A recent study by the Government Accountability Office indicates that roughly one billion of the ten billion annual budget may be paid to fraudulent businesses. The GAO set up two fictitious companies with sketchy information and false documents to see how the CMS (Centers for Medicare and Medicaid Services) would handle the sham businesses. The fake companies did not have clients or medical inventory to supply prospective Medicare patients. They won billing privileges even though everything was false and deliberately made to look so. The sting proved that there are gaps in the system and they can and are being manipulated by scam artists. The CMS says they are making changes to prevent this including;

  • requiring that suppliers keep supporting paperwork from doctors.
  • limiting the use of cell phones as the primary business number
  • setting up a new bidding process for medical equipment

But they promised to make changes in 2005 that have only achieved limited success. The government’s approval of the two sham companies is alarming because once a supplier attains Medicare billing privileges, it can easily 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, even though they collectively had submitted claims for hundreds of millions of dollars.

The GAO cited several recent fraud cases to highlight the problem:

A company using a broom closet for its address filled with buckets of sand and tar. The owner also stole personal ID numbers from doctors. In August 2007, he was sentenced to 37 months in prison for conspiracy to commit health care fraud and made to forfeit his Miami home and Rolls Royce.

A?secretary for a fraudulent medical supplier decided to start her own lucrative false company by renting an office in the same location. She purchased fake invoices and then provided her former employer kickbacks to have access to Medicare beneficiary numbers. From January 2006 to April 2007 she submitted $1.5 million in claims for urinary bags, canisters and air mattresses; Medicare paid the company $372,286. She was sentenced for fraud in January to 30 months’ imprisonment and three years of supervised release.

Good thing they make them forfeit all the funds they haven’t spent or even I might be tempted to do the hundred grand a year business. A little less than three years for three hundred grand isn’t too bad.

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