Sometimes you just have to sit back and marvel at healthcare fraud. There's the sheer scale of it, as much as $170 billion worth of plunder each year. Then there's the breadth of activity and the ingenuity of the evildoers. Providers submit claims for phantom procedures and equipment, upcode claims for less-intense treatments, do unnecessary procedures for referral kickbacks, artificially inflate drug prices to pump up reimbursement and bribe doctors to induce referrals. There isn't an aspect of medical care that isn't scammed.
For those who believe that healthcare scamming is the sole province of inner-city welfare cheats or mob thugs, take a peek inside the most recent seven-week window of fraud enforcement. Hint: It's the guys in suits doing the heavy lifting.
* Swiss drugmaker Serono's U.S. subsidiary pays the third-largest health fraud fine in history -- $704 million -- to resolve criminal and civil charges of paying kickbacks to physicians and illegally conspiring to boost sales of a drug to combat AIDS-related weight loss.
* GlaxoSmithKline pays more than $150 million to resolve allegations that the company violated the False Claims Act through fraudulent drug pricing and a "double dipping" scheme. Doctors were allegedly encouraged to pool leftover vials of Kytril, a drug used on cancer patients, to create an extra dose, which then would be administered to a patient and re-billed to Medicare and other federal healthcare programs.
* The Government Accountability Office releases a report saying Medicare was robbed of more than $900 million in fiscal 2004 by durable medical equipment companies while a government-paid watchdog company failed to check the credentials of unlicensed providers or inspect most suppliers.
* Eisenhower Medical Center, Rancho Mirage, Calif., agrees to pay $8 million to settle charges of manipulating cost reports to increase Medicare reimbursement from 1988 to 1998.
These were far from the only cases in the period, but they provide a glimpse of the scale of "activity." Unfortunately, those with the task of enforcing the fraud-and-abuse laws are woefully overmatched.
In June the first permanent HHS inspector general in more than two years took office (See profile, p. 32). Daniel Levinson inherited an office all but decimated by the gun-toting Janet Rehnquist, whose manic reign forced out a slew of veteran investigators.
The office's main funding source hasn't increased since 2003. It has received a small amount of discretionary funds from the Bush administration but still gets by on a couple of hundred million dollars a year.
With these modest tools, it has done wonders. In just the first half of fiscal 2005, the inspector general's office reported savings and expected recoveries of nearly $17 billion and 363 criminal and civil actions against individuals and companies.
You would think with that kind of return on investment, Congress and the administration would be showering money on Levinson's office, particularly at a time when Medicare and Medicaid are threatened with significant budget cuts. Reducing fraud and abuse might just help trim the federal deficit.
Now comes the new Medicare prescription-drug benefit, which thanks to its privatization-loving congressional architects is ripe for fraud on an epic scale. The inspector general has already identified 33 types of possible chicanery in the program, and it doesn't fully take effect until Jan. 1. Without competitive bidding and with a congeries of private-sector firms making millions of transactions every day, the $80 billion per year program has got to be among the world's most inviting booty.
It's odd that at a time when Congress is waking up to the consequences of its disastrous fiscal policies that there is so little awareness of such obvious sources of healthcare savings. The feds just have to dedicate themselves to catching them.