Massive Fraud Makes Medicare A Lousy Model

In what must be considered a monumental understatement, Attorney General Eric H. Holder told CBS News' "60 Minutes" that more oversight of Medicare funds is needed. I'll say, considering what we have learned about the scope and ease of stealing billions of dollars from the American taxpayer by means of fraudulent claims for care that never happened. To Mr. Holder's credit, his agency has been frantically cracking down on this thievery for some time now, resulting in the indictments of dozens of criminals in Miami, Detroit, Los Angeles and elsewhere. Still, this is merely the tip of what turns out to be a gargantuan iceberg.

The problems of health care - and the prospects for some effective reform of the systems we have to pay for it - are front and center as Washington's legislative geniuses work their magic behind closed doors, crafting "reform" they say will provide health insurance for those who lack it while somehow reducing the skyrocketing costs of providing it. However, what's happening in the Medicare rip-off is not a comforting augury of what lies ahead if government manages the entire medical bureaucracy. After all, Medicare is a government-run insurance program begun in 1965 that pays for the health care needs of 46 million elderly and disabled Americans. According to the "60 Minutes" story Sunday, it also is a honey pot for enterprising criminals who steal tens of billions from the system every year.

As one might expect, organized crime has moved enthusiastically into this business, which is safer and more profitable than any number of other criminal enterprises, such as prostitution, drug smuggling and gambling rings. But, as a busted Medicare scammer identified only as "Tony" told CBS correspondent Steve Kroft, it requires no great criminal genius to steal millions from Medicare. He said it's "like taking candy from a baby." In his case, he set up a number of health care businesses in an office building, obtained ID numbers of doctors and patients and sent bills to Medicare for expensive medical devices, such as artificial limbs and fancy wheelchairs. He says he made $20,000 to $40,000 a week, money sent directly to his bank account from the government.

The ease of this larceny has, according to Justice Department prosecutor Kirk Ogrosky, made the Medicare fraud businesses a "way bigger" criminal industry in South Florida than the drug businesses. It's so easy to steal in this way that even slugs that might have been in the very lower rungs of the crime business have discovered that instead of, say, stealing cars, they might as well help themselves to millions of dollars by defrauding Medicare. No more effort, much more profit.

As arrests mount, we discover more evidence that for some immigrants, America is indeed the Promised Land, where the streets are paved with gold - for enterprising criminals. One hot spot is Los Angeles, where Russian, Armenian and Nigerian gangs have been busted. In Miami, thousands of tiny pharmacies and health clinics, many operated by Latino immigrants, are set up in seedy strip malls for the sole purpose of ripping off Medicare. And, unlike, say, Pentagon contractors, they neither have to pay taxes on their profits nor make hefty contributions to politicians in return for juicy government contracts.

It's encouraging that attention is now being paid to Medicare fraud and that the Justice Department is committed to providing the resources to better fight these criminals. But it's discouraging to realize that despite accelerated law enforcement and the anticipated recovery of about $4 billion this year from health care criminals of all kinds (including corrupt doctors), this would represent a mere 5 percent of yearly health care fraud costs in this country.

We're told that if fraud and waste in Medicare (and Medicaid) could be eliminated, that would in itself pay for the costs of health care insurance for all Americans. At this point, though, it's hard to believe that kind of miracle will take place.

Ron Smith can be heard weekdays, 3 p.m. to 6 p.m., on 1090 WBAL-AM and WBAL.com. His column appears Fridays in The Baltimore Sun. His e-mail is [e-mail].