MIAMI — Regulators fighting an estimated $60 billion to $90 billion a year in Medicare fraud frequently suspend Medicare providers, then quickly reinstate them after appeals hearings that government employees don’t attend, according to an Associated Press review.
Federal prosecutors say the speedy reinstatements — helpful to legitimate suppliers snagged on technicalities or minor violations — amount to a missed chance to halt the flow of taxpayer dollars to bogus companies. Some store owners have collected tens of thousands of dollars after conviction, prosecutors told AP.
With a system that pays claims quickly and reviews them later, Medicare fraud has grown so lucrative and so easy that drug dealers and organized- crime rings are tapping into it.
Making matters worse, Medicare officials have failed to collect a single cent from security bonds that were instituted two years ago to discourage crooked providers from vanishing at the first sign of trouble from regulators.
Millions of dollars sit unrecovered; officials blame the delay on personnel changes.
Gaps in the system grow out of poor communication among contractors paid to inspect Medicare providers and alert officials to suspicious activity, other contractors that handle payments and the agency runing Medicare.
Often, neither the government nor private contractors attend initial hearings when companies appeal, allowing them to win. Officials at the Centers for Medicare and Medicaid Services declined to say why they aren’t part of the process — whether it is staffing concerns or other issues — even though it’s overseen by contractors the agency hires.
For years, Medicare has paid claims first and reviewed them later, which worked when providers were mostly hospitals because quick payments meant few lapses in service. But the “pay and chase” method has become a boon for criminals, allowing them weeks of lag time to bill for fraudulent claims, receive payment and quickly skip town.
“If Medicare wants to stop fraud, it can’t keep pretending these are real providers,” said attorney Kirk Ogrosky, former head of the Justice Department’s division that investigates health care fraud. “Medicare is adept at enforcing technicalities because the system has been designed for real providers, but outright crooks go undetected because their claims appear legitimate.”
Officials revoked licenses of 3,702 medical-equipment companies in the fraud hot spots of South Florida; Los Angeles; Baton Rouge, La.; Houston; Brooklyn, N.Y.; and Detroit between 2006 and 2009, according to data provided under a public- records request. Those areas represent the highest concentrations of Medicare fraud, according to federal authorities.
Of the providers who lost their licenses in those cities, about 37 percent, 1,371, eventually were back in business, sometimes within days and often within months.
