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Medicare Fraud Being Ignored By Feds

Posted on: Saturday, 14 November 2009, 07:00 CST

Documents show that for over three years, the agency in charge of preventing Medicare fraud has repeatedly ignored warnings about scammers stealing millions of dollars from several programs.

During the Bush and Obama administrations, the Centers for Medicare and Medicaid Services received about 30 warnings from inspectors but didn't respond to nearly half of them, even after repeated letters.

U.S. Sen. Charles Grassley said in a July 2008 warning, organized crime had infiltrated the system and was costing more than $1 million dollars for each artificial Medicare provider license the swindlers attained. The letter got no response.

He and other critics said lack of oversight in the federally administered program is part of an estimated $60 billion a year in Medicare fraud.

Grassley says, "There's no good answer for why the bureaucracy turned a blind eye, and it's a breach of the public trust."

By cracking down on those who cheat the Medicare system, the Obama administration hopes to pay for a large chunk of its proposed national heath care overhaul.

Obama's Health and Human Services Secretary Kathleen Sebelius said the Centers for Medicare and Medicaid Services typically responds to fraud warnings promptly, despite the lapses. She says they have investigated more than 300 since 2006 and is not satisfied that all the fraud alerts are receiving inadequate responses. Her office is implementing a new process for tracking the red flags.

Grassley wants the agency to respond to future fraud warnings within two months and Sebelius agreed.

He says, "If the department quickly responds to them, there is the opportunity to save significant taxpayers dollars."

One of the scams involved a program where Medicare patients whose home equipment was damaged or lost in Hurricanes Katrina and Rita get replacements without first getting a doctor's order. Medical equipment providers were reimbursed for such deliveries, but some of them turned out to be fraudulent.

The Centers for Medicare and Medicaid Services were warned but never got a response.

According to a July indictment, Kate and Oliver Nkuku used their Houston company, KO Medical, to bill Medicare for nearly $1 million worth of power wheelchairs and other items they claimed had been lost, damaged or destroyed during hurricanes. The couple allegedly paid another man $400 for each Medicare patient he recruited for the scam. Medicare paid the couple $5,000 for each wheelchair, and the indictment said not one of the orders was legitimate.

Okey Dike, Oliver Nkuku's attorney, has not returned several calls seeking comment.

Some other alerts the agency ignored:

- A July 2008 warning said "organized crime is using handlers" to recruit foreign nationals who are in the U.S. on student visas to get Social Security numbers, set up bank accounts and apply for Medicare provider numbers. After provider numbers were obtained, the crooks left the country, according to the letter. The inspectors warned this scam was costing more than $1 million for each provider license illegally obtained.

- A June 2007 warning said Medicare was routinely paying claims for two injectable medications "at doses that were not medically feasible." The reimbursement rate for the correct dosage at the time was $74 per injection but one company was getting $4,464 billing for the inflated amount.

- A 2006 warning about medically unnecessary drug screening tests went unheeded, as did another in 2008 saying labs were targeting pain management doctors and telling them to use the "most expensive test panel for every patient regardless of medical necessity." The letter also said the labs were paying kickbacks to the doctors for each test performed.

Jim Frogue, vice president of the private Center for Health Transformation, said it is impossible to stop Medicare fraud unless Medicare providers are screened more thoroughly. "The crooks are always one step ahead of the bureaucrats trying to keep up after them."

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On the Net:

• Centers for Medicare and Medicaid Services

Source: RedOrbit Staff & Wire Reports

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