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Medicare warnings ignored, records show

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The Associated Press

The Tampa Tribune

Published: November 15, 2009

MIAMI - For three years, the federal agency in charge of preventing Medicare fraud repeatedly ignored internal watchdog warnings about swindlers stealing millions of dollars by scamming several programs, documents show.

The Centers for Medicare and Medicaid Services received roughly 30 warnings from inspectors over three years during the Bush and Obama administrations but didn't respond to half, even after repeated letters, according to records provided to The Associated Press by the office of U.S. Sen. Charles Grassley, R-Iowa.

A July 2008 warning said organized crime had infiltrated the system and was costing more than $1 million for each phony Medicare provider license the crooks obtained. The letter got no response, Grassley said.

He and other critics said lack of oversight in the federally administered program is part of an estimated $60 billion a year in Medicare fraud.

"There's no good answer for why the bureaucracy turned a blind eye, and it's a breach of the public trust," said Grassley, a ranking member of the Senate Finance Committee.

Fighting the fraud is key for the Obama administration, which hopes to pay for a large chunk of its proposed national health care overhaul by cracking down on those who cheat Medicare.

Despite the lapses, Obama's Health and Human Services Secretary Kathleen Sebelius said the Centers for Medicare and Medicaid Services typically responds to fraud warnings promptly, and has investigated more than 300 since 2006. She was not satisfied that all fraud alerts were receiving sufficient responses, and her office is implementing a new process for tracking the red flags.

Grassley wants the agency to respond to future fraud warnings within two months and Sebelius agreed.

"If the department quickly responds to them, there is the opportunity to save significant taxpayer dollars," Grassley said.

One of the scams involved a program where Medicare patients whose home equipment was damaged or lost in hurricanes Katrina and Rita got replacements without first getting a doctor's order.

Medical equipment providers were reimbursed for such deliveries, but some of them turned out to be fraudulent.

The Health and Human Services Department's Office of Inspector General warned the Centers for Medicare and Medicaid Services about the scam last fall but never got a response.

According to a July indictment, Kate and Oliver Nkuku used their Houston company, KO Medical, to bill Medicare for nearly $1 million worth of power wheelchairs and other items they claimed had been lost, damaged or destroyed during hurricanes.

Medicare paid the couple $5,000 for each wheelchair, and the indictment said that not one of the orders was legitimate.

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