Huge Medicare Fraud Operation Racks Up $160 Million

| by Toni Brayer MD

There are few things that grind my gears more than Medicare fraud. These scams pop up every couple of years and I am so glad when the perpetrators get caught and arrested. The latest is a large crime syndicate lead by Armen Kazarian, the godfather of Armenian gangsters.  More than $160 million fake Medicare invoices were generated from 118 fake medical clinics in 25 states, said U.S. Attorney Preet Bharara. Most of these "clinics" didn't even exist and were Mail Boxes, Etc. addresses.

As part of this fraud, Endeavor Diagnostics billed more than $1million in medical lab tests for Medicare patients.  Endeavor Diagnostics was an empty office with a desk and a fax machine in San Fernando Valley, California. The complex operation recruited people and paid them a small fee to become a fake patient and then they would bill Medicare for services supposedly rendered.  Corrupt doctors were also part of the scam that carried out unnecessary tests on "fake" accident victims and then billed the  government for the treatment. The majority of this fraud was with stolen identities and completely bogus claims.

"These are hardcore crooks, and we got to do something about this," said Peter Budetti, the Deputy Administrator  for Program Integrity, Centers for Medicare and Medicaid Services. He reported that 18,000 new applications come into the Medicare program every month, and many of them are criminal elements and fraudsters.

I am staggered by that number. Did he really mean 18,000 a month? How is that even possible?  There can't possibly be that many new Medicare providers (labs, doctors, clinics). CMS simply must look at each new application and do random site visits to see if they are real. It is a huge waste of  taxpayers money if even a fraction of these are fraudulent.

Most Medicare providers are honest and are truly underpaid for their work. That includes physicians and hospitals. Durable medical equipment companies are highly regulated and physicians have to sign a number of forms  to even get a cane for a Medicare patient. How this type of fraud can slip under the radar is a huge mystery to me. Surely there is software that can identify billing outliers and claims data analysis, and should be able to spot fraudulent activity before it reaches millions in paid claims!  Even if the doctor's identity was stolen, the number and amount of paid claims should have raised a red flag.

Someone was asleep at the wheel.  Unfortunately it is the taxpayer's car!