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Medicare Fraud Remains Rampant, Audacious

The government launched a task force against fraud, but abuse of the system is just too easy.


Last week, the Department of Justice announced the sentencing of one of many Medicare fraud perpetrators—this time, former Los Angeles pastor Charles Agbu, 58. Agbu owned a medical equipment supply company, and he bribed doctors to give him fake prescriptions for “expensive, highly specialized power wheelchairs” (that their patients usually didn’t need, or even end up receiving), and then submitted claims for those wheelchairs to Medicare. He paid about $900 per wheelchair, wholesale, but billed Medicare for $6,000 each.

By doing this, the federal prosecutors said, Agbu and his co-conspirators cost the government $11 million. Agbu pleaded guilty to conspiracy and money laundering charges and was sentenced to seven years and change in prison and a hefty fine. While Agbu’s scheme is a particularly colorful one that raises several unique questions (Really, a man of the church? And just how fancy were those power wheelchairs?), Agbu certainly isn’t alone.

Federal inspectors found that 481 of 1,600 randomly visited Medicare-billing businesses did not even exist—but not before those 481 businesses submitted $237 million in bills.

The U.S. Department of Health and Human Services and Attorney General Eric Holder announced a new task force in 2009 called the Health Care Fraud Prevention and Enforcement Action Team (HEAT). A new dedicated website,, featured optimistic messages like “War on fraud goes high-tech” and “Seniors learn and teach each other to battle fraud.” The Affordable Care Act, says the HHS, would also help the government fight fraud by putting more people in the position of policing it, and also by increasing sentences of people convicted of big-ticket fraud. HEAT has had an impact: This past May, the government announced a coordinated takedown of 89 people in eight cities who have allegedly conspired to submit a total of $223 million in fraudulent billing.

The task force can help fight the problem, but it’s clearly not going to stop it altogether. Just in the week or two, the DOJ has announced the conviction of: a woman in Florida who operated a home health care company and billed Medicare for $74 million worth of expensive physical therapy sessions that were either “not medically necessary and/or were not provided”; the conviction of operators of adult day care centers in Michigan who billed Medicare for $3.2 million worth of therapy sessions that never actually happened; and the $30 million settlement of a medical equipment company that knowingly sold defective pacemakers to health care facilities that then implanted them (!) into Medicare patients. (Incidentally, the DOJ probably would have announced even more news like this, too, had the DOJ email alert system not been shut down for 16 days, but that’s another issue.)

Why is Medicare fraud so rampant? Maybe because it’s pretty darn easy to get away with. As reported by ProPublica, Medicare paid for over 400,000 prescriptions “purportedly written by massage therapists, athletic trainers, interpreters and others who aren’t allowed to prescribe drugs,” and Medicare Part D has paid for millions of dollars worth of drugs prescribed by health care providers who were (supposed to have been) banned from the Medicare program.

It does not seem that oversight to prevent these simple mistakes would be prohibitively difficult or expensive, either. Consider the report that NPR filed from South Florida, a region where Medicare fraud—especially involving elder care equipment such as wheelchairs, walkers, and respirators—is apparently “one of the most popular and lucrative crimes.” Federal inspectors there found that 481 of 1,600 randomly visited Medicare-billing businesses did not even exist—but not before those 481 businesses submitted $237 million in bills.

Not having a physical address should probably be a red flag. Also a red flag? One of the most telling quotes from the NPR segment: “You have patients receiving two artificial legs in a year ... when they never had an amputation from a hospital.”