From: mha23x@gmail.com   
      
   Health-care fraud   
   The $272 billion swindle   
      
   Why thieves love America’s health-care system   
      
      
   From the print edition | United States   
   May 31st 2014 | MIAMI AND NEW YORK   
      
   INVESTIGATORS in New York were looking for health-care fraud hot-spots. Agents   
   suggested Oceana, a cluster of luxury condos in Brighton Beach. The 865-unit   
   complex had a garage full of Porsches and Aston Martins—and 500 residents   
   claiming Medicaid,    
   which is meant for the poor and disabled. Though many claims had been filed   
   legitimately, some looked iffy. Last August six residents were charged. Within   
   weeks another 150 had stopped claiming assistance, says Robert Byrnes, one of   
   the investigators.   
      
   Health care is a tempting target for thieves. Medicaid doles out $415 billion   
   a year; Medicare (a federal scheme for the elderly), nearly $600 billion.   
   Total health spending in America is a massive $2.7 trillion, or 17% of GDP. No   
   one knows for sure how    
   much of that is embezzled, but in 2012 Donald Berwick, a former head of the   
   Centres for Medicare and Medicaid Services (CMS), and Andrew Hackbarth of the   
   RAND Corporation, estimated that fraud (and the extra rules and inspections   
   required to fight it)    
   added as much as $98 billion, or roughly 10%, to annual Medicare and Medicaid   
   spending—and up to $272 billion across the entire health system.   
      
      
   Federal prosecutors had over 2,000 health-fraud probes open at the end of   
   2013. A Medicare “strike force”, which was formed in 2007, boasts of seven   
   nationwide “takedowns”. In the latest, on May 13th, 90 people, including   
   16 doctors, were rounded    
   up in six cities—more than half of them in Miami, the capital city of   
   medical fraud. One doctor is alleged to have fraudulently charged for $24m of   
   kit, including 1,000 power wheelchairs.   
      
   Punishments have grown tougher: last year the owner of a mental-health clinic   
   got 30 years for false billing. Efforts to claw back stolen cash are highly   
   cost-effective: in 2011-13 the government’s main fraud-control programme,   
   run jointly by the    
   Department of Health and Human Services (HHS) and the Department of Justice,   
   recovered $8 for every $1 it spent.   
      
   As fraud-fighting has intensified, dodgy billing has tumbled in areas that   
   were most prone to abuse, such as durable medical kit and home visits (see   
   chart). Home-health fraud—such as charging for non-existent visits to give   
   insulin injections—got so    
   bad that the CMS, which runs the programmes, called a moratorium on enrolling   
   new providers in several large cities last year. Since tighter screening was   
   introduced under Obamacare, the CMS has stripped 17,000 providers of their   
   licence to bill Medicare.   
    Thousands of suppliers also quit after being required to seek accreditation   
   and to post surety bonds of $50,000.   
      
      
   Yet the sheer volume of transactions makes it easier for miscreants to hide:   
   every day, for instance, Medicare’s contractors process 4.5m claims. In this   
   context the $4.3 billion recovered by fraud-busters in 2013, though a record,   
   looks paltry.   
      
   Better than cocaine   
      
   Fraud migrates. Take one popular scam: overbilling for HIV infusion, an   
   outdated therapy that Medicare still covers despite the existence of cheaper,   
   better alternatives. This scam waned in Florida after a crackdown, only to pop   
   up in Detroit, run by    
   relatives of the original perpetrators.   
      
   Fraud mutates, too. As old hustles are rumbled, fraudsters invent new ones.   
   “We’ve taken out much of the low-hanging fruit,” says Gary Cantrell, an   
   investigator at HHS—an example being the thousands of bogus equipment   
   suppliers registered to    
   empty shopfronts. Scams now need to be more sophisticated to succeed, he   
   argues. Doctors, pharmacies, and patients act in league. Scammers over-bill   
   for real services rather than charging for non-existent ones. That makes them   
   harder to spot.   
      
   Some criminals are switching from cocaine trafficking to prescription-drug   
   fraud because the risk-adjusted rewards are higher: the money is still good,   
   the work safer and the penalties lighter. Medicare gumshoes in Florida   
   regularly find stockpiles of    
   weapons when making arrests. The gangs are often bound by ethnic ties:   
   Russians in New York, Cubans in Miami, Nigerians in Houston and so on.   
      
   Stealing patients’ identities is lucrative. Medical records are worth more   
   to crooks than credit-card numbers. They contain more information, and can be   
   used to obtain prescriptions for controlled drugs. Usually, it takes victims   
   longer to notice that    
   their details have been pinched. The Government Accountability Office has   
   recommended that the CMS remove Social Security numbers from Medicare cards to   
   prevent fraud. It has yet to do so.   
      
   In one fast-growing area of fraud, involving pharmacies and prescription   
   drugs, federal investigators have seen caseloads quadruple over the past five   
   years. Elderly patients may receive kickbacks to sell their details to a   
   pharmacist. He will then    
   provide them with drugs they need while billing Medicare for costlier ones.   
      
   Paid recruiters scour nursing homes for accomplices. Some pharmacies also pay   
   wholesalers to produce phoney invoices. Others bribe medical workers for   
   leftover pills: in April a pharmacy-owner in Louisiana admitted to paying   
   nursing-home staff a few    
   hundred dollars a time to bring her unused drugs, which she repackaged and   
   sold as new, billing Medicare $2.2m for the recycled meds between 2008 and   
   2013.   
      
   Another scam is to turn a doctor’s clinic into a prescription-writing   
   factory for painkillers (or “pill mill”) and resell them on the street. A   
   clinic in New York was recently charged with fraudulently producing   
   prescriptions for more than 5m    
   oxycodone tablets, which were sold locally for $30-$90 each. The alleged   
   conspirators included doctors and traffickers who ran crews of “patients”   
   so large that long queues sometimes formed outside the clinic. The doctors   
   charged $300 per large    
   prescription. One raked in $12m. To cover their backs they would ask for scans   
   or urine samples purporting to show injuries. The fake patients typically   
   obtained these from the traffickers at the clinic door.   
      
   False billing by pharmacies is rife. New York’s Medicaid sleuths have   
   stepped up spot checks to see if the drugs in the back room square with   
   invoices. But this is a lot of work, so most outlets are never checked.   
      
      
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