Organized Crime Targets Medicare & Medicaid

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Organized Crime Targets Medicare & Medicaid

Organized criminal groups are skimming hundreds of millions of dollars a year from Medicare and Medicaid according to a new report by the General Accounting Office (GAO). "Law enforcement officials find it difficult to keep up with this growing and widespread form of fraud," says the GAO. The groups form or corrupt clinics, physician groups, diagnostic laboratories, and medical equipment suppliers to defraud the programs.

A New Jersey man recently pled guilty to bilking the state's Medicaid program for more than $5 million. He paid kickbacks to owners of clinics in Paterson, Newark, and Jersey City, New Jersey. The clinics recruited people to give blood samples upon which the labs performed expensive tests. Medicaid was billed for the tests.

In return for their blood samples, those recruited (many who were drug addicts), received prescriptions from doctors who worked at the clinics. Medicaid paid for the drugs, which patients then sold on the street or to pharmacies.

Fraudulent companies often exist only on paper-billing Medicare and Medicaid for services and equipment that either are not provided or not medically necessary. In some cases, beneficiaries who supposedly receive the services are dead.

The GAO said that criminals often use the names of unsuspecting patients and doctors on the claims they file with Medicare and Medicaid. Information about patients is sometimes stolen from hospitals-taken from trash bins, or obtained by computer hackers-while unscrupulous hospital employees obtain the names and identification numbers of doctors.

Senators Susan Collins (R-ME), and Richard Durbin (D-IL) have drafted legislation that would require criminal background checks on health care providers before allowing them to participate in Medicare. The bill would also toughen penalties for people who buy or sell the names and identification numbers of doctors or patients with an intent to defraud the government.

Source: "U.S. Cites Criminals' Raids On Medicare And Medicaid," Robert Pear, The New York Times, November 4, 1999.

This article first appeared in Volume 5, Issue 3 of "The Social Security and Medicare Advisor" newsletter (February/2000). To receive future editions of "The Advisor" in its special, free e-mail version, please click here.