CMS launches anti-fraud program

December 11, 2009

The Centers for Medicare & Medicaid Services and the Office of the Inspector General of the federal Department of Health and Human Services are going after perpetrators of medical identity theft as part of a broader effort to reform healthcare.

Key Points

Watch out for Medicare fraud.

That's the message from the Centers for Medicare & Medicaid Services (CMS) and the federal Department of Health and Human Services Office of the Inspector General (OIG). CMS and OIG are highlighting problems associated with medical identity theft and Medicare fraud as part of a broader effort to reform healthcare.

"When criminals steal from Medicare, they are stealing from all of us," said HHS secretary Kathleen Sebelius recently in a prepared statement. "That's why Medicare fraud is one of the Obama administration's top priorities. Preventing medical identity theft is an important part of our work to stop Medicare fraud."

"There has been a lot of activity to rein in fraud and abuse in Medicare," said Marcie Bough, director of federal regulatory affairs for the American Pharmacists Association. "We support these efforts and encourage pharmacists to help make beneficiaries more aware of what they can do to prevent misuse of their personal information. There is always going to be some rogue activity. Durable medical equipment [DME] seems to be the current hot spot."

Fraud and identity theft are bad for beneficiaries and bad for pharmacy suppliers, said CMS spokesperson Peter Ashkenaz.

"It hits hardest when a legitimate supplier puts in a claim that is denied because that Medicare number has already been used as part of a scam somewhere else. We need to educate providers and beneficiaries that those Medicare and Social Security numbers are as valuable as credit card numbers. Criminal groups have already recognized the value of medical identity."

Law-enforcement officials say that organized crime groups are moving into Medicare fraud in South Florida, Detroit, Southern California, Houston, and other areas. Defrauding the federal government offers greater financial reward, less physical danger, and less prison time than drug dealing and other traditional moneymakers.

A Medicare scammer can easily net $25,000 daily while risking 10 years in federal prison if convicted on a single count, noted OIG lead attorney Lewis Morris. A mid-level drug dealer could take weeks to net the same amount while risking life in prison for a single-count conviction.

Earlier this year, HHS and the Department of Justice created a new Health Care Fraud Preventing and Enforcement Action Team (HEAT). The program expands existing DOJ-HHS Medicare Fraud Strike Force teams that focus on data analysis to track fraud. Also new is a requirement that DME suppliers except pharmacies be certified by CMS in order to reduce fraud.

The OIG has also launched an online consumer program, http://www.StopMedicareFraud.gov/, to combat medical identity theft. The website and printed materials offer tips on how to recognize medical identity theft and what to do if it happens. Common scams include offering free services, groceries, transportation, or other items in exchange for Medicare numbers, as well as telephone surveyors or marketers who ask for Medicare numbers as an identifier.

Pharmacies and other service providers can also be targets, Ashkenaz said. Online adjudication catches and stops most prescription scams, but DME and home health payment systems are easier to fool.

Bough noted that CMS guidelines require pharmacies to train all staff on fraud and abuse prevention in Part D and other Medicare programs by the end of 2009.

There are no specific training guidelines, she added, but Part D plans and pharmacies may be required to show evidence that pharmacists and other employees have been given fraud and abuse training in case of audit.