Until last May, business was humming at All-Med Billing Corp. Then federal prosecutors charged the Miami-area medical billing company with orchestrating a $101 million scheme to bilk Medicare. Now owners Abner and Mabel Diaz are facing a criminal trial; two of the six other defendants in the case have already pleaded guilty.
Chalk up a victory for the Medicare Fraud Strike Force, a joint experiment of the Federal Bureau of Investigations, the Miami US attorney's office, and Medicare. Relying on traditional investigative methods and heightened interagency cooperation to quickly identify patterns of irregular billing, the one-year-old force charged 197 defendants last year – accounting for about 1 in 4 of all Medicare-fraud defendants in the United States.
"Four years ago, there were maybe one-quarter the number of the cases that we're bringing now" in South Florida, says Alexander Acosta, Miami's US attorney. "Does that mean the fraud wasn't here? No. That just means we weren't looking for the fraud."
Fraud plagues Medicare, the federal program created in 1965 for the elderly and disabled. It's difficult finding a credible estimate to quantify how much is stolen every year, but it likely costs taxpayers billions of dollars. What's clear is that South Florida, with its fast-growing Medicare population, is the country's worst offender in Medicare fraud. This unfortunate distinction prompted the formation of the strike force last March.
Kirk Ogrosky, who manages the strike force in Washington for the Department of Justice, says the concept is being replicated in Los Angeles based on its success in Florida. A Houston strike force is planned to be set up this summer, says Mr. Ogrosky.
All-Med is one of the strike force's biggest cases. Among other things, the Diazes' indictment alleges they helped various Durable Medical Equipment (DME) providers to improperly obtain the Medicare billing numbers of beneficiaries and that those numbers were used for fake charges. The Diazes forged or altered prescriptions to make it appear as if patients needed equipment they did not, according to the indictment. Eventually, Mr. Acosta's office indicted the Diazes for conspiring with 29 DMEs to submit fraudulent claims to Medicare on their behalf.
Billing for unused equipment, drugs
It's a common scam, strike force officials say. Crooked DME operators bill Medicare without providing patients any equipment. In the other common scam, providers bill Medicare for expensive HIV drugs that patients never receive. Instead, they may get a heavily diluted version of the drug or a bag of saline that is supposed to be an HIV infusion.
Another problem is when doctors or patients join the scam. Doctors often write unnecessary prescriptions in exchange for kickbacks from providers (although it's also common for providers to write or alter prescriptions without doctors' knowledge). Patients also may get kickbacks for allowing their Medicare numbers to be used in billing bogus medical goods and services.
"We arrested eight patients last year – what we call 'professional patients,'" says Tim Delaney, the FBI leader on the Medicare strike force. "They were making a living by renting out their Medicare number and going for treatments they weren't getting." He estimates the phony patients were making "thousands to tens of thousands of dollars" a year.
When the US Department of Health and Human Services last year investigated the three largest South Florida counties – Miami-Dade, Broward, and Palm Beach – it discovered that a quarter of the 1,581 DME providers it visited at random were either not staffed or closed during business hours. An additional 6 percent had no physical facility whatsoever.
Another 2007 health department study concluded that South Florida accounts for 72 percent of all Medicare HIV claims, although only 8 percent of Medicare HIV patients live there.
Fixing South Florida's crisis
Florida's Sen. Mel Martinez (R) recently proposed doubling the maximum jail sentence for Medicare fraud to 10 years and sharply increasing fines. The legislation passed the Senate last month and is currently in committee in the House.
Medicare is moving to tighten its protocols. Last fall, all South Florida DME providers were required to reapply for billing privileges. Medicare has proposed a rule that would require such providers to post a $65,000 bond that they would forfeit in the event of fraud. Medicare will also expand its internal auditing by 2010.
But with 1.2 billion claims to process yearly, the mammoth system is still an easy target, says Kim Brandt, Medicare's director of program integrity. Scammers know that "because there are so many dollars, so many claims getting paid, there's a very good chance they're not going to get caught," she says.
In the last fiscal year, the strike force's civil-law division recovered $50 million in assets from those accused of Medicare fraud – sometimes even before defendants faced criminal charges.
"With this task force, they've decided to do the right thing and go after fraud in a systematic manner. And the results have been spectacular," says Patrick Burns, communications director for the nonprofit group Taxpayers Against Fraud. But given the scope of the problem, much more needs to happen, he says. "We're fishing the ocean with one pole."