REPORT ON MEDICARE FRAUD: MEDICARE IS DESIGNED FOR PLUNDER
Raymond
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AAPS REPORT ON MEDICARE FRAUD
MEDICARE IS DESIGNED FOR PLUNDER
Health Care Scam Costs Rising Up to $250 Billion
INTRODUCTION:
Willie Sutton robbed banks because "that's where the money is."
Today, government-run medical programs such as Medicare are the
modern-
day targets for new Willie Suttons. That's where the money is to be
made. The system is ripe for plunder. The government signs the
equivalent of blank checks to crooks who have figured out how to bilk
the system.
The news is full of horror stories of Medicare mills cranking out
fraudulent billings and bilking the American taxpayers out of
millions
of dollars. But these reports create a false impression that fraud is
the norm in Medicare. Instead, most physicians are doing their best
to
comply with a very complex and confusing system of CPT codes and
other
government regulations. The Inspector General for Health and Human
Services, June Gibbs Brown, acknowledges:
"We aren't finding the individual physician to be a prevalent
offender. Most of them are caring people, dedicated to medicine and
their patients."
-- Medical Economics (9/9/96)
But unfortunately, these highly publicized cases and misguided
enforcement actions by the Health Care Finance Administration (HCFA)
of HHS have created an atmosphere of fear and intimidation in which
physicians who treat Medicare-eligible patients must practice their
profession.
Proposed Solution
Under the current system, the billions of dollars of fraudulent
Medicare payments will never be eliminated.
The Association of American Physicians and Surgeons proposes
elimination of third-party payments ("assignment of benefits"
directly
to physicians and other providers as opposed to reimbursement of the
beneficiary) for Medicare patients.
Instead, payments should be made directly to patients, who, in turn,
would pay doctors and providers for actual services performed. As a
result, those intent on cheating the system would be prevented from
getting taxpayer reimbursement for treatments not performed, and for
patients who don't exist.
MEDICARE FRAUD ENFORCEMENT AND ITS NEGATIVE IMPACT ON DOCTORS AND
PATIENT CARE
AAPS recently released the results of a mailed survey of physicians
on
Medicare and its impact on patient care which shows that patients are
also feeling the pinch of these tactics as fewer physicians are
willing to treat Medicare-eligible patients and many are restricting
services to Medicare patients because of fear of prosecution. Results
of the survey detail for the first time the negative impact of
Medicare enforcement and regulations on patients' access to care.
Some
findings:
More than three-fourths (82%) report increased fear of prosecution or
investigation in the past 3 years;
71% report making changes in their practice to avoid threat of
prosecution, including greatly restricting services, i.e. more than
one-third (34%) of all respondents restrict services to Medicare
patients, such as surgery.
20% report they do not accept new Medicare patients because of
hassles
and/or threats from Medicare. (Only 16% cite fees)
Almost one-fourth (23%) DO NOT accept new Medicare patients. Of those
who do, 9% do so only under special circumstances;
More than one-third (34%) have difficulty finding physicians willing
to accept referrals of their Medicare patients;
Perhaps the most disturbing finding is that more than one-fourth
(26%)
of physicians who restrict services to Medicare patients do so
because
of "hassles and/or threats from Medicare." This is proof indeed that
some of the misdirected efforts of HHS and HCFA to "crack down" on
fraud have made it more difficult for patients to get care from the
most honest and qualified physicians.
MEDICARE IS DESIGNED FOR PLUNDER
The reason that Medicare is such an attractive target is that the
money is easy and the risk of detection is still low. Simply, the
system is ripe for plunder by design.
For example, in contrast to credit card fraud, Medicare fraud is
"non-
self-revealing." With credit cards, the customer receives a clearly
itemized statement, then pays the bill with his own funds. If he
finds
a discrepancy, it is in his financial self-interest to protest the
charge. But in Medicare, the "customer" (patient) never sees the bill
before it is paid by the government.
The assignment of benefits makes it possible for multi-million dollar
scams to operate by billing for fictitious services or for services
of
minimal value to the recipient (such as unnecessary laboratory
tests).
The absence of any copayment (as for laboratory tests or home health
services) removes any patient incentives to pay attention to the
bill.
As U.S. Attorney Alan Bersin has pointed out, the upswing in fraud
has
resulted from separating the payer from the recipient of services.
Third-party payers are attractive targets for organized criminal
scams, as well as for dishonest providers and patients. An
appallingly
high percentage of Americans (up to 25% in some groups) see nothing
wrong with lying to increase the size of medical/insurance
settlements. (study on fraud)
Inspector General Brown paints the picture clearly:
"It's created an entire cottage industry. But those involved aren't
medical people...the[se] people learned about the money that can be
made in health-care scams while they were in prison -- and then set
up
shop after they were released. Without providing any service, they
started billing HCFA, using Medicare numbers of deceased individuals.
Other people, again with no relationship to legitimate practitioners,
have billed Medicare for durable medical equipment they never
supplied." -- Medical Economics (9/9/96)
PROBLEMS WITH CURRENT FRAUD ENFORCEMENT/CODING PROCEDURES
The Investigative Staff Report of Senator William S. Cohen ("Gaming
the Health Care System" July 7, 1994) acknowledged that "The vast
majority of health care providers are honest and dedicated
professionals."
However, much of the current enforcement effort is directed at the
coding practices of those honest individuals trying to make a living
while abiding by ever-changing and Byzantine regulations. The side
effects:
Corruption in the system tends to protect the most egregious
offenders, as demonstrated by the repeat offenses of the Philadelphia
cardiologist cited in the Investigative Report, totaling millions of
dollars over thirteen years.
The system of rewarding enforcers (incentives or "bounties,"
especially forfeiture) has led to outrageous abuse of power by
government agents.
The system has become so terrifying that many physicians would be
well
advised to avoid participation. Factors include ambiguous rules,
administrative law that deprives the accused of basic rights, paid
informants, draconian fines for trivial errors and routine tactics of
intimidation.
The Investigative Report of the Special Committee cites 50 case
samples of true abuse. AAPS can match each of those with a case of an
honest practitioner unfairly prosecuted for inadvertent mistakes or
victimized because of inconsistent interpretation of coding
regulations.
For example:
Edgardo Perez-DeLeon of Michigan. Mr. Perez-DeLeon, former office
manager for his wife's internal medicine practice was convicted of 12
felony counts of Medicaid False Claims and Health Care False Claims
Offenses.
His crime? He coded patient visits that did not involve a physical
examination as "office visits." The coding was the closest match
available consistent with recommended manuals; contrary to testimony
by a government witness, a physical examination is not necessarily
required on every occasion.
His punishment? One year in jail, while the family house was
threatened with foreclosure and their children were sent back to
Puerto Rico to live with family because they couldn't afford to
support them. To this date, Mr. Perez-DeLeon has not been able to get
a clarification of the official interpretation of "office visit."
SUGGESTED GOALS FOR CONTROLLING FRAUD
As Congress explores ways to reduce fraud, AAPS suggests the
following
goals:
Minimize fraud by eliminating opportunities to cheat the system via
third-party payments/assignment of benefits.
Minimize adverse side effects of the fraud control effort, which
include:
Increasing costs and reducing the availability of medical goods and
services by intimidating honest medical professionals and vendors and
increasing overhead for activities required solely to demonstrate
compliance;
Violation of the rights of Americans with the unwarranted destruction
of careers and lives through abusive, over-zealous prosecution;
Destruction of patient confidentiality because of seizure and
disclosure of private patient records in enforcement actions;
Public endangerment by commando-style raids in which unarmed,
nonviolent patients and staff may be threatened with deadly force.
DEFINITION OF FRAUD
True fraud involves the submission of inaccurate claims with the
intent to deceive, for the purpose of collecting Medicare payment to
which the person submitting the claim knows he is not entitled. The
use of controversial treatments, "overutilization," failure to follow
"practice guidelines," incorrect coding, etc., do not constitute
fraud, though they may be the subject of a billing or reimbursement
dispute. Deliberate misrepresentation -- dishonesty -- is the sine
qua
non for fraud.
While Inspector General Brown has assured that "You won't find any
physician who has been convicted of a crime when all he did was make
an honest mistake," HCFA continues to send written threats and pursue
outrageous investigation tactics usually reserved for violent
criminals.
For example, Dr. Danny Westmoreland, a family practice physician in
Mason, West Virginia, along with his wife, 9-year-old son and eight
patients, were held at gunpoint while government officials ransacked
his office looking for evidence of irregularities in his billings.
Dr.
Westmoreland says if they wanted to look at his files, "All they had
to do was ask."
SUGGESTED REMEDIES
To eliminate opportunities for fraud and to ensure the best medical
care for patients, Congress should consider to following actions:
Make all Medicare payments directly to the patients, rather than the
providers;
Make Medical Savings Accounts available to all Medicare-eligible
patients;
Eliminate the Resource-Based Relative Value Scale and price controls.
Restrain Over-Zealous Enforcement Activities
Minimizing Incentives to Defraud By Abolishing Third Party Payment
(Assignment of Benefits
Congress must require HCFA to make all payments directly to Medicare
beneficiaries rather than to the providers, and possibly only after
the beneficiary presents evidence that the payment, or at least any
applicable copayment, has been made. (And some copayment should
always
be required except in cases of severe financial need.) At a minimum,
Congress should put a stop to any incentives that tend to encourage
accepting assignment (such as higher reimbursements to
"participating"
Medicare providers and enhanced "hassle factors" for
"nonparticipating" providers.)
The risk of detection would be enhanced by making health-care fraud
more likely to be "self- revealing." Senator Harkin proposed that a
toll free hotline be established for patients ask questions about the
"Explanation of Benefits." This is a first step, but does not go far
enough. Instead, a full and complete billing should be sent to the
patient in every case, and nondeliverable bills should be followed
up.
Furthermore, the billing should be in plain English, printed in
legible type, and should include narrative descriptions of services
and diagnoses, not just codes.
This would eliminate the potential for fraudulent billing for
deceased
individuals or for services which have not been provided--scams which
have been proven to bilk the taxpayers of millions of dollars.
Many physicians fear that patients will simply pocket the check and
not meet their financial obligation. To obviate these potential
objections, payment could be made by dual-payee check, which would
require endorsement by both patient and provider, with an
"Explanation
of Medical Benefits" (EOMB) sent to the provider. Beneficiaries would
not be able to cash the check and pocket the money for non-medical
use.
Expand the Medical Savings Account Option
Even more important is to reduce the use of Medicare as a pre-payment
rather than a risk- sharing mechanism. Most medical services should
be
paid for directly at the time of service and claims submitted only
after the deductible is met. If Congress continues to encourage
enrollment in managed care (HMOs), the taxpayers will continue to pay
for benefits whether they are used or not. A recent study shows that
managed care organizations have been paid 7% more for Medicare
patients than those utilizing fee-for-service. HMOs will continue to
"game the system" by receiving payment for services which are paid in
advance, but not performed.
Medical Savings Accounts (MSAs) would encourage responsible spending
by seniors only for services actually needed. The demonstration
project proposed should be expanded to any Medicare-eligible persons
who choose to participate.
Eliminate Price Controls
Congress must recognize that the current Medicare price controls
regime rewards cheaters and punishes conscientious physicians. Forty
centuries of wage-and-price controls have shown that market
distortions, gluts and shortages, black markets, erosion of quality,
and disrespect for law inevitably follow. The Resource-Based Relative
Value Scale is a cumbersome, Byzantine price-control system that
frequently leads to absurd fees, which may not even cover the
overhead
for services. Physicians who do not "game the system" may be forced
out of business. At least, they may be forced to change their
practice
in a way that is less than optimal for patient care simply to bring
in
enough payment to keep their doors open.
Survival is a powerful motive; faced with price controls that prevent
them from earning a fair return on their work, the most honest
citizens are tempted to cheat. That is why severe price controls have
always had to be enforced with draconian punishments, often the death
penalty. It is better to have reasonable laws, with which most
citizens comply willingly, than oppressive laws that must be enforced
with intrusive surveillance and harsh penalties. (This is especially
true since price controls never actually work to restrain or lower
prices in the long run.) Numerous respected economists have testified
against price controls, and Republicans in Congress are nominally
against this discredited and coercive intervention.
The RBRVS schedules, if used at all, should only be used to determine
reimbursement, not to dictate what physicians may charge. The proper
fee in all cases in the one that physician and patient agree is just
and reasonable. The ability to set one's own fees (which is always
constrained by the consumer's ability and willingness to pay) is
essential to a free market. All other professions, such as attorneys,
enjoy this freedom. The right to determine the value of one's own
services (implemented by balance billing) is a fundamental right,
also
guaranteed in the initial enactment of the Medicare law (Sec. 1801 of
Title 18 of the Social Security Act). It also tends to eliminate
rationalizations for "gaming the system."
Moreover, when prices are set at an irrationally low level, the
honest
and most capable physicians may be driven from the profession. (Price
controls eventually lead to an increased proportion of less
conscientious or less skillful providers whose services have a value
closer to that assigned to them by the central planners.)
The elimination of price controls need not increase Medicare
expenditures. In fact, it might decrease them if physicians offer
more
services of types that are presently underreimbursed and being
replace
by more costly services for which reimbursements are more acceptable.
Decreasing Adverse Side Effects of Over-Zealous Enforcement
Patient confidentiality should not be sacrificed to the demands of
prosecutors. The medical record should not be turned into a
legalistic
compliance tools to the detriment of medical practice.
Congress should monitor law-enforcement efforts and curb abusive
practices such as intimidation of witness, especially the most
vulnerable (elderly and mentally disturbed patients), unwarranted
forcible entry, bounty hunting, use or display of deadly weapons in
circumstances presenting no threat of harm to officers, knowing use
of
perjured testimony and any other tactics that are unseemly in a
nation
of laws, limited constitutional government, and respect for human
dignity.
If the U.S. government continues to harass the best and most honest
physicians, only the most mediocre and less scrupulous providers will
be left to care for our seniors. Patients will be the ones to suffer.
CONCLUSION
Medicare fraud is estimated at 10% of total dollars spent, and can be
expected to increase as the "baby boomers" reach Medicare-eligible
age.
AAPS believes Congress should consider legislation which would
eliminate third-party payment (assignment of benefits to the provider
instead of reimbursing the beneficiary) and inoculate the Medicare
system from the potential for fraud and abuse, while protecting the
best and most honest providers from intimidation and harassment.
If we want to stop the Willie Suttons from robbing the bank, we must
stop giving them a blank check. Removing the incentive will work much
better than retroactive enforcement. It will also preserve the rights
of the innocent patients and physicians, and reduce the cost of
medical care
http://www.aapsonline.org/fraud/medfraud.htm
The Hippocratic Oath includes the promise "to abstain from doing
harm" ... ( "We don't cheat Medicare" ) Bullshit. ! Many are
cheating
the system twice.
Report Finds Doctors Cheating Medicare - CBS News
CBS) Louisville, Ky., eye doctor Larry Joel got caught red-handed
owing $2.4 million in back taxes. He claimed he had no assets, not
even a bank account. But he failed to mention to the IRS his fancy
home, his Corvette, Cadillac, Ferrari, Jaguar, and his 72-foot yacht.
But Joel is not alone. A GAO report presented to Congress on Tuesday
finds 21,000 health professionals and suppliers owe at least $1.3
billion in back taxes to the United States government, CBS News
correspondent Sharyl Attkisson reports.
At a hearing on Tuesday, Senators were told many are cheating the
system twice — defaulting on their taxes while getting Medicare
payments from the government.
"The question I have is, how bad does it need to be for them to be
barred from doing business with the federal government?" says Gregory
Kutz, with the General Accountability Office.
Apparently, pretty bad. If it were deadling with an average citizen,
the IRS would just garnish the person's wages. But believe it or not,
there's no process to halt Medicare payments for tax cheating
doctors.
One doctor owed $400,000 in taxes, but managed to collect $1 million
from Uncle Sam for treating Medicare patients in just nine months —
and had the gall to pocket payroll taxes from his hardworking
employees. Among his assets: a $1 million home, a boat and night
clubs. Another deadbeat doc, who owed $400,000 in back taxes,
received
$100,000 from Medicare and also got caught trying to transfer "large
amounts of money to a country known for state-sponsored terrorism."
That now seems almost certain to change. Members of Congress said
today they're determined to force Medicare providers to be screened
for tax debt before they get a dime of Medicare money. The GAO is
referring criminal cases for prosecution and collection
http://www.cbsnews.com/stories/2007/03/20/eveningnews/main2589815.shtml
Health Care Scam Costs Rising Up to $250 Billion
http://groups.google.com/group/alt.crime/browse_thread/thread/8392057fcfbfea27.
AARP Washington Fraud Fighter Call Center
http://www.complaintsboard.com/videos/aarp-washington-fraud-fighter-call-center-c196.html
Six Nevada doctors pay to settle Medicare fraud claims - ..
Six Las Vegas area doctors agreed to collectively pay over $600,000
for their role in a Medicare fraud scheme, according to a report
issued by KTNV, a Las Vegas news station..
http://www.hcpro.com/CCP-221936-862/Six-Nevada-doctors-pay-to-settle-...
"Doctors do know so little and they do charge so much for it".
--- Mark Twain
"Let us prey."
Doomer,I.M., M.D.