Preventing Medicare Fraud among Health Providers and Organizations:

1. Preventing Medicare Fraud among Health Providers and Organizations: (Part II):Special Challenges among Urban, Rural, and Ethnic Minority Communities This presentation was sponsored in part by a grant from the US Administration on Aging. Grantees are encouraged to freely express their findings, therefore, materials and opinions do not represent the position or policy of the US Administration on Aging.

2. Presenters • Dr. Mark Grey Professor and Executive Director Iowa Center on Immigrant Leadership and Integration University of Northern Iowa • Dr. Michele Yehieli Associate Professor and Executive Director Iowa EXPORT Center of Excellence on Health Disparities University of Northern Iowa

3. Outline of Topics • Background on Research • Review • Overview of Specific Scams affecting Diverse and Underserved Population • Case Studies of Scams • What Staff Can Do… • Acknowledgements • Selected Bibliography

4. Background on Research • Literature review: • Types of fraud, minorities/immigrants and fraud, etc. • Interviews with FBI, OIG, NHIC, Attorney General officials, and other law enforcement agents • Tours of fraud-prevalent neighborhoods • Urban and rural environments

5. Review

6. Review: Defining Fraud and Abuse • Fraud: To purposely bill for services that were never given or to bill for a service that has a higher reimbursement than the service produced. Deliberate misrepresentation. • Abuse: Payment for items or services that are billed by mistake by providers, but should not be paid for by Medicare. This is not the same as fraud.

7. Review the Base Problem… • Medicare fraud is “non-self-revealing” • With credit cards • Itemized statement • Customer pays with his/her funds • If there is a discrepancy, it is in the customer’s self-interest to protest the charge • With Medicare, the customer/patient never sees the bill before it is paid by the government • Only rarely will patient catch fraudulent charges on own statement after the fact

8. Review the Base Problem… • Fraud = billing for fictitious services or for services of minimal or no value to patient (eg. unnecessary lab tests) • Limited co-payments remove patient incentives to pay attention to the bill • or “patients” are paid for their participation • Fraud results from separating payer from the recipient of services • Patient can only catch fraud after it takes place

9. Review: Types of Fraud • Billing for services never rendered • Using genuine patient information to fabricate claims or “pad” claims for procedures that never took place • Billing for more expensive services than were actually provided • “upcoding” • Billing for higher-priced treatment than was actually provided • Billing for physician care when lower-level provider actually attended

10. Review: Types of Fraud 3. Providing medically unnecessary services or products solely to generate insurance payments Rent-a-patient scams “sweaty palm syndrome” sham clinics durable medical equipment scams recruit and pay patients to have unnecessary surgery skeleton pharmacies

11. Review: Types of Fraud 4. Misrepresenting non-covered treatments as medically necessary • usually cosmetic-surgery schemes such as “nose jobs,” “tummy tucks,” and liposuction • But billed as deviated-septum repairs, hernia repairs, lumpectomies, etc.

12. Overview of Specific Scams affecting Diverse and Underserved Populations

13. Immigrants, Minorities and Medicare Fraud • How minorities and immigrants • perpetrate fraud • become complicit in fraud • become victims of fraud

14. The Bad News, Upfront • “Health care fraud is now the bread and butter of organized crime. It pays their overhead and frees up other money so that they can commit more crimes” • “Presence of large-scale health care fraud in a community is typically associated with presence of organized crime, particularly in certain ethnic communities”

15. Evolution of Fraud • 1990s: • Staged car accidents • Fraudulent lab claims

16. 1990s + • DME Durable Medical Equipment • Clinics • Most recent • Home health agencies • Outpatient surgery • Prescription drugs

17. “Business as Usual” • In many countries, bilking government bureaucracies is not “fraud” • It’s BAU “Business as Usual” • American providers are fiercely competitive • Fellow ethnics regularly share practices, including ways to bilking systems

18. Case Studies of Scams

19. Sham Clinics and the Minority Perspective • Patients often don’t know they are being used • Language barriers • Cultural barriers • Normal back home to receive gifts or gratis services • Normal back home to be recruited • “free trips” (to clinics) just a weekend jaunt • Fraudulent relations with government BAU • Unfamiliarity with US government procedures

20. Sham Clinics • Typical Organizational Structure • Leadership Level • Often Russian or Armenian organized crime • Open up “medical management company” • Run ads in LA Times and ethnic newspapers • Recruit “medical directors,” often young or retired doctors, as “contractual clinic owners” • Paperwork and bank accounts set up in doctor’s name, and later used in money laundering schemes to transfer assets

21. (Alleged) Sham Clinic

22. Sham Clinics • Operational Level • Recruit informants and insiders in DHS, passport agencies, telephone companies and banks • Part-time positions • Usually fellow ethnics/immigrants • Steal identity information • Facilitate operations, including money laundering

23. Sham Clinics • Operations” Recruitment • Recruitment • Hire “cappers” • Culturally specific for the target populations • Languages • Ethnicity • National origin • Immigrant/refugee status • Often convicted criminals who meet in prison/jail • Morning meetings in secret locations to plan the day’s activities • Hard to infiltrate these gangs of cappers • Average $500 cut per person recruited

24. Advertisement for “marketing person” in Russian publication • We are a surgery center. Looking for a marketing person. If you can bring 10-15 people we pay $3000 every month to start and up to $500 per patient. (cosmetic surgery). If you can't bring 10-15 people then we will pay a referral fee per patient. We are also looking for for other types of surgeries, if you know people with good insurance who needs surgery, referrals are welcome. Will compensate generously.

25. Van drivers who bring “patients” to sham clinics and IDTFs.

26. Sham Clinics • Operations • Patients • Recruited and paid by cappers • Recruited door-to-door, among homeless, via telephone • Recruited through advertisements in ethnic newspapers • Provided transportation to and from clinics • Paid for receiving services, lab samples ($100 cash) • Paid to undergo unnecessary surgery and procedures • “Sweaty palm” surgery: patients paid $1,800 each • Brought in from Idaho and Iowa

27. Russian couple leaving IDTF with McDonalds meals as payment for Medicare cards and “free” diagnostic tests.

28. No licensed medical staff = patient abuse. Elderly patient about to get a hot paraffin wrap from unlicensed “massage therapist” His identity was used to bill Medicare for “physical therapy” and expensive diagnostic tests.

29. Sham Clinics • Gifts exchanged for identities and Medicare information • Ensure drinks • Depends • Perfume • Toaster Ovens • Food, including McDonald • “Free medical exams” • Cappers use PR49 “Excluded Beneficiary” lists to determine eligibility of patients for recruitment • Majority of patients minorities • Immigrants, refugees • Often recruited from other states

30. Buying, selling and trading Medicare identities and health records at adult day health care center.

31. Pharmacy that offers perfume and gifts for copies of Medicare and Medi-Cal cards. Receives millions each year in Medicare and MediCal money.

32. Immigrant elderly in adult day health center receiving music lessons in exchange for Medicare identities.

33. “Rent” an Immigrant Patient • Sleep Studies • Paid $100 + transportation • Recruiters bring in immigrants for easy $100 • Lie in bed for 4 hours watching TV with wires attached • Medicare billed • $1,500 for “sleep study” • $800 for breathing and lung tests • $1,600 for tests related to dizziness

34. Ultrasound machine used on all patients regardless of medical need (service charged to Medicare)

35. Lab Test Scams • Blood from runaways, homeless, drug addicts • Draw excess blood • Perform blood tests • Stolen doctors’ identities and Medicare numbers • Sell blood to other fake labs • Sometimes lured with promise of “free” health exam

36. Suspected lab work drop-off site

37. Drug Scams: The Next Frontier • Drugs….Medicare Part D • Counterfeit drugs • Up-code or over charge for drugs • Order more than actually prescribed and sold on black market • Under-prescribe drugs • Real pharmacies do not make profits on drugs • Sham pharmacies profits 40 times hire than legitimate pharmacies

38. Pharmacy paid millions for prescription drugs.

39. Scams: Healthcare Money Laundering • Profits and Money Laundering • Funds immediately sent to multiple organizations to “launder” it • May eventually wind up in foreign banks or even potentially linked to terrorist activities • Occurs rapidly and difficult to trace • State Labor Commission can shut down clinic temporarily in few weeks, but takes two years or more to investigate and prosecute on tax evasion or money laundering • Incredibly complicated to track; need specialists

40. Insiders in banks can “launder” large deposits with rapid movement of funds to multiple accounts.

41. Scams: Healthcare Identity Theft • “Ghost” patients • Medicare numbers/cards sold on street for $10-20 • Patient Records sold for $20 • Often sold and resold several times • Just like email or mailing lists • IDs’ often stolen in trash from MSNs • Stealing and selling IDs does not even require sham clinic, often conducted with home computers

42. Healthcare Identity Theft • One stolen Medicare number will typically result in $30,000 in fraudulent services and DME in LA • For poor newcomers: • Easy cash by selling or leasing their identities and Medicare numbers and signing blank forms • In LA, running out of patients for some scams • Where next? Nevada and rural states like Iowa

43. Scams: Hospice/Home Health Services • Use immigrants/refugees with some health care experience as RNs/LPNs • Newcomer may or may not know how they are registered or licensed • Some health workers may be involved in identity theft and other scams

44. Scams: DME • Identity theft; ordering of unnecessary supplies; shipments of multiple items in large quantities • Often a “beginning” or lower level of fraud • Examples: • One of the largest ever: $36.5 million in knee braces; 18 Medical Supply Firms @ $1,200/brace • Scooters, electric wheelchairs, hospital beds • “Feeding tubes” and flavored drinks • Diabetes equipment • Oxygen machines

45. DME fraud in MSN

46. Storefront with no customers, deliveries or activities. Paid millions for DME never delivered to patients.

47. Special Rural Scam Concerns • Medicare fraud scams quickly spreading to rural communities • Currently relatively uncommon, however: • Likely to grow quickly as next frontier • Rapidly expanding elderly populations • New influxes of immigrants and refugees • Depletion of urban patient base for scams • Isolation of rural populations and limited resources to prevent and fight crime, especially in foreign languages

48. What Staff Can Do…

49. Bottom Line: Fraud Prevention for Staff • Change the mindset of clients! • FBI Agent: • “Elders need to realize that personally Medicare fraud does impact them because it uses up their benefits and limits” • Healthcare fraud costs are passed on to all Americans as taxpayers • To the extent organized crime is involved, it frees up other money to commit worse crimes

50. Bottom Line: Fraud Prevention for Staff • Don’t try to fight organized crime!! • Review MSNs thoroughly • Protect identities • Report abuse and crimes rapidly