News & Politics

FBI Busts $1.2 Billion Medicare Fraud Ring

It’s being called “one of the largest health care fraud schemes in U.S. history” against Medicare recipients. The FBI announced it had charged 24 individuals, including CEOs and COOs of medical equipment companies, with defrauding Medicare to the tune of $1.2 billion.

The good news is that the feds were able to crack the case. The bad news is it went on for five years before they were able to stop it.

The scheme was simple and elegant.

Fox Business:

The alleged scheme involved the payment of illegal kickbacks and bribes by DME companies in exchange for the referral of Medicare beneficiaries by medical professionals who were working with fraudulent telemedicine companies for back, shoulder, wrist and knee braces that “are medically unnecessary.”

The scam relied on telemarketers scattered throughout the Philippines and Latin America to seek out elderly patients eligible for Medicare using television and radio ads, as well as cold calls, by promising them “free or low-cost” braces.

The defendants allegedly paid doctors to prescribe medical equipment without any patient interaction or with only a brief phone call.

The profits were then laundered through international shell corporations and used to purchase exotic automobiles, yachts and luxury real estate in the U.S. and abroad.

There’s plenty more where that came from. How much is open to debate. There is apparently a difference between out and out fraud and what the Center for Medicare and Medicaid Services calls “billing mistakes.” It’s estimated that up to 10 percent of all Medicare funds paid out go to fraudsters. With more than $700 billion spent on Medicare in 2017, that means about $70 billion is stolen from the government every year.

The FBI puts this case in context:

At a news conference today in Columbia, South Carolina, officials said the operation took down every aspect of the far-reaching scheme—from the international call centers to the telemarketing companies to the shipping companies that were involved.

Investigators estimate Medicare paid as much as $17 to $22 million a week to the companies allegedly participating in fraudulent practices.

“Alleged fraud like this takes money away that could be put into research or better care for patients. That billion dollars could’ve been spent on medical care for patients who really needed it,” said Special Agent Karen Corbett, an FBI Criminal Investigative Division supervisor who oversaw the case.

In a $700 billion government program, there will be fraud, billing mistakes, accounting errors, and unnecessary bureaucratic red tape. The question we should be asking is fairly straightforward: Is the government doing enough to safeguard taxpayer dollars?

I think clearly, the answer is no. There is little incentive to root out fraud, although the use of analytics and other anti-fraud measures appear to be helping the government do a better job at detecting illegal activity.

But it simply isn’t a significant part of the culture in government employment to guard the public purse. Until it is, waste, fraud, and abuse will continue to be a massive problem for which taxpayers will be forced to foot the bill.