A nondescript office in a drab constructing in a quiet suburb of Miami appeared like a good place for a medical supply company to lease office space.
But this company rented space two floors above the US Department of Health and Human Services’ regional investigative unit office. It also tried to charge Medicare over $500,000 for various medical devices – resembling braces and wheelchairs – for patients that didn’t exist.
During a routine inspection by the HHS Office of Inspector General, which investigates Medicare and Medicaid fraud, special agents in Florida noticed that a local business had recently modified hands and had a different address in its constructing. But this location had no actual employees. It was nothing greater than a mail drop, the physical location of a front corporation designed to seem legit on paper, said Omar Pérez Aybar, special agent accountable for Florida.
A deeper have a look at the company’s billing practices revealed what gave the impression to be Medicare fraud, Pérez Aybar said.
When agents questioned the recent owner, he admitted that his name had been utilized in company documents to disguise the identity of the real owners. As the investigation continues to be ongoing and no arrests have been made, agents have provided few details identifying the operation. But Pérez Aybar said it closed last yr before Medicare lost any money.
Deception thrives
That is just one among hundreds of examples of Medicare scams flourishing—not only in South Florida, but nationwide.
In accordance with estimates by the National Health Care Anti-Fraud Association, taxpayers lose greater than $100 billion annually resulting from Medicare and Medicaid program fraud.
“It’s probably a conservative number,” said Pérez Aybar. “When we predict of all lines of business in Medicare and Medicaid, that is probably a drop in the bucket.”
Omar Pérez Aybar, Responsible Special Agent/Office of Inspector General
CNBC
The scams run the gamut: billing for unapproved Covid tests, fake bills for wheelchairs, braces and other medical equipment, genetic testing scams, home health care bills and many other schemes. Investigators say scammers have gotten more brazen in recent times, with Washington quickly pouring trillions of dollars into Covid-19 relief funds and other aid in response to the pandemic.
The spread of crime has put a strain on the inspector general, who has just 450 agents nationwide. The stakes are staggering: Medicare spends about $901 billion a yr on its 65 million beneficiaries, while Medicaid spends $734 billion providing medical care to greater than 85 million poor and disabled Americans every year, in keeping with the Centers for Medicare and Medicaid Services, which falls under the HHS. The inspector general describes fraud as widespread and inventive, routinely snaring full-time criminals in addition to legitimate doctors and health professionals, in keeping with his annual reports.
Medicare rip-off is ‘easy’
“It is so easy. It’s unbelievable,” said one Miami resident who admitted he made his living robbing Medicare.
This convicted felon says Medicare and Medicaid fraud is “very easy” to avoid.
CNBC
“You will be surprised. They are going to do anything for money,” he said, requesting anonymity for fear of retribution from individuals with whom he collaborated in the criminal underworld. “All the time been like that. And other people move on – they get caught, they get out and they do all of it yet again.”
In accordance with agents working on his case, he was arrested and charged with running an illegal pill business. This system involved many players who were high and received a share of the Medicare scam, special agents said.
Describing the scheme, the scammer said he recruited patients to get a prescription from a doctor, which was then filled at a pharmacy and paid for by Medicare. He would then remove the label and “wash” the bottle to make it appear to be recent before selling the pills to a wholesaler who resold them back to that pharmacy or one other that was in the deal, he said. The identical pills will be sold and resold over and yet again to different fake patients, billing Medicare every time.
It was a lucrative plan.
“I had houses, I had cars”
“I used to be little known, no person knew about me. I had all the pieces. I had houses, cars, watches,” he said, adding that he usually made tens of millions from healthcare fraud for greater than a decade.
Eventually, nonetheless, someone who knew him was caught and handed him over to law enforcement in exchange for more lenient treatment, he said. He eventually pleaded guilty to healthcare fraud and served three years in prison.
Even when the cheaters are caught, the reward may outweigh the risk.
“I do not think the government can sustain,” he said. “Persons are moving on. They will not stop.”
Pérez Aybar said the inspector general was understaffed to handle the countless variety of cases. In accordance with data compiled by the inspector general’s office in fiscal yr 2021, about 2 cents of each $100 spent by HHS went to oversight and enforcement.
Fraud is something Medicare and Medicaid take very seriously, Dara Corrigan, associate administrator of the Centers for Medicare and Medicaid Services, said in a statement to CNBC.
“We’re continuously working to guard taxpayer money and strengthen the integrity of the program in our operations by identifying vulnerabilities in the system,” she said. “CMS uses all the tools at our disposal to scale back the risk of Medicare and Medicaid fraud and abuse, and works with law enforcement to discover and investigate fraud and abuse.”
Buried Treasure
In one other scheme, inspectors general in 2021 found $2.5 million in money wrapped in plastic tucked in PVC pipes beneath Jesus Garces’ home. He’s serving a 12.5-year sentence after pleading guilty to at least one count of conspiracy to commit healthcare fraud and bank fraud earlier this yr. Garces ran the fraudulent Medicare company from the mall, Pérez Aybar said. A government informant recorded Garces on a hidden camera smiling as he counted the money he stole from Medicare, in keeping with investigators and a copy of the video obtained by CNBC.
Federal agents found tens of millions of dollars full of PVC pipes under the home of a man currently in prison for Medicare fraud.
OIG | FBI
“We were shocked to seek out on the market was this amount of money,” said Pérez Aybar. “I believe a lot of us didn’t necessarily see that much, but that is the way it was packaged, vacuum sealed in bricks, pushed back into PVC pipes. And that actually gave us a sign of how cheeky it’s [durable medical equipment] fraud is.”
Garces “thought he was a CEO when actually he was just a con man,” said Pérez Aybar.
Ricardo Carcas, the special agent who oversaw the Garces case, explained how these schemes typically work.
“Once I are available in, I see that that is the coating we normally see on this durable medical equipment scam,” Carcas said, pointing to a storefront in the Miami mall where Garces arrange his fraudulent medical device business. “It was almost empty – it had only a desk (and) a shelf with possibly three braces. And it was closed during business hours.”
To prove it was a scam, Carcas said it had identified referring physicians who allegedly signed off on patients who billed their medical equipment to Medicare. None of the patients saw these doctors.
Whack-a-mole
“They bought a list of patient information,” said Pérez Aybar. “They’ve doctors that they either use under the program or pay bribes or they can purchase a list of doctors information and you then start making claims. Once the money is in the checking account, they’ve the money launderers and mules they paid to exit and just take the money out of those accounts.”
Pérez Aybar described the fight against cheaters as “almost like a mole whack game where you hit one and the other pops out.”
On the ground, agents fighting healthcare fraud see a never-ending scenario.
Take, for example, the Miami Merchandise Mart.
In accordance with investigators, the sprawling, aging mall is home to low-cost wholesalers and quite a few medical supply firms set as much as defraud the government.
When CNBC visited the mall in December, there have been many storefronts that were mostly empty except for the names of medical supply firms that adorned the entrances.
Pérez Aybar described what agents had found at the mall and elsewhere during previous investigations.
“In accordance with Medicare regulations, you could own a business, especially on this case of durable medical equipment. And so normally – after we leave, what I see is just a little crust. It’s an office that will be 12 by 15 meters wide,” he said.
“Possibly there’s a desk, there’s a little bit of a curiosity with one or two several types of braces. They are going to have the textbooks that Medicare requires – with which they’re familiar. And there is normally some form of partition if we’re talking about a brace, say, because the patient should come and slot in.”
Medicare storefronts
Along a corridor in the CNBC mall, she found a young woman sitting alone at a desk in a small glass-fronted store called United Med Supply Market Inc. She said it was a medical supply company and gave us a business card with the owner’s phone number. When the reporter called the number a jiffy later, the phone rang at the woman’s desk.
A couple of weeks later, the company’s president, Antonio Lantigua, was contacted by phone. When asked why the equipment was not visible at the site, he said that they keep it in different places.
“We now have equipment elsewhere. We send documents to the company; the company ships equipment to patients,” said Lantigua.
Pressed for more information, he said, “I do not know why you are calling me,” and hung up.
Government records show that the United Med Supply Market charged Medicare greater than $2 million, mostly for wound care.
Following an investigation by the inspector general, the company was suspended from billing for Medicare payments.
Ali Ghraoui, CEO of the Miami Merchandise Mart, told CNBC in a February interview that United Medical has vacated the space and is working to enhance the mall’s image.
Still, as Pérez Aybar points out, there’s all the time one other fraudulent operation able to idiot the system.
“South Florida, little doubt, is ground zero for healthcare fraud, but that is only one state. There are 49 others and territories which have these kinds of programs,” he said.