Dead Doctors Used to Scam Government Out of Medicare Money, Probe Finds

Sellers of wheelchairs, drugs and other medical supplies collected as much as $93 million in fraudulent Medicare claims based on prescriptions from doctors who actually were dead, some for 10 years or more, a congressional investigation has found.

Millions more dollars will continue to be at risk of waste and fraud each year in the billion-dollar government-run health program for the elderly and disabled unless Medicare officials address flaws that they've promised to fix since at least 2001, according to the probe.

The bipartisan report by the Senate Homeland Security investigations subcommittee, obtained Tuesday by The Associated Press, reviewed millions of reimbursement claims for medical equipment and supplies from 2000 through 2007. It found that Medicare paid out between $60.3 million to $92.8 million to medical suppliers even though they involved claims in which the prescribing doctor listed had been dead for at least 12 months.

In Florida, which has a high number of Medicare claims, more than $2 million alone was paid to medical suppliers from 2002 to 2007 for equipment such as oxygen machines, prosthetics and diabetic equipment that claimed to have prescriptions from 114 deceased doctors. As many as 484 claims totaling $544,789 were filed under an ID code for a single deceased doctor who had died in 1999.

In all, about 7 percent of all deceased doctors and 27 percent of dead doctors in Florida still had active Medicare ID codes that could be used improperly to seek reimbursement.

The Centers for Medicare and Medicaid Services and its contractors since have switched to a new ID system as of May that will wipe away many of those outdated codes, but unless broader changes are implemented, the same problems of potential waste and fraud will arise again, the investigation found.

Responding in the report, CMS did not challenge the Senate findings but said it was taking several steps to help avoid future problems. For example, the agency said it was working to strengthen federal regulations involving documentation Medicare providers must keep from prescribing physicians. CMS said it also planned to work with the Social Security Administration to get monthly updates of the agency's file on recent deaths.

In an additional statement Tuesday, CMS spokesman Jeff Nelligan stressed that the agency was committed to reducing Medicare waste and abuse, including separate efforts to promote competitive bidding for medical equipment and supplies.

"We believe the initiatives we have initiated will address many — if not all — of the issues surrounding the payments for claims to those health care providers who are using invalid or inactive physician numbers," Herb Kuhn, deputy administrator of CMS, wrote in the report.

The Senate report calls for CMS and its contractors to adopt new procedures to update physician data to account for deaths on a more frequent basis, such as every 90 days instead of roughly 15 months. It also urges regular audits to ensure improper claims are not being filed.

"Using the ID numbers of dead doctors, these scam artists have treated Medicare like an ATM machine, drawing money out of the government's account with little fear of getting caught," said Sen. Norm Coleman, R-Minn., the top Republican on the Senate panel.

Coleman said the waste estimate would be much higher if investigators counted claims that involved all deceased doctors, not just those dead for at least 12 months. "It's time to close this $100 million loophole."

CMS made promises to fix problems shortly after the Health and Human Services Department inspector general in 2001 found roughly $91 million over a one-year period was improperly paid out for Medicare claims with invalid or inactive doctors' ID codes.

At the time, CMS said it would conduct regular reviews and update its automated claims system to block payment of any claims with invalid codes. But the agency eventually backtracked, saying it would focus instead on educating Medicare providers on their responsibility in ensuring valid ID codes are used.

The congressional study said that decision by CMS might have proved costly, noting that 63 percent of the questionable claims investigators identified as involving doctors deceased for a year or more were paid with dates of service after April 1, 2002, the date after which Medicare had promised it would reject such claims.

In fact, about 16 percent of the estimated 478,500 claims found to be questionable, or about 51,000 claims worth $4 million, involved prescribing doctors who had been dead 10 or more years before the service date on the claims.

"This oversight failure resulted in tens of millions of dollars in improper payments," investigators wrote.

The Senate committee largely declined to identify suppliers or reveal locations due to privacy concerns, but in interviews generally described many of the offenders as small businesses that apparently were created for the purpose of committing fraud. Investigators were reviewing the evidence to determine which cases might be referred to law enforcement for prosecution.

In one case, Miami-based Professional Gluco Services Inc. submitted 83 questionable claims between December 2005 and July 2006 and was paid $93,171, according to the report. Last November, Gluco's owners pleaded guilty to criminal charges of submitting claims for medical equipment that had not been ordered by a doctor nor delivered to a Medicare patient.

"The slipshod procedures that let these claims get through are an insult to U.S. taxpayers," said Sen. Carl Levin, D-Mich., who chairs the Senate panel. "It is long overdue to shut the door on this multimillion-dollar abuse."

The report comes as lawmakers in both parties seek ways to trim spending in the rapidly growing domestic entitlement program — which has been cited for many years by the Government Accountability Office as a high-risk for fraud and waste — while preserving benefits for millions of the elderly and disabled. This week, Senate Democrats are pushing legislation to prevent scheduled Medicare cuts to doctors' payments by trimming payments to private insurers that they consider too generous, a move that President Bush and some Republicans oppose.

Sen. John McCain, R-Ariz., the likely Republican presidential nominee, has pledged to balance the federal budget by the end of his first term if elected in part by curbing wasteful spending and overhauling costly entitlement programs such as Social Security.

The Senate investigation based its findings on a statistical sample of 1,500 deceased physicians who had been assigned ID codes for Medicare reimbursement use and on additional data it obtained for Florida. CMS was asked to provide data on Medicare claims involving those deceased doctors that had service dates between Jan. 1, 2000 and Dec. 31, 2007.