Steal big: Billion-dollar Medicare fraud busted

When it comes to government spending, an old axiom says A billion here, a billion there, and soon you’re talking about real money.  That’s especially true of entitlement spending, which has spun out of control and threatens to put the US into a hole of hundreds of trillions of dollars over the next generation. So when news broke this morning that the feds busted a Medicare fraud ring that had sapped a billion dollars out of the program, the most pressing question was how they noticed it at all.

Interestingly, Jay Weaver’s report for the Miami Herald doesn’t actually answer that question. It does, however, raise questions about just how much fraud it takes to trigger an investigation:

In a region notorious for Medicare fraud, this one is for the record books: a massive scam to steal $1 billion from the taxpayer-funded program was shattered on Friday when federal agents arrested the South Florida ringleader and his partners.

Federal prosecutors said it was the biggest Medicare fraud scheme in the nation’s history, costing the U.S. government program for the elderly and disabled hundreds of millions of dollars in fraudulent payments.

How did it work? The indictment alleges a rather prosaic method of bilking the government: unnecessary medical procedures, kickbacks to recruiters for phantom home-bound patients, using nursing homes as ATMs, and so on. At least according to initial reports, the ringleaders don’t appear to have been innovators — just very bold, and very successful for a very long period of time.

Given that the schemes were “all too familiar,” as Weaver puts it, just how did the schemers make off with “hundreds of millions of dollars” without triggering any red flags? Shouldn’t the government have some oversight into these expenditures to prevent fraud before it hits the nine-figure level? The New York Times’ report on the indictment doesn’t offer any insight into why this got missed until it hit the billion-dollar mark, either. It does note that Esformes got away with it for a staggering fourteen years:

Over a period of 14 years, Mr. Esformes’s facilities would take in Medicare and Medicaid recipients who did not actually qualify for skilled nursing or assisted-living facilities, then bill the government programs for their care, prosecutors charged.

The scheme resulted in what George L. Piro, the special agent in charge of the F.B.I. office in Miami, called “staggering losses in excess of $1 billion.”

The losses were the largest ever seen in a health care fraud prosecution, Justice Department officials said, and represent the most significant in a string of hundreds of Medicare fraud cases totaling $10 billion in the last decade.

Kudos of course to the investigators who finally did take this scheme down, but taxpayers just lost a very large chunk of their collective funds, and likely will never get it back.

A billion here, a billion there