Tag: health care fraud

You’ve Come a Long Way, Baby: Barack Obama on Health Care Fraud

Last week, President Obama approved a one-year, unilateral (and thus illegalrepeal of ObamaCare’s requirements that the federal government verify the incomes and insurance options of people applying for the law’s new subsidies—a move that eviscerated the law’s anti-fraud protections. Rescinding anti-fraud protections is nothing new (or defensible). There is a very powerful fraud lobby in Washington, D.C. Normally, such steps just mean an increase in fraudulent and improper payments from the federal treasury, and a few more ignored reports from the Government Accountability Office and HHS Inspector General. Obama’s move, however, is so sweeping that he effectively expanded the eligibility criteria for ObamaCare’s new entitlements without so much as consulting Congress. Indeed, the law Obama is implementing did not and could not have passed Congress.

Barack Obama wasn’t always part of the health-care fraud lobby. Oh, no: time was, he railed against health care fraud. When he pleaded for his health care plan before a joint session of Congress in 2009, he promised that with his plan:

We will root out the waste and fraud and abuse in our Medicare program that doesn’t make our seniors any healthier…I’ve appointed a proven and aggressive inspector general to ferret out any and all cases of waste and fraud.

Any and all cases! So inspiring. And in his final push for ObamaCare’s passage, he promised the law would reduce fraud and improper payments. Here are excerpts from a strident speech he gave in Missouri on March 10, 2010:

I believe that in everything government does, we’ve got a special responsibility to be wise stewards about how Americans’ hard-earned tax dollars are spent. And I know you agree with that, too. Doesn’t matter whether you’re a Democrat or a Republican, you don’t like seeing your money wasted — or an independent, don’t like seeing your money wasted.

That’s a responsibility my administration is seeking to fulfill every single day…

Washington is a place where tax dollars are often treated like Monopoly money — they’re bartered and traded, and they’re divvied up among lobbyists and special interests, and where waste — even billions of dollars of waste — is accepted as the price of doing business…

The health care system has billions of dollars that should go to patient care and they’re lost each and every year to fraud, to abuse, to massive subsidies that line the pockets of the insurance industry.

Let me just give you one example — this is a long recognized but long tolerated problem called “improper payments.” That’s what they call them. Washington always has a name for these things. “Improper payments.” And as is often the case in Washington, the more innocuous the name, the more worried you should be. So these are payments mostly made through Medicare and Medicaid that are sent to the wrong person, sent for the wrong reason, sent in the wrong amount. Sometimes they’re innocent errors. Sometimes they’re because nobody is bothering to check to see where the money is going and they’re abused by scam artists and fly-by-night operations…

If we created a “Department of Improper Payments” it would be one of the largest agencies in our government…

Now, for the past few years, there has actually been a pilot program that uses a system of tough audits to recover some of this lost money. And even though these audits, they were just operating mainly in three states, they already found a billion dollars in improper payments. So these results were both disturbing and encouraging. They’re disturbing because it shows you how much waste there is out there in the health care system. But it’s encouraging because we can do something about it.

So earlier today, with [U.S. Sen.] Claire [McCaskill, D-Mo.] looking over my shoulder — one of our auditors-in-chief — I signed an order calling on all federal agencies to launch these kinds of audits all across the country. All across the country. (Applause.) So agencies would hire auditors to scour the books, go through things line by line. Auditors are paid based on how many abuses or errors they uncover. So it’s a win-win. The auditor, if they do a good job they get a small percentage as a reward. And the taxpayer wins by getting huge sums of money that would otherwise be lost that we can then spend to provide care to people who really need it, or we can use to reduce the deficit.

Now, through this effort, we expect to more than double the amounts we would’ve otherwise recovered — a couple of billion dollars over the next few years. And I’m announcing my support for the Improper Payments Elimination and Recovery Act — that’s a mouthful — but this is a bipartisan bill — (applause) — is a bipartisan bill to expand our ability to do these audits, so we can prevent even more fraud and abuse and waste.

Now, the reason I’m bringing all this stuff up is because there’s been a lot of talk about health care lately. And look, I’ll be honest, a lot of people, they’re confused, they’re saying, well, how can you help people get insurance who don’t have it without it adding to our deficit? It’s a legitimate question.

Well, the reason is, is because so much of the money currently in our health care system is being misspent.

Barack Obama used to oppose health care fraud—up until the moment that opposing fraud conflicted with his goal of preserving ObamaCare.

And why not? It’s just other people’s money.

Fidel Castro, Medicare Beneficiary?

There’s no proof yet, but it looks an awful lot like Medicare might be subsidizing the Castro brothers.

I, for one,  was not surprised to read that Medicare payments for non-existent medical services are ending up in Cuban (read: government-controlled) banks. Nor that “accused scammers are escaping in droves to Cuba and other Latin American countries to avoid prosecution — with more than 150 fugitives now wanted for stealing hundreds of millions of dollars from the U.S. healthcare program, according to the FBI and court records.”

In fact, I have been wondering for some time when we would see evidence that foreign governments have been stealing from Medicare. The official (read: conservative) estimates are that Medicare and Medicaid lose $70 billion each year to fraud and improper payments, a result of having almost zero meaningful controls in place. That’s practically an open invitation to steal from American taxpayers. Kleptocratic governments—and other organized-crime rings—would be insane not to wet their beaks.

In this National Review article, I explain how easily it could happen:

Last year, the feds indicted 44 members of an Armenian crime syndicate for operating a sprawling Medicare-fraud scheme. The syndicate had set up 118 phony clinics and billed Medicare for $35 million. They transferred at least some of their booty overseas. Who knows what LBJ’s Great Society is funding?

I also explain how these vast amounts of fraud aren’t going to stop without fundamental Medicare and Medicaid reform. Give the National Review article a read, and tell me if you share my suspicion that Medicare is bankrolling other governments.

Medicare Fraud Posse Cackles as If They Laid an Asteroid

What the media blare:

Levinson Snags $515 Million in Health Care Fraud

More than 100 Charged in Massive Medicare Fraud Busts in 7 Cities in Scams Totaling $452 Mil

What I hear:

Drip … … … . drip … … … … .

Why? As the latter article notes, “authorities have targeted fraud that’s believed to cost the government between $60 billion and $90 billion each year.” So add up those two figures, which include frauds that occurred in multiple years, and you get somewhere between 1.1 percent and 1.6 percent of the amount that Medicare and Medicaid enable criminals to steal from taxpayers in a single year.

Neither article makes it clear how paltry these anti-fraud efforts are. But at least the former article asks:

So what is it about the government’s health care programs that make them such inviting targets for white collar criminals?

I answer that question here, and in this video:

‘Health-Care Executive’s Medicare Fraud Scheme Included Lobbying Washington’

In a recent article, I explained:

Politicians routinely subvert anti-fraud measures to protect their constituents. When the federal government began poking around a Buffalo school district that billed Medicaid for speech therapy for 4,434 kids, the New York Times reported, “the Justice Department suspended its civil inquiry after complaints from Senator Charles E. Schumer, Democrat of New York, and other politicians”…

It’s not just the politicians. The Legal Aid Society is pushing back against a federal lawsuit charging that New York City overbilled Medicaid. Even conservatives fight anti-fraud measures, albeit in the name of preventing frivolous litigation, when they oppose expanding whistle-blower lawsuits, where private citizens who help the government win a case get to keep some of the penalty.

An indispensable part of this fraud-protection scam are the lobbyists who work to enable fraud or block credible anti-fraud efforts.  The Washington Post reports:

Miami health-care executive Larry Duran orchestrated one of the largest Medicare frauds in U.S. history, submitting more than $205 million in phony claims and landing a record-breaking 50-year prison sentence for his crimes.

But another piece of Duran’s scheme also caught the eye of prosecutors. They say he extended his fraud through his lobbying efforts, all aimed at getting official Washington to make it easier for mental health centers such as his to make money.

An advocacy group he helped set up, the National Association for Behavioral Health (NABH), has spent more than $750,000 on lobbying efforts over the past five years, including staging “fly-ins” on Capitol Hill and providing advice to group members on how to get around Medicare denials, according to the Justice Department. The group also held fundraisers for lawmakers…

“Duran did not stop with just committing a massive fraud on the Medicare program through his own companies. Duran franchised his fraud to others,” trial lawyer Jennifer Saulino wrote in a sentencing memo. The advocacy group he helped found, she said, “provided Duran a legitimate-looking vehicle to lobby Congress to allocate more money, through Medicare, to Duran and his co-conspirators for their fraudulent schemes”…

Duran said he pleaded guilty in the case to atone for his actions…

The basic scheme, records show, worked like this: Duran and Valera paid up to $400,000 a month in kickbacks to assisted living centers, halfway homes and others to procure a steady stream of patients for their clinics, which claimed to be providing group mental health treatment. Doctors frequently faked records or signed off on charts without seeing any patients.

Patients often suffered from Alzheimer’s disease, dementia or other conditions unsuited for therapy and were frequently left to urinate or defecate on themselves as they waited for treatment that never came, testimony showed…

Part of Duran’s strategy, prosecutors alleged, was to use his connections to push for policy changes to benefit his fraudulent business. Justice Department officials said in court testimony that Duran was an NABH founder, a board member and a leading financial contributor…“He had a very integral part of the lobbying role,” FBI agent Patrick Koeth testified during sentencing. “Basically, his involvement was to keep pushing for those lobbying efforts”…

The group boasts of its success in fighting for higher Medicare rates for partial hospitalization programs — the type of service Duran offered — and solicited money for a “policy defense fund” to fight proposed cuts.

Here’s the sound-and-pictures version of my article:

The basic theorem is this: market actors have greater incentives to prevent fraud, because it’s their own money on the line.  Politicians are spending other people’s money, so their incentive to prevent fraud is far less.  Therefore, fraud will always be higher in government programs than in similar market endeavors.

An 85 Percent Increase in Health Care Fraud Prosecutions? Be Still My Beating Heart…

USA Today reports that the Obama administration’s efforts may yield an 85 percent rise in federal fraud prosecutions.  Yawn.

Fraud expert Malcolm Sparrow:

By taking the fraud and abuse problem seriously this administration might be able to save 10 percent or even 20 percent from Medicare and Medicaid budgets. But to do that, one would have to spend 1 percent or maybe 2 percent (as opposed to the prevailing 0.1 percent) in order to check that the other 98 percent or 99 percent of the funds were well spent.  But please realize what a massive departure that would be from the status quo. This would mean increasing the budgets for control operations by a factor of 10 or 20. Not by 10 percent or 20 percent, but by a factor of 10 or 20. [emphasis added]

That’s not going to happen, as I explain here and in this video: