower or whistle blower) is a person, often an employee, who reveals information about activity within a private or public organization that is deemed illegal, immoral, illicit, unsafe or fraudulent. Whi ...
s.


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. 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.


Omnicare fraud

In November 2009, Omnicare paid $98 million to the federal government to settle five
qui tam In common law, a writ of ''qui tam'' is a writ through which private individuals who assist a prosecution can receive for themselves all or part of the damages or financial penalties recovered by the government as a result of the prosecution. Its ...
lawsuits brought under the ''
False Claims Act The False Claims Act (FCA), also called the "Lincoln Law", is an American federal law that imposes liability on persons and companies (typically federal contractors) who defraud governmental programs. It is the federal government's primary litigat ...
'' and government charges that the company had paid or solicited a variety of
kickbacks A kickback is a form of negotiated bribery in which a commission is paid to the bribe-taker in exchange for services rendered. Generally speaking, the remuneration (money, goods, or services handed over) is negotiated ahead of time. The kickbac ...
. The company admitted no wrongdoing. The charges included allegations that Omnicare solicited and received kickbacks from a pharmaceutical manufacturer
Johnson & Johnson Johnson & Johnson (J&J) is an American multinational corporation founded in 1886 that develops medical devices, pharmaceuticals, and consumer packaged goods. Its common stock is a component of the Dow Jones Industrial Average and the company i ...
, 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 The False Claims Act (FCA), also called the "Lincoln Law", is an American federal law that imposes liability on persons and companies (typically federal contractors) who defraud governmental programs. It is the federal government's primary litigat ...
, 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. In 2010, Omnicare settled Resnick's False Claims Act suit that had been taken up by the
U.S. Department of Justice The United States Department of Justice (DOJ), also known as the Justice Department, is a federal executive department of the United States government tasked with the enforcement of federal law and administration of justice in the United State ...
by paying $19.8 million to the federal government, while Mariner and SavaSeniorCare settled for $14 million.


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 An arrest is the act of apprehending and taking a person into custody (legal protection or control), usually because the person has been suspected of or observed committing a crime. After being taken into custody, the person can be questi ...
.Federal Bureau of Investigation press release, July 16, 2010
Medicare Fraud Strike Force Charges 94 Doctors, Health Care Company Owners, Executives, and Others for More Than $251 Million in Alleged False Billing
/ref>Miami Herald
Feds charge 94 medicare suspects in Miami other cities
July 17, 2010, Jay Weaver
Charges were filed in
Baton Rouge Baton Rouge ( ; ) is a city in and the capital of the U.S. state of Louisiana Louisiana , group=pronunciation (French: ''La Louisiane'') is a state in the Deep South and South Central regions of the United States. It is the 20th-sma ...
(31 defendants charged),
Miami Miami ( ), officially the City of Miami, known as "the 305", "The Magic City", and "Gateway to the Americas", is a East Coast of the United States, coastal metropolis and the County seat, county seat of Miami-Dade County, Florida, Miami-Dade C ...
(24 charged)
Brooklyn Brooklyn () is a borough of New York City, coextensive with Kings County, in the U.S. state of New York. Kings County is the most populous county in the State of New York, and the second-most densely populated county in the United States, be ...
, (21 charged),
Detroit Detroit ( , ; , ) is the largest city in the U.S. state of Michigan. It is also the largest U.S. city on the United States–Canada border, and the seat of government of Wayne County. The City of Detroit had a population of 639,111 at th ...
(11 charged) and
Houston Houston (; ) is the most populous city in Texas, the most populous city in the Southern United States, the fourth-most populous city in the United States, and the sixth-most populous city in North America, with a population of 2,304,580 in ...
(four charged). By value, nearly half of the false claims were made in
Miami-Dade County Miami-Dade County is a county located in the southeastern part of the U.S. state of Florida. The county had a population of 2,701,767 as of the 2020 census, making it the most populous county in Florida and the seventh-most populous county in ...
,
Florida Florida is a state located in the Southeastern region of the United States. Florida is bordered to the west by the Gulf of Mexico, to the northwest by Alabama, to the north by Georgia, to the east by the Bahamas and Atlantic Ocean, and to ...
. The Medicare claims covered HIV treatment, medical equipment, physical therapy and other unnecessary services or items, or those not provided. * 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 The operation was under the protection of an Armenian crime boss, known in the former Soviet Union as a "vor," Armen Kazarian. 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.


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.


2012 Medicare Fraud Strike Task Force Charges

In 2012, Medicare Fraud Strike Force operations in Detroit resulted in convictions 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 with Medicare fraud schemes that the government said totaled over $223 million in false billings. 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.


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.


2019 Medicare Fraud Strike Task Force Charges

In April 2019, Federal officials charged Philip Esformes of paying and receiving kickbacks and bribes in the largest Medicare fraud case in U.S. history. The largest case of fraud brought to the Department of Justice took place between 2007 until 2016.  Philip Esformes, 48, owner of more than 20 assisted living facilities and skilled nursing homes was the leader of the ring. Former Director of the Outreach Program at Larkin Hospital in South Miami, Odette Barcha, 50, was Esformes’ accomplice along with Arnaldo Carmouze, 57, a physical assistant in the Palmetto Bay Area. These three constructed a team of corrupt physicians, hospitals, and private practices in South Florida. The scheme worked as follows: bribes and kickbacks where paid to physicians, hospitals, and practices to refer patients to the facilities owned and controlled by Esformes. The assisted living and skilled nursing facilities would admit the patients and bill Medicare and Medicaid for unnecessary, fabricated and sometimes harmful procedures. In addition to that, some of the charges to Medicare and Medicaid include prescription narcotics prescribed to patients addicted to
opioid Opioids are substances that act on opioid receptors to produce morphine-like effects. Medically they are primarily used for pain relief, including anesthesia. Other medical uses include suppression of diarrhea, replacement therapy for opioid us ...
s to entice the patients to stay at the facility in order for the bill to increase. Another technique used by the dream team was to move patients in and out of facilities when the patients have reached the maximum number of days allowed by Medicare and Medicaid. This was accomplished by using one of the corrupt physicians to see the patients and coordinate for readmission in the same or a different facility owned by Esformes. Per Medicare and Medicaid guidelines, a patient is allowed 100 days at a skilled nursing facility after a hospital stay. The patient is given an additional 100 days if the he/she spends 6 days outside of a facility or is readmitted to a hospital for 3 additional days. The facilities not only fabricated medical documents to show treatment was done to a patient, they also hiked up the prices to equipment and medications that were never consumed or used. The role of Barcha as the Director of the Outreach program was to expand the group of corrupt physicians and practices. She would advise the community physicians and hospitals to refer patients to the facilities owned by Esformes and they will receive monetary gifts. The group would refer patient to the facilities and receive kickbacks. The law against kickbacks is called the Anti-Kickback Statute or Stark Law. This law makes it illegal for medical providers to refer patient to a facility owned by the physician or a family member for services billable to Medicare and Medicaid. It also prohibits providers to receive bribes for patient referrals. The involvement of Carmouze in the grand scheme was to prescribe unnecessary prescription drug to patients who may or may not have needed the medications. He also facilitated community physicians to visit the patient in the assisted living facilities owned by Esformes in order for the physician to bill Medicare and Medicaid and Esformes received kickbacks. Carmouze also assisted in falsifying medical documentation to represent proof of medical necessity for many of the medications, procedures, visits, and equipment charged to the government. Esformes has been detained since 2016. In 2019, he was convicted for charges that add up to 20 years in prison. His sentence was commuted by Donald Trump on December 22, 2020.


See also

*
Benefit fraud Benefit fraud is a form of welfare fraud as found within the system of government benefits paid to individuals by the welfare state in the United Kingdom. Definition of benefit fraud The Department for Work and Pensions (DWP) define benefit fr ...
*
Zone Program Integrity Contractor The Zone Program Integrity Contractor (ZPIC) is an entity established in the United States by the Centers for Medicare & Medicaid Services (CMS) to combat fraud, waste and abuse in the Medicare program. As a result of the Medicare Prescription Drug ...


References


External links


Stop Medicare Fraud
site by US Government
Fraud Overview
at Medicare.gov site
FBI.gov
{{DEFAULTSORT:Medicare Fraud Fraud, Medicare Insurance fraud Fraud in the United States Fraud