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Sting Exposes Medicare Fraud

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The Associated Press

Published: August 4, 2008

WASHINGTON - The government is putting millions of Medicare dollars at risk by authorizing fictitious sellers of wheelchairs, prosthetics and other medical supplies to submit reimbursement claims with only limited review, congressional investigators say.

The study by the Government Accountability Office obtained by The Associated Press sought to follow up on oversight gaps that have plagued the Centers for Medicare and Medicaid Services since at least 2005. Roughly $1 billion of the $10 billion in annual Medicare payments the government makes for medical equipment are later deemed improper.

The investigation found that federal agency approved two companies in the past year for Medicare billing privileges that the GAO had set up as sham businesses.

These fictitious suppliers, based in Maryland and Virginia, won privileges even though GAO investigators deliberately provided the government with sketchy information and false documents.

"This sting operation proves that there are gaps in the system and that scam artists can exploit - and are exploiting - those gaps," said Sen. Norm Coleman, R-Minn., the top Republican on the Senate Homeland Security and Governmental Affairs subcommittee that requested the report.

Investigators noted that the agency had made promises since at least 2005 to fix problems in its supply program and achieved only limited success. They said the government's approval of their two sham companies was alarming, because once a supplier attains Medicare billing privileges, it easily can get a doctor's ID code fraudulently and begin submitting claims.

A report by the Health and Human Services Department's inspector general in December 2006 found that almost one-third of the 1,581 medical suppliers it visited in south Florida did not have an office at the business address they provided Medicare.

Among the fraud cases the GAO cited was a Florida businessman who submitted claims from three fake medical supply companies in excess of $5.5 million from October 2006 through March 2007 and received $77,000 from Medicare. One company used a utility closet as its address; health and human services investigators found buckets of sand mix and road tar, but no medical files, office equipment or telephone. Last August the owner was sentenced to 37 months in prison for conspiracy to commit health care fraud and made to forfeit his Miami home and Rolls Royce.

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