The New Face of Medicare
Drug dealers and organized-crime groups have invaded the Medicare system and are taking the government and citizens for a billion-dollar ride
The agency has launched a host of other initiatives, including a national database that agents can tap into to see who is being investigated; a system that will require more information from those seeking health care provider licenses; and a $50,000 bond for those who want to sell medical equipment under Medicare's aegis. New laws also prohibit felons, like Gabriel Hernandez, from getting licenses. Most notably, HCFA has continued its Operation Restore Trust, a pilot program begun in eight states in 1995 that targets areas of intense fraud. But with a 30-year head start, the bad guys remain far out front. "We in the federal government and officials from the state of Florida have pooled our resources to combat this vexing problem," says one frustrated HCFA official working fraud cases in Florida. "And together, we have been remarkably ineffective."
Medicare by the numbers
Annual claims $250 bil.
Number of claims $800 mil.
Patients participating $38 mil.
Estimated annual loss to waste, fraud, and abuse $27 bil.
Total recovered through prosecutions in 1997 $1.2 bil.
Total claims audited by Medicare contractors $74 mil.
Sources: HCFA, HHS Office of Inspector General
Macarena day care June Schuman's retarded son was supposed to be going on field trips with other residents of his group home. But David, 31, told his mother that, on the trips, "We just go to another counseling place and sit." When Schuman went to David's "counseling place" in Orlando, Fla., she says, "I was absolutely appalled. I saw about 20, 25 patients, just sitting outside smoking." Inside the building, formerly a dairy plant, she found dingy, unpainted walls, some spartan furniture, and more patients like David doing nothing. Then she got David's Medicare statement. It showed that Orlando doctor Jerome Feldman was charging Medicare $200 a day for David's visits. Medicare even paid Feldman's operating costs.
Federal officials say Feldman was billing for dozens of patients. They stopped his Medicare payments last summer, and he is now under investigation. (He could not be reached for comment.) But his was just one of 250 Medicare-funded Community Mental Health Centers in Florida--and one of more than 1,000 across the country--that sprang up after Congress relaxed a rule requiring them to operate only on hospital grounds. In Florida, authorities have suspended payments to nine centers.
The law requires such centers to offer counseling on aging and the loss of partners and intensive therapy. Many, though, are simply expensive adult day care, offering nothing more than fast-food and television. In one, the "therapy" offered the elderly was dancing the macarena.
Moscow on the Hudson He funneled money through eight different New York City banks. He borrowed the names of legal Russian residents in the United States: Mikhail Goldenberg, Yakov Dubinski, Leonid Simonovski. The only thing Yury Bizaykl--his real name--couldn't conceal was his looks. That's how he got caught.
Bizaykl, who pleaded guilty last year, was the middleman in an organization that operated a multimillion-dollar Medicare scam, which agents say they haven't fully cracked. According to an affidavit, it ran at least 13 companies that billed Medicare $10 million for MRIs, equipment, and other services never rendered. The companies, which agents believe are controlled by a Russian crime group in New York, billed Medicare for "patients" in six other states.
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