Feds Take Down Medicare Fraud Gang

The Feds have just broken the biggest Medicare fraud ring to date.  An international gang was taken down for bilking Medicare of over $163M.  How could such a large fraud occur?  It may surprise some to learn that the Medicare payment system is mostly automated.   Claims are submitted electronically, and the computer matches a diagnosis code with a billing code.  If the codes are appropriate, a payment is beamed  to the provider’s account.    This system makes Medicare efficient, but it has the downside of being susceptible to fraud due to its “pay first and ask questions later” policy.

An enterprising crook just needs to get provider credentials,  set up a business bank account, obtain patient Medicare ID numbers and he’s in business.   Other scams have involved criminals colluding with doctors and patients to use their numbers to bill services that never took place.  In this scam, it seems patients and doctors were unaware their numbers were even being used.

As crime goes, this may be more attractive than narcotics, bank robbery, or other seedy activities.  Most of those involve violence and other un-pleasantries.  There can be production and supply hassles.   Here, there is no “turf” to protect.  Capital investment is limited to a few computers.  It is also less dangerous; while the Feds will eventually arrest you, they aren’t likely to smash in and kill everyone.  Enemy gangs tend to do that.  All the Medicare scammer has to do is produce phony bills and watch their account fill up.  It actually resembles typical white-collar cubicle work since their office is unlikely to be that different from any medical billing operation.

These schemes get detected when someone notices spikes in billing activity far outside normal levels.  Qualitative abnormalities can also be seen, such as having ENTs bill for obstetric services and dermatologists billing for cardiac services.  Although “doctor drift” has been a trend in recent years, that is a bit extreme.  It is amusing that the gang took elaborate pains to set up a sophisticated network, went through considerable administrative effort, and then flubbed the basic task of making the services match the type of doctor they were ‘billing’ under.   Had they done this, and kept the volume of services at a reasonable level, this scam might have gone on quite a while longer.

Although the suspects are in a tight spot right now, there is a bright side for them.   If convicted they won’t have to worry about health insurance.  As Federal inmates they will have coverage, likely for many years to come.


Tags: , , , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: