A nondescript suite of offices in a bland constructing tucked in a quiet Miami suburb seemed nearly as good a spot as any for a medical supply company to rent some office space.
But this company rented space two floors above a regional office of the U.S. Department of Health and Human Services’ criminal investigative unit. It also tried billing Medicare greater than $500,000 for various medical equipment — akin to braces, orthotics and wheelchairs — for patients who didn’t exist.
During a routine check by HHS’ Office of Inspector General, which investigates Medicare and Medicaid fraud, special agents in Florida noticed that a neighborhood company had recently modified owners and had one other address of their constructing. But that location did not have any actual employees. It was not more than a mail drop, a physical location of a shell corporation designed to make it look legitimate on paper, said Omar Pérez Aybar, special agent in charge for Florida.
A deeper take a look at the corporate’s billing practices revealed what seemed to be Medicare fraud, Pérez Aybar said.
When agents grilled the brand new owner, he admitted his name was used on corporate business records to hide the identity of the actual owners. Since the investigation remains to be ongoing and no arrests have been made, agents provided few details identifying the operation. But Pérez Aybar said it was shuttered last yr before Medicare lost any money.
Fraud flourishes
That is just one in every of 1000’s of examples of how Medicare fraud is flourishing — not only in south Florida, but across the country.
Taxpayers are losing greater than $100 billion a yr to Medicare and Medicaid fraud, in accordance with estimates from the National Health Care Anti-Fraud Association.
“That is probably a conservative number,” Pérez Aybar said. “After we take into consideration all lines of business in Medicare and Medicaid, that is probably a drop within the bucket.”
Omar Pérez Aybar, Special Agent In Charge / Office of Inspector General
CNBC
The fraud runs the gamut: billing for unapproved Covid tests, phony billing for wheelchairs, braces and other medical equipment, genetic testing fraud, home health-care billing and a bunch of other schemes. Investigators say fraudsters have gotten more brazen lately — as Washington swiftly doled out trillions of dollars in Covid-19 relief funds and other aid in response to the pandemic.
The proliferation of crime has taxed the inspector general, which has just 450 agents across the country. The quantity at stake is staggering: Medicare spends about $901 billion a yr on its 65 million beneficiaries, while Medicaid spends $734 billion providing medical coverage to greater than 85 million poor and disabled Americans every yr, in accordance with the Centers for Medicare and Medicaid Services, which falls under HHS. The inspector general describes the fraud as prevalent and inventive, routinely ensnaring full-time criminals in addition to legitimate doctors and health-care professionals gone bad, in accordance with its annual reports.
Ripping off Medicare is ‘easy’
“It’s just really easy. It’s unbelievable,” said one Miami man, who admitted that he used to make a living by stealing from Medicare.
This convicted felon says Medicare and Medicaid fraud is “very easy” to get away with.
CNBC
“You will be surprised. For money, they’ll do anything,” he said, asking to not be identified for fear of retribution by people he worked with within the criminal underworld. “It is often been like that. And folks carry on — they get caught, they get out, they usually’ll do all of it all over again.”
He was arrested and charged with running an illegal pill business, in accordance with agents who worked his case. The scheme involved multiple players who were all on the take and got a cut of the windfall from defrauding Medicare, the special agents said.
Describing the scheme, the fraudster said he recruited patients to get a prescription from a physician that was then filled at a pharmacy and paid for by Medicare. He would then remove the label and “wash” the bottle to make it look recent before reselling the pills to a wholesaler, which might sell them back to that pharmacy or one other one which was in on the deal, he said. The identical pills may very well be sold and resold multiple times with different phony patients, billing Medicare every time.
It was a lucrative scheme.
‘I had houses, I had cars’
“I used to be low-profile, no one knew about me. I had every thing. I had houses, I had cars, I had watches,” he said, adding that he routinely raked in thousands and thousands from health-care fraud for greater than a decade.
Eventually, though, someone who knew him was caught and turned him over to law enforcement in exchange for more lenient treatment, he said. He ended up pleading guilty to health care-related fraud and served three years in prison.
Even when the fraudsters get caught — the reward may outweigh the chance.
“I do not think the federal government can sustain,” he said. “People carry on. They are not gonna stop.”
Pérez Aybar said the inspector general is understaffed to handle the never-ending volume of cases. In fiscal yr 2021, about 2 cents of each $100 spent by HHS went to oversight and enforcement, in accordance with figures compiled by the inspector general’s office.
Fraud is something Medicare and Medicaid take very seriously, Dara Corrigan, deputy administrator of the Centers for Medicare and Medicaid Services, said in an announcement to CNBC.
“We repeatedly work to safeguard taxpayer dollars and strengthen program integrity in our operations by identifying vulnerabilities within the system,” she said. “CMS uses every tool we now have to lower the chance of fraud and abuse within the Medicare and Medicaid programs, and collaboratively works with law enforcement to discover and investigate fraud and abuse.”
Buried treasure
In one other scheme, inspector general agents in 2021 found $2.5 million in money wrapped in plastic tucked inside PVC pipes under the house of Jesus Garces. He’s serving a 12½-year sentence after he pleaded guilty that yr to 1 count of conspiracy to commit health-care fraud and wire fraud. Garces was operating a fraudulent Medicare company out of a strip mall, Pérez Aybar said. A government informant recorded Garces on a hidden camera smiling as he counted money he stole from Medicare, in accordance with investigators and a replica of the video obtained by CNBC.
Federal Agents found thousands and thousands of dollars stuffed in PVC pipes under the house of a person now in prison for Medicare fraud.
OIG | FBI
“We were shocked to know that there was this amount of money,” Pérez Aybar said. “I believe loads of us hadn’t necessarily seen that much, nevertheless it was the way it had been packaged, vacuum sealed in bricks, again, stuffed into PVC pipes. And it really was, for us, a sign of how brazen this [durable medical equipment] fraud is.”
Garces “thought he was a CEO, when in truth he was only a crook,” Pérez Aybar said.
Ricardo Carcas, the special agent who oversaw the Garces case, explained how these schemes typically work.
“Once I show up, I see that it’s the shell that we typically see on this durable medical equipment fraud scheme,” Carcas said, pointing to the storefront in a Miami strip mall where Garces arrange his fraudulent medical device company. “It was empty just about — it just had a desk (and) a shelf with possibly three orthotic braces in there. And it was closed during operating hours.”
To prove it was fraudulent, Carcas said he identified the referring doctors who supposedly signed off on patients who were billing their medical equipment to Medicare. Not one of the patients saw those doctors.
Whack-a-mole
“They purchased an inventory of patient information,” Pérez Aybar said. “They’ve doctors that they either are using as a part of the scheme, they’re paying kickbacks, or they might purchase an inventory of doctors’ information as well, and then you definately start submitting the claims. Once the cash gets into the checking account, they’ve money launderers and mules that they paid to exit and just pull the cash out of those accounts.”
Pérez Aybar described battling the fraudsters as “almost just like the game of whack-a-mole, where we hit one and one other pops up.”
On the bottom, agents fighting health-care fraud see a never-ending scenario.
Take the Miami Merchandise Mart, as an illustration.
The sprawling, aging indoor mall houses low-cost, wholesale retailers together with quite a few medical supply businesses set as much as bilk the federal government, in accordance with investigators.
When CNBC visited the mall in December, there have been quite a few storefronts that were largely empty, but for the names of the medical supply corporations that adorned the entrances.
Pérez Aybar described what agents have found on the mall and elsewhere during previous investigations.
“It’s Medicare regulations that you have got to have a business, especially on this case for durable medical equipment. And so normally what — once we exit, what I’ll see is only a little bit of a shell. It’s an office that is possibly 12 by 15 feet wide,” he said.
“There is a desk, perhaps, there is a little bit of a curio with one or two several types of braces. They’ll have the manuals that Medicare requires that — that they are aware of. And typically there’s some kind of partition if to illustrate we’re talking about orthotics since the patient is purported to are available and truly get fitted.”
Medicare storefronts
Along a corridor within the mall, CNBC found a young woman sitting alone at a desk in a small glass-enclosed store called United Med Supply Market Inc. She said it was a medical supply business and gave us the business card with a phone number for the owner. When a reporter called the number just a few minutes later, it rang at the girl’s desk.
Company President Antonio Lantigua was reached by phone several weeks later. When asked why equipment wasn’t visible on site, he said they keep it in other locations.
“We have now equipment somewhere else. We send papers to the corporate; the corporate sends equipment to the patients,” Lantigua said.
When pressed for more information, he said, “I do not know why you’re calling me” and hung up.
Government records show United Med Supply Market billed Medicare for greater than $2 million, mostly for wound care.
Following an investigation by the inspector general, the business was suspended from billing for Medicare payments.
Ali Ghraoui, general manager of the Miami Merchandise Mart, told CNBC in a February interview that United Medical vacated that space and that he was working to enhance the image of the mall.
Still, as Pérez Aybar points out, there’s all the time one other fraudulent operation able to bilk the system.
“South Florida, without query, is the bottom zero for health-care fraud, nevertheless it’s just one state. There are 49 others and territories where some of these schemes are occurring,” he said.