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Rampant Fraud Complicates Medicare Cures

October 08, 1995|ELIZABETH SHOGREN | TIMES STAFF WRITER

WASHINGTON — A nursing home operator in Northern California bilks Medicare out of nearly $4 million, and might have gotten away with it if he hadn't submitted forged invoices from bogus firms listing their addresses as New Hamshire--without a "p"--and Lubbock, Miss.

Senior citizens in southern Florida are duped into giving their Social Security numbers to door-to-door solicitors who say the seniors are eligible for free milk; the conspirators use the numbers to defraud Medicare out of $14 million.

A home health care service with operations in 22 states bills Medicare for $85,000; investigators later learn the money was used to send gourmet popcorn to doctors in order to encourage them to employ the firm's services.

According to the General Accounting Office, schemes like these added 10%--or roughly $17 billion--to the cost of Medicare last year. That's more than the federal government's total bill for providing cash welfare assistance to poor families with children.

As members of Congress wrestle with competing plans for overhauling the massive system that provides health care to the elderly and disabled, they face an uncomfortable reality: Perhaps no other government program is as rife with fraud as Medicare, but the virtual impossibility of rooting it out means that reformers must cut benefits deeper and squeeze providers harder in order to achieve the savings they want.

Republicans and Democrats alike claim that significant savings can be achieved by ridding Medicare of waste, fraud and abuse, and they are competing with each other to prove their prowess as fraud-busters. But nonpartisan government accountants say the proposed reform plans would do little more than scratch the surface of Medi- care fraud.

The Congressional Budget Office, for example, estimates that the House Republican reform blueprint would recover only $2 billion of the more than $120 billion likely to be stolen from Medicare over the next seven years.

Some officials are warning that reform legislation could actually make matters worse. The inspector general of the Department of Health and Human Services contends that the House GOP plan "would cripple the efforts of law enforcement agencies" to control Medicare abuse and prosecute doctors and other medical professionals who take kickbacks by placing an "unsurmountable burden of proof on the government."

In fact, one section of the House reform package is titled "limiting the imposition of anti-kickback penalties."

"They know what they're doing," said Gerald Stern, special counsel for health care fraud at the Justice Department. The House plan, he said, would "seriously undermine" multi-agency efforts to investigate and prosecute fraud, which have won the government hundreds of millions of dollars in recent settlements.

Congressional Democrats are using the issue to attack their Republican colleagues. At a congressional hearing last week, Sen. Tom Harkin (D-Iowa) said the GOP plan "could be more appropriately called the Scam Artists Protection Act."

House Republicans argue that their proposals are designed to reduce unnecessary regulation of doctors and would not facilitate fraud. "The Administration is fabricating and inventing reasons why doctors should not be able to have their regulatory burdens reduced," said Ari Fleischer, spokesman for the House Ways and Means Committee, which drafted the measure.

By contrast, the Administration has praised the anti-fraud provisions contained in the rival reform plan drafted by Senate Republicans. "There are some dramatic additional tools [for fighting fraud] in the Senate bill," Stern said in an interview. "For example, it makes health care fraud a crime; it gives subpoena authority to the attorney general on health care cases; it expands anti-kickback statutes."

The Senate measure would permit Justice Department civil fraud attorneys access to grand jury information in health care cases, an authority they already have in cases involving financial institutions. It would earmark $200 million initially--and 10% more each year for seven years--for investigation and prosecution of Medicare fraud.

After being on a legislative back-burner for decades, health care fraud has become a hot issue as medical costs spiral out of control and Congress finds it necessary to harness the rapid growth of Medicare and Medicaid. Many lawmakers now seem convinced that if they hope to sell a skeptical public on the necessity of reduced benefits or higher premiums, they had better do something to seriously attack the problem of fraud at the same time.

Clinton Administration officials have felt the heat.

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