The federal government estimates that patients, doctors, pharmacists and others steal $60 billion from Medicare each year.
Recently, WFOR-TV, the CBS-owned station in Miami, and CBS' "60 Minutes" went undercover to learn how easy it was for criminals to cash in.
"This is the hardest fraud to track,"
WFOR investigative reporter Stephen Stock told me in an e-mail interview.
"Doctors and their clinics can bill Medicare for services never delivered or only partially delivered. ... Either they add on to services actually rendered (pad the bill) or bill for services never delivered," Stock said.
WFOR's story
showed store after empty store that used to be stocked with medical supplies and were really just fronts for fraud. Fraudulent DMEs (durable medical equipment companies) are open for a month or two. The store owners purchase lists of names that they send in to Medicare and submit thousands upon thousands of dollars in fake medical claims for equipment that is never really bought or sold.
The "60 Minutes" story included a former federal judge who noticed on his Medicare statements that somebody had purchased prosthetic arms in his name.
The audacity of those involved with this fraud is stunning.
"60 Minutes"
called Medicare fraud one of the most profitable crimes in America, if not the most. In this edited interview, Stock advises other journalists who want to tell the Medicare fraud story in their towns.
Al Tompkins: Is this kind of fraud happening everywhere?Stephen Stock: Yes. For some reason -- investigators say because of demographics and the tradition of narco dealers -- South Florida became the incubator of this crime. The people perpetrating this fraud tried various schemes and techniques, saw which ones worked and which did not, then exported the ones that worked to other parts of the country. There were recent busts in Detroit and Los Angeles which involved similar scams that had been used -- and busted years ago -- here in South Florida. In L.A., a pastor convinced many of his congregation to "sign up" and let him use their Medicare number (he had the list already made up -- the church roll!) and fraudulently billed Medicare for millions before being caught. He and his parishioners now face prison time.
What advice would you give to other journalists who want to tell the Medicare fraud story in their town?
Stock: This is a huge story. But it's also very complicated and can be "boring." Your news director's eyes may glaze over if you just pitch, "Hey, I want to do a story on Medicare fraud." You must mine down and concentrate on just a few techniques, a few victims, before "backing out" and telling the big story through the eyes of a few.
I would suggest listening to the "weird, elderly caller" who leaves a message that his/her Medicare bill has been charged with all kinds of strange things, like wheelchairs or HIV therapy or emphysema breathing machines, when the patient doesn't have any of those things. Guess what? That sounds cuckoo! No way. Guess what! Yes way. And there's your story. It's so unbelievable that it's true. But that is what makes it outrageous and what makes it such a good story. I found the Medicare patient who was billed for all kinds of strange things by reading the letters to the editor to The Miami Herald. The Herald published this guy's letter but never went to talk to him. I called him. And he was in our story.
The Obama administration has formed a special office to do nothing but fight Medicare fraud.
It hired Roberta Baskin, a former Poynter ethics fellow and an award-winning, top-notch, wonderful investigative reporter who knows exactly what you, as a TV journalist, need. She's a senior communications adviser in Washington, D.C., a terrific resource who can point you to local contacts within the law enforcement community to help you with your story. You should get a lot of cooperation from federal investigators, unlike in the past. They want this out in the public. They want the story to be told across the nation.
Other insiders called or e-mailed us with unbelievable claims. We took them out and bought them a cup of coffee and listened. One of them provided us with the lists of names and of clinics to check out.
Working with "60 Minutes" enabled us to get other information from federal investigators and to meet and use FBI informants. That's how we got close to and used several of those people. FBI sources also gave us names and locations of suspect clinics, which we then independently checked out.
In truth, the list of names, while it was real and valid, could have been a list of any names and the lady who offered to buy them would have done so. I purposely changed the order of the list, as well as mixed up the addresses and blacked out the Medicare numbers, just in case she actually got her hands on them. That way they wouldn't have been able to bill them.
We also were very careful. We consulted with our attorney constantly. We also told the FBI every time we went in to a clinic to see if they would pay 1) our FBI informant/patient or 2) our photographer for his list. We wrestled with the possibility that we set up or entrapped those who might offer us money. We went into the one clinic you saw in the piece three different times with different people in order to make sure and to refute claims of entrapment.
What has the government been able to do to stop these fraudulent billings?
Stock: Very little. The law enforcement folks are clearly frustrated by this and said so on many occasions. One officer told us they could arrest hundreds of people a month and the fraud wouldn't stop until a culture in Washington changes and laws and rules are changed. We ran into a lot of turf wars. The U.S. Attorney's office tried to stop the story in the middle. There were weeks where investigators would "go dark," wouldn't return calls, etc., and I later learned it was because yet another official had gotten wind of our investigation and wanted to approve or manipulate how it was handled, who talked to us, etc.
I spoke with some in the private billing industry, not for attribution, in Washington, who say that it will take accountants and computer geeks who can track data and do analysis to stop this, not FBI agents on the ground knocking down doors and chasing the bad guys. And FBI agents down here agree. The problem is so massive, so widespread that it will take a huge data analysis effort in real time to catch and stop this. One FBI agent was frustrated because it took him so long to get data from Health and Human Services on clinics that were suspect that when he finally got the data, the storefronts were closed and gone.
I was surprised that you didn't hold somebody's feet to the fire for allowing this kind of fraud to happen. Who should have caught this problem? Who is not doing what is supposed to be done to keep the system honest?
Stock: Great question. We wrestled with going to the clinic where the office manager offered us money. We ultimately decided it would not be fair to single her out when all evidence pointed to hundreds, if not thousands, of other clinics doing the same thing. As for the government, I'm not sure who else to hold to the fire. Eric Holder? Maybe. But he just took office. Kimberly Brandt of the HHS anti-fraud unit? Yes. Truth be told, that's where I felt the most ineffective. Had we had a bigger budget and more time, I might have traveled to Washington to "hold someone's feet to the fire." I am pushing to continue to do just that. We will continue to follow this story, and I am pushing to talk to members of Congress from our area and to eventually travel to Washington. To ask why. And why haven't data analysis and other techniques been used before now?
You worked with "60 Minutes" on this project. What was the nature of the joint effort? How did working with "60 Minutes" help you to get what you got for your story?
Stock: At the Investigative Reporters and Editors convention in Baltimore last June, investigative producer Ira Rosen, who works at "60 Minutes," asked if I would be interested. A few months earlier, Jay Weaver at The Miami Herald had just done a
great series on Medicare fraud and I was eager to advance the story or shed further light on it. After getting approval from my bosses at WFOR, Ira and I stayed in touch, talking two to three times a week, as we set up meetings with the FBI and FBI informants, visited various clinics and staked out various suspect
providores and DMEs, durable medical equipment companies.
...
Providores are recruiters paid by clinics to round up elderly patients and bring them into the clinic. They give them something to eat, pay the patients a couple of hundred dollars, and then require the patients to sign some paperwork with the Medicare number, then move on to another clinic. ...
DMEs are so-called pharmacies or medical supply companies. [Fraudulent ones] literally open for 30 to 60 days, get a list of patients and their Medicare numbers and then bill like crazy. They send in bills for artificial arms and legs, wheelchairs, breathing machines, medicine, etc. But none of this is ever bought and sold. Medicare just pays for these items. ...
When "60 Minutes" came to town, we met with them and shared various ideas and resources. They shot their own interviews and B-roll, but asked us to commit resources to undercover visits to clinics, DMEs and providores. We did that. We shot for nearly four months and visited many locations, meeting with folks who would talk about paying us but then ultimately backed out.
Working with "60 Minutes" was a challenge. They have their own culture and expectations and they don't share easily. Their long, successful history doesn't contain many cooperative projects with local TV news operations. However, they did enable us to meet FBI sources we wouldn't have found without them. We met and were able to work with the FBI informant, which wouldn't have happened without them. They opened doors and gave insight and ideas that enabled us to be successful. And we contributed by successfully getting undercover video of an office worker offering money both for a list and to a "patient" to use her Medicare number. "60 Minutes" chose not to use the video and framed the story otherwise, but we contributed nonetheless.
Here are some other government links:
As the association that represents the durable medical equipment and...
