Medicare Crime: A $60 Billion Fraud

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Medicare Fraud is a $60 billion industry for criminals, who find Medicare “easy” to rip off using fake storefront addresses and using stolen medicare patient information.

According to a CBS “60 Minutes” report shared below. Medicare now spends $430 billion a year. Of this, $60 billion, or 14%, flows to criminals operating out of unoccupied store fronts with addresses and using Medicare information stolen from hospitals, drug stores, doctors’ offices, and patients themselves.



(CBS)  Of all the problems facing the United States right now, none are more important than health care.

President Obama says rising costs are driving huge federal budget deficits that imperil our future, and that there is enough waste and fraud in the system to pay for health care reform if it was eliminated.

At the center of both issues is Medicare, the government insurance program that provides health care to 46 million elderly and disabled Americans. But it also 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.

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.

This story may raise your blood pressure, along with some troubling questions about our government’s ability to manage a medical bureaucracy.

If you want to find Medicare fraud, the first place you should look is South Florida, where 60 Minutes and correspondent Steve Kroft were told it has pushed aside cocaine as the major criminal enterprise.

It’s a quiet crime – there are no sirens or gunfire. The only victims are the American taxpayers, and they don’t even know they are being ripped off.

FBI Special Agent Brian Waterman, who 60 Minutes rode with for several days, told us 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.

“This office number should be manned and answered 24 hours a day,” Waterman explained, standing outside one of those small, unstaffed businesses.

The tiny medical supply company billed 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.

Sometimes, they don’t even have offices: we went looking for a pharmacy at 7511 NW. 73rd Street that billed Medicare $300,000 in charges. It turned out to be in the middle of a public warehouse storage area.

“They’ve already told us that there’s no offices here,” Waterman told Kroft. “There are no businesses here. In fact they are not even allowed to have a business here.”

Waterman is the senior agent in the Miami office in charge of Medicare fraud. And Kirk Ogrosky, a top Justice Department prosecutor, oversees half a dozen Medicare fraud strike forces that have been set up across the country.

The office Kroft visited operates out of a warehouse at a secret location in South Florida and includes investigators from the FBI, Health and Human Services, and the IRS.

“There’s a healthcare fraud industry where people do nothing but recruit patients, get patient lists, find doctors, look on the Internet, find different scams. There are entire groups and entire organizations of people that are dedicated to nothing but committing fraud, finding a better way to steal from Medicare,” Waterman explained.

“Is the Medicare fraud business bigger than the drug business in Miami now?” Kroft asked.

“I think it’s way bigger,” Ogrosky said.

Asked what changed, Ogrosky told Kroft, “The criminals changed.”

“Sophistication,” Waterman added.

“They’ve figured out that rather than stealing $100,000 or $200,000, they can steal $100 million. We have seen cases in the last six, eight months that involve a couple of guys that if they weren’t stealing from Medicare might be stealing your car,” Ogrosky explained.

“You know, we were the king of the drugs in the ’80s. We’re king of healthcare fraud in the ’90s and the 2000’s,” Waterman added, speaking about South Florida.

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.

“We have to understand this is a major fraud area,” United States Attorney General Eric Holder told Kroft.

Holder is taking a crime that has been in the backwaters of law enforcement and made it a top priority at the Justice Department.

“Why do you think it’s been so attractive for the criminals?” Kroft asked.

“Because I think it’s been pretty easy. I think that they have found a way in which they have been able to get pretty substantial amounts of money with not a huge amount of effort and at least until now, without the possibility of great detection,” Holder explained.

The attorney general agreed that the risks are much lower. “You’ll see some of these people and they’ll say ‘You know there is not a chance that you are going to have some other drug dealer shooting at you.’ The chances of being incarcerated were lower, the amount of time you would spend in jail was smaller. All of which is different now.”

“You’re wakin’ up every day makin’ $20,000, $30,000, $40,000. Every day, almost literally. And you’re like ‘Wow I just won the lottery,'” a man we’ll call “Tony” told Kroft.

Tony is not his real name. Before he was ratted out by a friend and brought down by the FBI, he was making Wall Street money running a string of phony medical supply companies out of a building that were theoretically providing wheel chairs and other expensive equipment to Medicare patients.

He told Kroft he stole about $20 million from Medicare. He told Kroft it was “real easy.”

“And you’re not exactly a criminal mastermind?” Kroft asked.

“No. No,” Tony said. “No, not really. It’s more like common sense.”

Asked if he actually ever sold any medical equipment, Tony said, “No. Just have somebody in an office answering the phone, like we’re open for business. And wake up in the morning, see how much, check your bank account and see how much money you made today.”

He told Kroft he didn’t have any medical equipment or real clients – all of it was fake.

“And you would just fill out some invoices and some forms and send ’em to Medicare?” Kroft asked.

“That’s it. In 15 to 30 days you’ll have a direct deposit in your bank account. I mean it was ridiculous. It’s more like taking candy from a baby,” Tony said.

According to the FBI, all you have to do to get into this business is rent a cheap storefront office, find or create a front man to get an occupational license, bribe a doctor or forge a prescription pad, and obtain the names and ID numbers