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'Rags to riches' through Medicare fraud

$105 million scam highlights growing problem for feds
By Carrie Johnson
The Washington Post
updated 4:43 a.m. CT, Fri., June. 13, 2008

MIAMI - All it took to bilk the federal government out of $105 million
was a laptop computer.

From her Mediterranean-style townhouse, a high school dropout named
Rita Campos Ramirez orchestrated what prosecutors call the largest
health-care fraud by one person. Over nearly four years, she
electronically submitted more than 140,000 Medicare claims for
unnecessary equipment and services. She used the proceeds to finance
big-ticket purchases, including two condominiums and a Mercedes-Benz.

Health-care experts say the simplicity of Campos Ramirez's scheme
underscores the scope of the growing fraud problem and the need to
devote more resources to theft prevention. Law enforcement authorities
estimate that health-care fraud costs taxpayers more than $60 billion
each year.

A critical aspect of the problem is that Medicare, the health program
for the elderly and the disabled, automatically pays the vast majority
of the bills it receives from companies that possess federally issued
supplier numbers. Computer and audit systems now in place to detect
problems generally focus on overbilling and unorthodox medical
treatment rather than fraud, scholars say.

"You should be able to spot emerging problems quickly and address them
before they do much harm," said Malcolm Sparrow, a Harvard professor
and author of "License to Steal," a book about health-care fraud that
advocates for greater federal vigilance. "It's a miserable pattern, a
cycle of neglect followed by a painful and dramatic intervention."

'Highly vulnerable' to fraud
Fallout from the Campos Ramirez case continues. After pleading guilty
to filing false claims, she has helped authorities win indictments
against more than half a dozen doctors and patients who allegedly
accepted kickbacks for pretending to receive costly HIV drug therapy.
With cooperation from Campos Ramirez, FBI agents this week arrested
three Miami-area men who, the government alleges, financed sham
clinics that billed the government more than $100 million.

Daniel R. Levinson, the inspector general of the Department of Health
and Human Services, has warned repeatedly that the Medicare program is
"highly vulnerable" to fraud, particularly in South Florida, where
schemes center on expensive, infusion-based HIV medications and on
equipment such as wheelchairs, walkers, canes and hospital beds.

Officials from the Centers for Medicare and Medicaid Services (CMS),
which oversees federally funded health programs, say they have stepped
up their efforts to combat fraud over the past year by working closely
with investigators, removing the requisite billing numbers of nearly
900 companies and imposing new standards in high-fraud areas that
would prevent people convicted of felonies from ever receiving a
Medicare number.

Troubling patterns
"There's always more fraud than we have resources to combat," said
Kimberly L. Brandt, director of program integrity at CMS. "We have
done a much better job of realigning our resources to attack this
problem."

Investigators and prosecutors trained their focus on Miami after
noticing two troubling patterns:

HHS investigators discovered that nearly half of 1,581 medical
equipment companies they visited in the Miami area did not comply with
basic Medicare requirements to be open during scheduled hours and to
have a telephone number. The inspector general and the Government
Accountability Office have flagged weak oversight of these kinds of
suppliers for a dozen years, according to congressional testimony.

The South Florida region bills Medicare more than $2 billion each year
for injectable HIV medications. That figure is 22 times as high as the
amount of similar claims in the rest of the country, and is far out of
line with demographic data in a population of 2 million people in
Miami-Dade County, HHS statistics show.
Justice Department officials moved to freeze money in suspicious bank
accounts controlled by medical equipment company owners and they
created a Washington-based strike force to handle the issue. The
strike force, in concert with a small group of U.S. attorney's
offices, has in the past year opened nearly 900 criminal
investigations and convicted 560 defendants in health-care fraud
offenses throughout the country.

'Operation Whack-a-Mole'
Authorities say the strategy is working. They point to a $1.75 billion
drop in Medicare claims in Miami since the operation began a year ago.
But even government officials hope for a more comprehensive solution.

Christopher Dennis, the special agent in charge of the HHS inspector
general's office in Miami, said fraudulent medical equipment companies
appear to have shifted gears since the strike force arrived. After a
crackdown in South Florida, at least some corporate owners moved to
the north, he said. Investigators dubbed one initiative "Operation
Whack-a-Mole," after the carnival game in which a creature pops up in
different places after being hit with a hammer.

"The sheer number of zeroes following the dollar sign is irresistible
to crooks and con men," Attorney General Michael B. Mukasey said last
month during a Miami visit. "For every crooked company we bust, there
is another one to replace it before the ink on the indictment is
dry. . . . The money and the temptation are simply too big."

The strike force recently established a base in Los Angeles, another
area rife with fraud. Prosecutors announced criminal charges last
month against two medical equipment company owners who are accused of
falsely billing Medicare more than $2 million. Plans call for a
similar rollout this fall in Houston, another potential fraud hot
spot.

'Rags to riches'
"You can see how these frauds spread through communities," said Kirk
Ogrosky, who is deputy chief in the Justice Department's fraud section
and helps lead the strike force. "Family members and friends just get
sucked into it. It's really rags to riches on the backs of the
American taxpayer."

Officials who oversee the Medicare program say they are vigilant
despite time pressure and limited resources. Employees review fewer
than 5 percent of the nearly 1 billion claims filed each year. The
vast majority of claims shuttle through computer systems that are
tweaked when authorities notice fraud patterns. This year, CMS is
working to finalize a rule that would prevent convicted felons from
obtaining Medicare billing numbers. At present, that regulation
applies only in a few high-fraud regions.

"It's a big volume," Brandt said. "No matter how hard we try to get
people trained, there's always going to be a margin of error."

10-year sentence
Sentenced to 10 years, Campos Ramirez, 60, may yet reduce her prison
term by helping authorities unwind "the large web of medical clinics,
doctors, nurses, money laundering companies and HIV clinic financiers
who participated in this massive fraud," prosecutors wrote earlier
this year in court papers. Her lawyer did not return calls seeking
comment.

By many accounts, Campos Ramirez was unusually successful. Prosecutors
say that corrupt medical clinic owners anticipate that Medicare will
cover a quarter of their phony claims. But Campos Ramirez persuaded
authorities to cover 60 percent of all the bills she submitted on
behalf of 75 HIV clinics in South Florida, according to court filings.

As the owner of R and I Medical Billing, Campos Ramirez advised clinic
owners how to justify the costly HIV treatments and manipulated
Medicare claims to make sham clinics appear to be legitimate health-
care facilities, prosecutors said. She personally collected more than
$5 million with which she bought property and luxury items. Over the
past year, however, Campos Ramirez has met repeatedly with law
enforcement agents to unravel the scheme, which ran from 2002 to 2006.

At the time of her sentencing in March, Campos Ramirez had amassed a
net worth of $1.5 million, including one of the condominiums where her
son, an employee of her billing company, had lived.

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