MAY 15, 1996
This week, the Department of Health & Human Services announced that a year-old pilot project to crack down on Medicare fraud is proving successful. Florida is one of five states included in that project. Fred De Sam Lazaro of KTCA-St. Paul-Minneapolis has the story.
FRED DE SAM LAZARO: More retired Americans live in Florida than any other state, so it's no surprised that health care, particularly Medicare, the program that insures all Americans over 65, is the biggest driver of the economy here. In the Miami area, doctors offices, nursing services, and home health agencies abound, serving an estimated 2 million Medicare beneficiaries in the area. South Florida is also a huge lucrative target of opportunity for rip-off artists according to U.S. Attorney Kendall Coffey.
KENDALL COFFEY, U.S. Attorney: South Florida has a rampant problem with Medicare fraud and really with health care fraud generally. It is spread all over the place. It is a problem that is perhaps as much as $2 billion or more when you include all the components of health care fraud. It is really the problem of the 90's, just as bank fraud and failures have been the big fraud challenge of the 80's. Criminals follow dollars and health care is where the dollars are.
FRED DE SAM LAZARO: The Medicare program is inviting to criminals because it is comprehensive. Medicare pays for all medical services a doctor deems reasonable and necessary. The FBI's George Clow says just what reasonable and necessary means has been stretched to new limits.
GEORGE CLOW, FBI: We've had some very unscrupulous licensed physicians have been, they've been utilized to prescribe things for people that they don't need. One of the more interesting ones that we had here in South Florida, this case that resulted in about $9 million worth of fraud being, being perpetrated on Medicare and the taxpayer, involves what's known as a nutritional milk. We had a group of people who were going to old folks homes and senior citizens complexes and telling these people that the government wants them to have this surplus milk, and they were bringing it in by the case, and all you need to do to participate in getting the surplus milk, this nutritional supplement, is to give us your Medicare number, which people did.
JOSE COMAS, Medicare Recipient: I received a phone call that afternoon. A gentleman asked me, "Have you heard about a new program from Medicare?".
FRED DE SAM LAZARO: Seventy-year-old retired airline mechanic Jose Comas readily volunteered his Medicare or Social Security number when a telephone solicitor offered him fruit juices which he was misled to believe were free under Medicare.
JOSE COMAS: Two days later, I find two cases of fruit juice on my porch. Very well, we drank it, very good. Next month we had another couple of cases. I didn't see anybody around. They always dropped it without saying anything or leaving any messages or notes until I got the Medicare statement at the end of a couple of months went buy, and I see January, February, $395 for nutrients and special fruit.
FRED DE SAM LAZARO: Medicare statements are merely notifications of benefits. Although there are some co-payments, beneficiaries rarely are asked to pay anything out of their own pocket in fraudulent schemes. It's one reason many do not complain. Although most elderly don't know they're being used in schemes, advocates say many, in fact, cooperate in them. Here at Miami's Little Havana Senior Center the average person lives on just $450 a month in Social Security benefits. Many don't speak English, making them especially vulnerable, according to psychologist Dr. Ariela Rodriguez.
DR. ARIELA RODRIGUEZ, Psychologist: These are folks that come out here because they don't have family at home, they don't have anything to do at home, except sit there and watch TV. So these folks are at risk for being, uh, poor, at risk for bribery, or at risk for accepting gifts because of their poverty. They are at risk to allow people to talk to them about these things because they're lonely, so anybody that comes knocking on their door, young person that is friendly to them, they will invite in and offer coffee to and entertain and please, try to please.
FRED DE SAM LAZARO: And Dr. Rodriguez says they're quite liable to turn over their Social Security numbers. That's the first of three simple steps it takes to bilk Medicare. The second is registering as a Medicare provider, obtaining an ID number. That takes one phone call to a Medicare office. Finally, with a collaborating doctor to sign prescriptions, these operators can begin sending bills to Medicare. Jose Comas got notifications that Medicare paid four different providers on his behalf over a two-year period.
JOSE COMAS: And I imagine Medicare provides them with a control numbers so they can collect their money when they send them a bill.
FRED DE SAM LAZARO: So you got a total of four different companies that supplied you with these?
JOSE COMAS: Four different companies supplying. That's right, over a period of over a year and I, I calculated more or less ten to fifteen thousand dollars.
FRED DE SAM LAZARO: Medicare is an open entitlement. It pays for all reasonable necessary medical care, but money to crack down on fraud comes from what are called discretionary federal funds, annual appropriations from Congress. They are limited and limiting, according to June Brown, inspector general at the Department of Health & Human Services.
JUNE BROWN, Department of Health and Human Services: (1995) This office brought back $8 billion last year to the government and reimbursed the programs that lost the money and the rest went to the U.S. Treasury, and yet, the budgets are being cut for the oversight effort. If you averaged people on the staff, they brought back $6.4 million each.
FRED DE SAM LAZARO: Medicare beneficiaries are being urged in mailings, through the media, and senior centers, to scrutinize their Medicare notifications. They are sent out each time a provider has been paid in their behalf. Recipients are urged to report bills for services they did not receive.
SPOKESPERSON: You do have a copy of the claim that you submitted?
FRED DE SAM LAZARO: The program has also taken several steps to make it more difficult for fraudulent operators. For example, it will no longer issue provider numbers to applicants who list post office boxes, instead of street addresses, a trademark of fly-by-night operators. Medicare's computerized billing system is also being streamlined so unusual billing activity will be red-flagged for further investigation according to Medicare's top administrator, Bruce Vladeck.
BRUCE VLADECK, Medicare Administrator: The long-term big effect is going to be, is going to be produced by significant changes in our systems, our computer systems, our payment systems, our systems for assigning new provider organizations to participate in the Medicare program. The front-end prevention and deterrence, of course, is where the greatest long-term pay-offs are, and that's a process that won't be going on over the next several years.
FRED DE SAM LAZARO: How much these measures will curtail abuse remains an open question to many experts. So too is the definition of abuse. The Florida Medical Association's Dr. Robert Goldberg says although some doctors have engaged in fraud, in many cases, the abuse is not overt or it may be well-intentioned.
DR. ROBERT GOLDBERG, Florida Medical Association: For example, a medical equipment, a durable medical equipment supplier may ask the physician to fill out or requisition, saying that a patient is there and requires a wheelchair or some other piece of medical equipment to, to do their activities in the home. The physician is not benefiting in that situation, and very often wants to do what's best for the patient. As practices have become busier and you're seeing larger numbers of patients, it's very difficult to check into every situation, so the doctors are vulnerable, coercible, into doing things that perhaps aren't always in the program's best interest.
FRED DE SAM LAZARO: Gail Wilensky, who ran the Medicare program during the Bush administration says the gray areas, possible but not clear abuse, far outstrip the out and out fraud in Medicare.
GAIL WILENSKY, Former Medicare Administrator: Thirty and forty percent of some kinds of procedures may well be in this gray area, not of zero benefit, and not of certain benefit either. Medicare tends to be delivered in an ala carte fee-for-service environment, and that means that the financial incentives are to do more, rather than less.
FRED DE SAM LAZARO: Wilensky says information measuring the effectiveness of some commonly used services, notably in cardiothorasic surgery, for example, is being gathered that will ultimately enable guidelines to better control costs. Meanwhile, law enforcement officials, who must go after the blatant abuse, say Medicare continues to attract crooks.
KENDALL COFFEY: My biggest frustration is that we have not yet reached the point of critical mass, and once friends are telling friends that they're going to get prosecuted, then we'll have hit critical mass, and then we'll be turning this thing around and in a dramatic way.
FRED DE SAM LAZARO: Do you see that happening?
KENDALL COFFEY: I think it's going to happen. I think it's starting to happen, but we're not there yet.
FRED DE SAM LAZARO: Coffey says part of the challenge is in making elderly Americans aware of how easily they are used in fraudulent Medicare schemes. In the meanwhile, under the Clinton administration anti-fraud program, his office is adding five new investigators to track down more of those schemes.