“IT makes it easier to find fraud, but it also makes it easier to camouflage,” Markopolos responded when Gupta asked him about the role of IT in healthcare fraud enforcement.
On one had, Markopolos said IT can be used to detect changes in accounting that could be red flags for fraud, such as large money transfers to offshore accounts or larges sums of money being kept in separate nonoperating accounts with names such as “slush fund” or “kickback account,” which he said were real-life examples he has seen. But Markopolos also said the elimination of paper files or medical records, which have been replaced by electronic files or electronic health records, results in the loss of a key piece of evidence in fraud investigations. Investigators need paper records to compare with electronic records, which can be modified or deleted, he said.
Markopolos said the three most common types of Medicare fraud that he sees in healthcare are upcoding of bills, off-label marketing for drugs and kickbacks paid by medical-device makers.
“Medicare fraud is so pervasive,” Markopolos said. “Wall Street is playing second fiddle to the healthcare industry.”
Yet, Markopolos saved his harshest criticism for the CMS, which he described as virtually impotent in preventing fraudulent billing and other schemes aimed at scamming the Medicare program.
“CMS is weak. It doesn't understand medicine. It's not an efficiently run agency,” he said. “Agencies become captive to the industry they regulate. CMS kowtows to the healthcare industry.”
Gupta, who, citing several sources, estimated the amount of Medicare fraud annually at $60 billion, or “one Madoff unit.” He asked Markopolos about the prospect of federal agents posing as patients to catch physicians and other providers engaged in fraud schemes or who are at least willing to do so. Markopolos said the use of undercover agents is a proven law-enforcement tool that the government likely will start using in healthcare. “It's the wave of the future. You have to attack this from all angles.”