Medicare fraud-busters’ Star Trek turn
By: Brett Coughlin
January 24, 2011 11:39 PM EST
The words “Medicare fraud” conjure up pictures of shady doctors, forged paperwork and unwitting little old ladies — not Armenian mobsters, illegal guns and Klingon swords. A raid on the New Jersey mansion of a suspected Armenian-American mobster, however, uncovered the sword and was part of the $4 billion Medicare fraud crackdown Obama administration officials touted Monday.
The Justice Department estimated that the suspected ring of Armenian-American mobsters fraudulently billed Medicare for $163 million. A joint federal task force busted the ring last October, arresting 53 individuals in what the DOJ called the largest fraud scheme perpetrated by one criminal enterprise.
Justice officials said at the time that the group operated 118 phony clinics in 25 states using the stolen identities of doctors and “thousands of Medicare beneficiaries.” Officials also seized a cache of weapons during the bust that included many guns and a Bat’leth, a vicious-looking double-sided Klingon longsword inspired by “Star Trek.”
“This is a good example of organized crime [figuring out a way to] make quick money, one they think they can get away with. It involved multiple FBI and inspector general offices scattered across the country,” Kevin Perkins, assistant director of the FBI, told POLITICO, referring to the high-profile case.
“It was the use of intelligence and analysts to connect these different cities. Instead of having individual cases, we were able to determine a network that was hitting cities across the country. We’ve got more of those cases,” Perkins said.
A new regulation issued Monday will allow Medicare officials to stop payment on suspected fraudsters, but will also give law enforcement new tools to mine claims and other data to identify the really bad guys. Health and Human Services Secretary Kathleen Sebelius, CMS Administrator Don Berwick, and Associate Attorney General Thomas Perrelli held a joint press conference on Monday to discuss the new rule and the fraud prevention efforts.
Taken together, the rule will give the agency and law enforcement further tools to prevent fraud and abuse from happening and stop the “pay and chase” mentality that has frustrated federal fraud fighters for years.
It establishes procedures for screening new enrollees that will hopefully catch criminals before they can begin billing the program. It also allows Medicaid and CHIP plans to bar from participation any provider that has been banned by Medicare. It allows Medicare and Medicaid officials to freeze enrollment into either program if they identify trends suggesting fraud in a given region or by benefit category. CMS will also charge new “application fees” on “institutional providers” — nursing home and hospital care givers — under a provision of the rule.
One area, however, that is giving legitimate providers pause is a provision of the rule that allows the agency to stop payment when there are “credible allegations of fraud.”
Peter Budetti, the CMS Deputy Administrator for Program Integrity, said decisions about this provision will be carefully vetted, but it “allows the Secretary –in consultation with the Inspector General – to suspend payments when there is a credible allegation of fraud, so the key is defining what is sufficiently credible and warrants suspension of payments.”
Budetti said the sources of the allegations can vary, but must be “sufficiently solid to merit attention.”
The allegations could come from law enforcement investigations or “tips of various kinds.” Traditional techniques like screening of claims and data will also be used.
“Whatever it is that generates an allegation of fraud, if the secretary – in consultation with the inspector general – determines that it is credible, and sufficiently so to warrant suspension of payments, that is how the provision will be implemented,” he said.
Budetti said that screenings for fraud will be done, according to the statute, by “the level of risk of fraud, by category of providers.” Screening will also take into account information from law enforcement, and reports by the Inspector General and the Government Accountability Office, Budetti said.
Perkins said that the way the FBI determines risk is whether a patient’s life or health is in jeopardy.
Among the highest risk areas, according Perkins, are durable medical equipment suppliers, home health agencies, independent diagnostic testing facilities and HIV infusion clinics.
Although many at the press conference to discuss the Obama administration’s fraud-fighting efforts talked about the money it will return to the Medicare trust fund, a federal score of the bill does not estimate savings from these provisions.
The high return on investment that Medicare fraud generates apparently was not enough for the Congressional Budget Office to score savings from the provisions. HHS officials said that the ROI is as high as $4.9 returned for every $1 invested since 1997 and an ROI of $6.8 to $1.0 for the last three years.
Under the ACA, Section 6401(a) codified the HHS authority to issue requirements on screening, application fees, and a moratorium on payment to suspected fraudulent providers. The law [Section 6402(h)] set forth the payment suspension requirements discussed above, while Section 6501 allows for the mutual termination requirements for Medicaid and Medicare.
An HHS official, however, questioned the official score, saying that the Congressional Budget Office did not estimate any savings for sections 6401 and 6501 “despite the fact it is well established there are good ROIs with all our fraud prevention activities.”
The CMS final rule with comment was published in the Federal Register Monday afternoon. CMS is seeking comment only on a narrow provision of the rule that would allow the agency to use a fingerprint-based criminal history report for certain providers and suppliers.
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