Private Insurers Breed Medicare Fraud

Do the folks who've created much sound and fury at town-hall meetings in recent weeks have a clue what they are talking about on health-care reform?Apparently not.

Consider the fellow who popped off at a town-hall meeting hosted by U.S. Sen. Ben Cardin (D-MD). The questioner was opposed to health-care reform because of a possible public option. With all of the fraud we have now in Medicare, he said, how much fraud would we have with a larger public program?

The questioner seemed to be a supporter of private insurance. But it apparently never occurred to him that a large portion of Medicare fraud is committed by private businesses, including insurance companies.


First of all, the Obama administration has started a major crackdown on Medicare fraud as part of its plans to reform health care. And much of that fraud is driven by the private sector. Consider this report from the Miami Herald:


On Friday, FBI agents arrested eight Miami-Dade residents on charges of bilking Medicare for $22 million by charging for nurses to treat mostly homebound diabetic patients--many of whom didn't have the disease or didn't receive the services.

FBI and HHS agents raided the suspects' two Miami-Dade businesses, ABC Home Health Care and Florida Home Health Care Providers, while prosecutors froze their bank accounts.

The prosecutions follow Medicare's suspension of billing privileges for 10 Miami-Dade home healthcare agencies that charged more than $100 million for suspicious services to treat homebound diabetic patients -- including false claims for nurses injecting their insulin shots twice a day.

Now consider the record of private insurers when it comes to Medicare fraud. Two employees at a Blue Cross/Blue Shield subsidiary in South Carolina recently received prison sentences for their roles in a fraud scheme.

The Blue Cross Blue Shield Association (BCBSA) has a long history of fighting health-care reform--and its affiliates have a long history of health-care fraud.

Consider this 1999 Government Accounting Office (GAO) report titled "Improprieties by Contractors Compromised Medicare Program Integrity." And who are those Medicare contractors? BCBSA affiliates, including Blue Cross and Blue Shield of Alabama, are among them.

What did the report find? Here is part of the summary:


Since 1993, criminal and/or civil actions have been taken against at least six Medicare contractors resulting from their performance under Medicare contracts. The alleged contractor activities addressed in those actions occurred during the calendar years 1984 through 1997. With respect to three of the six contractors--BCBS of Illinois, Blue Shield of California, and Pennsylvania Blue Shield--the contractors and/or some of their employees pled guilty to various criminal charges and agreed to pay criminal fines and/or civil penalties. Investigations of the three other contractors--BCBS of Massachusetts, BCBS of Michigan, and BCBS of Florida--resulted in civil settlements only. A total of over $261 million was assessed in criminal and civil penalties against these six contractors.

What kind of shenanigans were the "Blues" up to? The report gives examples:


1. improperly screened, processed, and paid claims, resulting in additional costs to the Medicare program;

2. improperly destroyed or deleted claims;

3. failed to recoup overpayments to Medicare providers within the prescribed time and to collect required interest payments;

4. falsified documentation and reports to HCFA (now Medicare and Medicaid Services) regarding their performance; and


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http://www.opednews.com/articles/Private-Insurers-Breed-Med-by-Roger-Shuler-090827-818.html

It has something to say, and hunts fiercely for evidence.

Take the first instance:

"Two employees at a Blue Cross/Blue Shield subsidiary in South Carolina recently received prison sentences for their roles in a fraud scheme."

http://www.thestate.com/local/story/883788.html

They weren't BC/BS employees; they worked for some subsidiary. Moreover, the fraud benefitted not the subsidiary, but themselves. The only reason their affiliation with the insurance industry was relevant is that it gave them access to information they could use to defraud the government. Of course their numbers pale when compared to the scam New York medical staffers ran against private insurance companies --indicted earlier this year. One would have to assume, this unnecessarily raised private insurance rates. Scum tends to target pretty much any pile of cash it can.

I don't see how this could possibly relate to the role that the companies themselves play. It's like pointing out Rangel's, uh, errors, and saying that since he did those things, since his office makes doing such things a bit easier than the average Joe, the House is an inappropriate organization and must be disbanded. The logic, well, any logic, is simply absent.

The second chunk--from "Improprieties by Contractors Compromised Medicare Program Integrity"--is rather stickier to understand accurately. There are two claims. The first is that they failed at their responsibility as contractors. Hired to process claims, essentially to do the administrative work you'd expect the government to do, they flubbed it. They processed claims they shouldn't have--false/fraudulent claims, and thus approved claims they shouldn't have. It's unclear to me that they originated the claims, i.e., made them up so that they not only received the money, but kept the money. I didn't see that in my skimming of the report. This is negligence--not so much "shenanigans", although inappropriate cost-cutting could certainly facilitate some of the negligence, and it's likely that employees benefited from it somehow. The second claim is out-and-out fraud by the companies, but not the kind you'd expect. The companies, contractors, were hired to process paperwork. Doing a good job was required for having their contracts renewed; they falsified the paperwork to ensure contract renewal. But they also could qualify for bonuses, if their performance met certain or exceeded certain criteria. They falsified paperwork to appear to exceed these criteria, and fraudulently obtained bonuses. Of course, the time scale is important: Over 12 years, half a dozen instances (each of which almost certainly lasted multiple years).

Not good, certainly fraud, but not usually what we mean by "Medicare fraud". Most of the actual fraud was in the filing of false and fraudulent claims; the companies failed as gatekeepers. Now, one reason Medicare claims processing was outsourced was that Medicare was also processing fake claims. Their employees had benefitted, either from not bothering to do their jobs or because of kickbacks. That sounds really familiar, doesn't it? Now, I accept that it's hard to check all of the claims, to be sure--only idiots and ideologues expect perfection--and people are only human. The slack I cut government employees I tend to extend to all employees. Doesn't make incompetence and malfeasance right; it does make them understandable. The fines and punishments against the private agencies were proper. But I'd have to ask, if the Medicare staffers were caught doing the same thing, would the government have been 'made whole'? Uh ... Medicare suing Medicare makes no sense. So, no.