Medicare's $869 Air Mattress Bill

The Justice Department's Alice Fisher, with Attorney General Alberto R. Gonzales, right, discusses the arrest of 38 people who allegedly bilked Medicare.
The Justice Department's Alice Fisher, with Attorney General Alberto R. Gonzales, right, discusses the arrest of 38 people who allegedly bilked Medicare. (By Lois Raimondo -- The Washington Post)
By Carrie Johnson
Washington Post Staff Writer
Thursday, May 10, 2007

The schemes center on what prosecutors call the nation's largest hot spot for health-care malfeasance: the southern district of Florida. Over the past several weeks, federal agents visited dozens of companies there that charged Medicare for prosthetic limbs, costly AIDS drugs, air mattresses and urinary collection bags.

Few if any of the products were purchased or delivered to patients in need. Instead, the cash went into the pockets of company operators -- one purchased a Rolls Royce Phantom valued at more than $200,000, law enforcement officials said. Many of the office headquarters are little more than barren storage closets.

That is just a glimpse into the fraud that officials at the Justice and Health and Human Services departments revealed yesterday when they announced the arrest of 38 people who allegedly bilked Medicare. They are accused of operating sham companies that submitted $142 million in bills for unnecessary or nonexistent equipment and supplies.

Health and Human Services Secretary Michael Leavitt, who visited several of the businesses in December, described his shock at peering into office fronts in a Miami area strip mall and seeing little more than a chair and a few pieces of equipment on the wall. He called the fraud "blatant."

At a news conference in the District, Attorney General Alberto R. Gonzales said prosecutors were using real-time computer data to target unscrupulous companies that defraud taxpayers under the Medicare program. In the past, executives at equipment companies would close their operations at the first hint of government scrutiny, only to open up shop again under new names.

"These fraudsters, they move quick," Gonzales said. "They operate quickly, and so we have to change our strategy, as well."

The arrests are the fruit of the Medicare Fraud Strike Force, a new partnership among the Justice and Health and Human Services departments and the FBI. The team is led by Kirk Ogrosky, a deputy chief in the Justice Department's fraud section, and Matthew Menchel, head of the criminal division in the U.S. attorney's office in Miami. Officials said they expect to expand their investigation beyond southern Florida in the months ahead. Leavitt said the government could save as much as $2.5 billion by cracking down on the fraud.

Medicare is a federally funded program for the elderly and those with disabilities. The program is vast and growing rapidly as baby boomers turn 65. But as Medicare payouts have risen, so has malfeasance, according to government officials and a pair of recent federal studies.

The Centers for Medicare and Medicaid Services, a government unit that administers the health-care program, estimated that $700 million in improper payments had been made for durable medical equipment and supplies alone between April 2005 and March 2006.

In a January report, the Government Accountability Office singled out CMS and its contractors, who auditors say failed to install automated controls to flag unusual charges. That meant that in at least one case, Medicare paid more than $2 million for ankle braces for a patient whose foot had been amputated, the report said. In another instance, operators billed Medicare for more than one hospital-style bed per month for a single patient.

Questions about the program and its oversight have persisted for months. Industry officials say that it is relatively easy to win a provider billing number from Medicare and that supervision has been lacking. Companies continued to bill the government a total of $400,000 even after staff members at the Health and Human Services Department's inspector general visited their offices and determined that the businesses did not exist, according to a March report.

Federal lawmakers, including Senate Finance Committee Chairman Max Baucus (D-Mont.), have called on health officials to step up oversight. The Senate permanent subcommittee on investigations recently examined underpayment or nonpayment of federal taxes by physicians and suppliers of medical equipment even as they received Medicare funding.

"Federal health dollars are just too scarce to lose to fraud and abuse in Medicare," Baucus said in a statement.

The criminal charges unsealed yesterday affect a disparate group of people. Some, prosecutors suggest, are most likely dupes paid to put their names on front companies. Others are professionals with intricate knowledge of the health-care industry. They often work with doctors, pharmacies and patients who are complicit in the schemes. But sometimes, authorities say, patient numbers or prescription pads are stolen and then used by equipment-company operators.

Eduardo Moreno, who owned several medical-equipment firms, passed along bills of more than $1.9 million in unnecessary services, including "powered pressure-reducing air mattresses" for $868.85 apiece, according to court papers. His 2004 Rolls Royce was seized last month.

A couple, Barbara Diaz and Jose Prieto, charged Medicare $900,000 for anesthetics and other drugs infused into patients' bloodstreams when the patients did not need the medicine, prosecutors say.

The investigation also has ensnared middlemen. Benjamin R. Metsch, a Florida lawyer and former advance man for Bill Clinton's second presidential campaign, pleaded guilty to a conspiracy charge this year. Metsch admitted to creating false sale documents for straw buyers to help conceal the owners of the health-care businesses.

Staff researcher Richard Drezen contributed to this report.

© 2007 The Washington Post Company