The Underside of Healthcare: Rife with Greed and Corruption

One has to look past a number of odious policies adopted by the Justice Department under Jeff Sessions — his latest is to restore police stealing from people to fund their departments — in order to find one bright spot.

And that was, a couple of weeks ago, the arrest of 412 people, across 20 states, in a Justice Department crackdown against
healthcare fraud amounting to $1.3 billion. Perpetrators had billed Medicare and Medicaid for drugs that were never disbursed, treatments and tests that were never administered, had sold prescriptions to patients for cash, and a third of them were involved with the horrific opioid scourge that is ravaging this country, taking the lives of 91 daily according to the Centers for Disease Control.

At a news conference, Acting FBI Director Andrew McCabe said that, of the 56 doctors caught up in the sweep, some had prescribed more for controlled substances in a single month than had entire hospitals. "This event again highlights the enormity of the fraud", said Attorney General Sessions, who intends to crack down on drug crime as a priority, but that regrettably includes mandatory sentencing for minor possession that has filled prisons and ruined lives to little purpose.

The operation, largely unreported in the midst of daily Russia probe revelations, continued the work of a Medicare fraud task force established during the George W. Bush administration in 2007.

Florida, with its elderly population, is ground zero for Medicare scammers, with the Russia mafia that settled in Brighton Beach Brooklyn a close second. This catch of 412 set a record — "the largest healthcare fraud takedown operation" in history, said Sessions.

"Too many trusted medical professionals like doctors, nurses and pharmacists have chosen to violate their oaths and put greed ahead of their patients. They seem oblivious to the consequences of their greed".

Last year, the program netted 301 people from Florida to Alaska who had bilked the government for some $900 million in charges for health treatment that never happened. Then Deputy Attorney General Sally Yates barred prosecutors from exempting persons from criminal or civil liability in cases that Justice brought against companies; immunity had until then been used to gain evidence against the businesses, so this meant a change to search warrants and raids. In the decade since its creation, the task force has nailed some 3,500 perpetrators for the fraud of $12.5 billion in phony billings. The Trump administration has put $70 million into program.

Medical professionals game the system on all fronts. The Affordable Care Act actually paid doctors to catch up with the rest of the world and convert patient records to computer databases. Yet, a federal audit found that $729 million in payments had gone out from Medicare to doctors who had claimed these "bonus" payments but in fact had done nothing to digitize.

Medicare data tells us that 1% of the 950,000 doctors and related healthcare providers accounted for 17.5% of all payouts. That was the percentage for 2013; for 2012 it was 16.6%. Some doctors specialize in very high cost patients, which accounts for part of the clustering. Others administer drugs directly, which means that the pharmaceutical companies' outrageous prices pass through their billings. Fair enough. Others, though, have adopted the growing trend of buying expensive testing equipment for use in their own offices, which adds to their billings what previously went through separate labs or imaging outfits. But hand-in-hand with that are doctors' tendencies to prescribe excessive tests for their patients, both to cover the cost the equipment and make more money at the expense of Medicare, Medicaid and insurers.

And then there is up-coding. Beginning in October 2014, doctor offices were required to select codes for every service performed when submitting for payment. The codes were found in a compendium called the International Classification of Diseases which had exploded to some 155,000 listings. Stung by a jellyfish this summer? The doctor or staff would have to track down code T63622A which covers the initial encounter with the jellied-beast. Up-coding is thought to be widespread where staff is encouraged to look a little further in the list to find where the jellyfish could be said to have caused complications or nausea or some follow-on ailment in order to up-code to an entry that brings in more money. Overcharging the government and insurance companies by up-coding is thought to be extensive. Regrettably, it is difficult to prove.

But some of the biggest offenses are found in otherwise, we're told, reputable companies.

 Johnson & Johnson developed an antipsychotic drug they called Risperdal, but seeking greater profits the company aggressively marketed it for a off-label maladies such as autism and dementia. They did so undeterred by the drug's known side effects, such as breast development for young boys and strokes for the elderly. Doctors were paid to promote the drug; a company that provided pharmaceuticals to nursing homes was paid kickbacks. J&J pleaded guilty and paid a $2 billion fine, but had sold $30 billion of the drug worldwide, doing untold harm. You can find Steven Brill's 58,000 word investigative report, "America's Most Admired Lawbreaker", serialized in the Huffington Post.

 In a move to cut Medicare costs, the Bush administration began Medicare Advantage, which has since proved hugely popular among seniors. Instead of its open-ended practice of paying health providers directly for services as they occur, Medicare hands claims processing and payment to insurance companies for those seniors who sign on. Medicare pays the insurers a predetermined fee tailored to each Medicare member who chooses the Advantage alternative. But if the insurer finds that a member's health is worse than predicted, Medicare pays extra. Or the converse: the fee paid the insurer is reduced if a member's health profile going-in contained problems that proved to be non-existent.

But a UnitedHealth Group executive blew the whistle, asserting that his and other insurance companies have for years "data mined" members' health records looking for conditions that could raise a patient's "risk score" along with the fee that the score earns — irrespective of any actual health problem. This May the Justice Department sued UnitedHealth for allegedly overcharging Medicare $3 billion between 2010 and 2015.

What about the opposite — coding errors or diagnostics that proved overblown leading to excessive fees paid to the insurer? UnitedHealth had a quality control unit that identified such overpayments starting in 2011 and which caused the company to book reserves for refund to Medicare. But that good-faith program was quietly shut down when in 2014 the company experienced a shortfall in revenue. Management decided to fill the hole by zeroing out the reserves and keeping the money — $208 million for 2012, up to $180 million for 2013, $175 million for 2014.

 A 2016 inspector general report from the Health and Human Services department found that hospices often double-charge for prescription medicines and bill Medicare "far more than they should have" for a higher level of care than patients need. The report tallies the fraud to cost some $280 million a year. Much of that comes about by hospices keeping patients at their facilities for longer than necessary to earn the $720 a day fee rather than releasing them to home care at $187 a day.

 Last year the Justice Department brought the biggest healthcare fraud case in its history when it charged the owner of about 30 nursing facilities in Florida with bilking Medicare and Medicaid for over $1 billion across one and a half decades. The indictments charged that Philip Esformes and two others operated a scheme that cycled thousands of older people through the nursing facilities for treatment beyond what they needed, often dosing them with narcotics to create a need for prolonged stays to treat the addiction they had created — all with the help of doctors, pharmacists, and healthcare professionals who were paid kickbacks for helping, or hush money to keep quiet. The plot yielded millions for Esformes who indulged in the usual banalities of a "$600,000 watch, the leasing of private jets, chauffeured limousines, and periodic trips with escorts to" where, Paris? Venice? the Côte d'Azur? No. The Ritz-Carlton in Orlando.

 In New York City, Russian immigrants found a home in the Brighton Beach community of Brooklyn and chose to reward their new country with one of the highest pockets of healthcare fraud in the nation. More providers in that ZIP code have been barred from government programs than anywhere in the country other than south Florida with its retirement-age population.

In 2012 a plot was uncovered that sought to steal over a quarter of a billion dollars from insurance companies. A conspiracy of 10 doctors, 9 clinics in the city, and 105 different letter-box corporations was halfway there when shut down and prosecuted for having provided unnecessary and excessive medical treatments, physical therapy, acupuncture, pain management, psychological services, and testing such as X-rays and MRIs. Law enforcement calls it the Russian mindset. The rigid repression of the Soviet Union taught generations there that the only way to obtain anything was to outwit the system and break laws. They believe that Russia sends its recruits here with the handbook of how to game our systems. When you hear "Russian mafia", this is where they are, stateside.

Medicare and Medicaid are not helpless victims. Much of the industry's problems can be laid at their feet. Both accept medical providers — the supposed professionals who will treat patients and submit charges for payment — without checking whether they are authentic. A probe found thousands had applied with fake addresses or had been the subject of state disciplinary actions but were accepted without scrutiny. To the good, one reason the Affordable Care Act ran to 906 pages was that it contained so much else beyond prescribing insurance plans. It called for screening that the Wall Street Journal said had kicked 34,000 providers out of the system.

The other systemic fault line, pointed out by this Journal op-ed writer says that of total claims paid by Medicare and Medicaid — $853 billion in 2015 — a stunning 10% are fraudulent owing to their practice of paying first and looking for fraud after. Claims are farmed out for processing to a "hodgepodge" of private contractors that are not asked to vet submissions; rather, they assume the good faith of medical providers. There is no one choke point through which all 4.4 million claims a day can be screened, nor the software filters and algorithms such as the highly sophisticated tools developed by credit card companies to weed out crooks.

Added together, that greed suffuses so many levels of what is supposed to be the honorable maintenance of the public weal is enough to make one ill. As said by the U.S. attorney in the Miami case we cited, "Medicare fraud has infected every facet of our healthcare system".