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Organized Crime Bilking Medicare  LIST.HEALTHPLAN
 Nov 08, 1999 22:17 PST 
A lengthier report on this issue may be found at:
(The New York Times Web site requires users to register, at no charge.)

Organized criminal has infiltrated Medicare and
Medicaid, and is skimming hundreds of millions
of dollars a year from the programs, federal in-
vestigators said on Wednesday, November 3, 1999.

In a report to Congress, the General Accounting Office
said the criminal groups had formed or corrupted scores
of "medical entities" -- clinics, physician groups,
diagnostic laboratories and medical equipment suppliers
-- for the purpose of bilking Medicare and Medicaid, the
insurance programs for people who are elderly, disabled
or poor.

The companies, many of which "existed only on paper,"
billed the government for services and equipment not
provided or not medically necessary, the report said. In
some cases, beneficiaries died before the dates on which
the services were supposedly provided.

The investigators looked at what they said were 160 sham
companies in Florida, North Carolina and Illinois, and
took a broad look at New Jersey as well. They suspect
the problem is nationwide.

"Criminals previously involved in other types of crime
are now migrating into the health care fraud arena," the
General Accounting Office, Congress's investigative and
auditing agency, said in a report to Senator Susan
Collins, the Maine Republican who requested the study as
chairwoman of the Permanent Subcommittee on

In one type of scheme described by the accounting
office, criminals paid people to recruit Medicare
beneficiaries, who were sent to clinics and offices for
unnecessary medical tests or services. The recruiters
received a fee -- $100 to $135 -- for each patient they
found, and shared the fees with cooperating
beneficiaries. Medicare was billed for services and
equipment never provided.

"Licensed physicians sometimes participated in such
schemes, typically exchanging their signatures on
medical records for cash, without actually performing or
overseeing any medical services," the report said.

In another type of scheme, the accounting office said,
members of criminal groups "rented private mailboxes,
set up bogus corporations and opened phony corporate
bank accounts." Payments from Medicare, Medicaid and
private insurance companies were sent to the mailboxes,
deposited in bank accounts and quickly converted to cash
or moved to other accounts beyond the reach of law-
enforcement authorities.

The General Accounting Office had no estimate of total
losses to the government. But the magnitude of the
problem is suggested by the fact that a criminal group
in one Florida case filed fraudulent Medicare claims
worth more than $120 million and fraudulent Medicaid
claims of $1.5 million.

The accounting office said these "organized criminal
groups tend to be quite transient," and should not be
confused with traditional organized crime groups like
the Mafia.

In an interview, Senator Collins said the findings of
the study were "very troubling." She said she and
Senator Richard J. Durbin, Democrat of Illinois, were
drafting legislation that would require federal
officials to conduct criminal background checks on
health care providers before allowing them to
participate in Medicare. The bill, she said, 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.

The General Accounting Office said criminals often used
the names of unsuspecting patients and doctors on the
claims they filed with Medicare and Medicaid. The
information on beneficiaries is "sometimes stolen from
hospitals, taken from trash bins or obtained by computer
hackers," while the names and identification numbers of
doctors are obtained from "unscrupulous hospital
employees," the report said.
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