Arias says doctors, nurses, and elderly Medicare recipients either don't notice that their good names and Medicare numbers are being used to run the scam — or else they're getting kickbacks for participating. In the rare instance that a Medicare investigator actually comes knocking, the criminals have already fled — stopping at the check-cashing store on their way out of town.
Committing fraud is simple, says one prosecutor in the Department of Justice, because "100 percent of Medicare claims are auto-adjudicated. No human looks at it." In the old days, Medicare paperwork was burdensome. But now, claims are put through a computerized system and automatically paid — direct-deposited into providers' accounts within 16 days. Payments are halted only if the software detects something wrong, if, say, a code for gynecological procedure is matched to a male Medicare patient. In contrast, the source explains, a private insurance company might automatically pay 60 percent of its claims and deny — or at least look into — the other 40 percent.
"Medicare would be better off just putting million-dollar bundles of cash in bags and handing them out," the prosecutor says.
According to Arias, Medicare "keeps on sending the money, and after a while they go, 'Oh shoot — better go investigate!' " Insiders call this "pay and chase." Good luck getting the money back. The Center for Medicare and Medicaid Services, an arm of the Department of Health and Human Services, has only about a dozen investigators in South Florida.
The slack on Medicare's end makes plenty of work for the U.S. Attorney's Office. "Federal prosecutors are so overwhelmed," Arias says, "they just pick the juiciest cases to prosecute." It can take years to seize evidence, pore through medical records, and build a solid case. Arias guesses that anyone bilking less than a million dollars a year doesn't even get sniffed at. Even when prosecutors do nail big-time crooks, he says, "It's like bailing out a boat with a fork."
According to Gabriel Imperato, a Fort Lauderdale attorney specializing in medical fraud, it wasn't until the late '70s that the government really noticed abuses of the Medicare system. By the early 1990s, the problem was out of control. In recent years, though, whistleblowers have started taking advantage of the False Claims Act; cooperators flip on their criminal buddies and get a cut of the proceeds when misused government funds are recovered. In what's called a qui tam action, a person who sees fraud being committed can file suit as the plaintiff, or "relator," on behalf of the government. If fraudulent monies are found, he or she stands to get a piece of the pie.
"Now, whistleblowing is driving the issue," Imperato says. "Everyone's ratting each other out. It's driving tons of insider info into the Department of Justice."
In 1996, the Health Care Fraud and Abuse Control Program was established to go after health care fraud. By the end of 2005, the program — a joint effort between HHS and the Attorney General's Office — had recovered $8.85 billion and deposited it in the Medicare Trust Fund.
Arias points out that South Florida, with its wealth of elderly patients, is the epicenter of health care fraud. Including federal health operatives, the FBI, and state agencies, he estimates there are 90 agents working to combat the problem, plus a staff of prosecutors in the U.S. Attorney's Office. In 2000, authorities opened a giant facility in Miramar where investigators from various agencies could work together to root out health care scams.
R. Alexander Acosta is the U.S. attorney for the Southern District of Florida. Sitting in his eighth-floor conference room in downtown Miami, Acosta speaks freely about his "three-pronged" mission to go after Medicare scammers. "In late 2005," he explains, "we took a look at what was going on in South Florida and the amount of health care fraud. We said, 'Hey, this is our money! We have to go after it more aggressively.' "
In 2006, Acosta says, prosecutions went up 30 percent. His office indicted more than 50 cases and charged $138 million in fraud. By July 2007, they'd indicted another 70 cases and charged $290 million. That's not even counting an August indictment alleging $170 million in one fraud case alone.
In February, the Department of Justice partnered with HHS, the FBI, and local law enforcement agencies to create a fast-acting superpower: the Medicare Fraud Strike Force. Acosta wants to fight the impression that his office is pursuing only "the worst of the worst. Like, if you stay small, you're going to go under the federal radar." The Strike Force allows enforcers to execute warrants and seize files quickly. So far, it has had success finding what Acosta calls "small cases — two-, three-, five-million-dollar cases."