Nursing Homes, Social Security and Medicare Fraud

(8/21/17)-The Medicaid drug rebate program requires the drug companies to pay a rebate to the states if a Medicaid beneficiary uses one of their medications ( Brand name drugs, which are higher priced than generic drugs, require higher rebates.

Mylan NV and its subsidiaries Mylan Inc. and Mylan Specialty along with the Justice Department announced that they had settled their pending case for $465 million. The case involved the fact that Mylan miscalculated the classification of its injection drug EpiPen, for allergic reactions, as a generic drug, and thus the company paid less of a rebate for its usage to the states and their Medicaid programs.

The settlement does not contain an admission or finding of wrongdoing by Mylan.

The Health and Human Services’ (HHS) Office of the Inspector General estimated that Medicaid overpaid $1.27 billion for EpiPen from 2006 to 2016, so Iowa Republican Senator Charles Grassley and Texas democratic Representative Lloyd Doggett are objecting to the settlement.

(6/14/17)- The Department of Health and Human Services Office of the Inspector General said, over a 3-year period of time, improperly Paid health professionals who vouched they earned bomis payments under  a federal initiative designed to shift the health care system from paper records to computer files.

Their audit determined that the claims either lacked proof or failed to meet bonus criteria. The program began in 2009 under the HIPAA Act.

. The audit estimated improper payments totaled 12% of about $6.1 billion Medicare paid out as electronic bonus payments.

(11/9/15)- “Recovery audit contractors” recouped about $2.4 billion in improper Medicare payments from medical professionals and hospitals in 2014, down from $3.7 billion in 2013 before the Centers for Medicare and Medicaid Services cut back on the number of audits and temporarily suspended the program for several months., according to a report from the agency.

The number of audits will be cutback even more because, starting in January, the auditors will be able to review only 0.5% of the claims Medicare pays to each hospital or provider every 45 days, according to an October 28 letter sent to the contractors. That is down from the prior threshold of 2% of claims.

Representatives of the contractors that perform the audits have not made any public statements on the matter. Four of the largest contractors are CGI Group Inc., Performant Corp., Cotiviti Corp., and HMS Holdings Corp.

The new rules limit the volume of records auditors can request from hospitals after claims are paid by Medicare. Those who favor the new rules argue that the audits can disrupt patient care and impose undue paperwork on the providers and hospitals.

(7/29/15)- A recent report from the Government Accountability Office (GAO) that examined Medicare billing through 2013 concluded that thousands of medical providers used questionable addresses and dozens of doctors made claims despite the fact that they had lost their license in one state, but had moved their practice to another state.

Under the terms of the Affordable Care Act, the Centers for Medicare and Medicaid Services (CMS) has been revamping its enrollment system and verifying provider information. This effort has resulted in over 34,000 providers being eliminated from the program. There are about 1.8 million Medicare providers who are eligible to bill the system.

The GAO estimated that about $44.2 billion was improperly paid to medical providers in the fiscal year that ended September 30, 2015.

(5/4/15)- A four-year investigation by the U.S. attorney’s general office for the Middle District of Florida has resulted in a $7.5 million settlement by nine hospitals in the Jacksonville, Fla., area and a local ambulance company of civil allegations that they defrauded Medicare with ambulance rides that were medically unnecessary.

A.Lee Bentley III, the U.S. attorney, said his office uncovered evidence that able-bodied patients who did not need immediate emergency transportation were being ferried in ambulances. The hospitals did not benefit directly from the ambulance rides, but they did benefit indirectly by speeding up their admissions and discharges, a key contributor to hospital profitability dubbed “throughput”.

Able-bodied patients should take a taxi, or be driven by relatives or friends, while wheelchair patients can use access services that are cheaper than ambulance rides.

(7/10/14)- A recent report, by the Department of Health and Human Services’ Office of Inspector General showed that more than 1,000 medical laboratories showed five or more measures of questionable billing, during the year 2010, which was the latest year for which the data was available. That includes metrics significantly higher-than average billing, using ineligible physician identification numbers and administering duplicate tests, among other items.

In fiscal 2013, the rate of improper payments in Medicare was 10.1%, representing $36 billion in improper payments, according to the Centers for Medicare and Medicaid Services. That is up from 8.5%, or4 $29.6 billion, the previous year.

Medicare paid about $8.2 billion in 2010 for lab services in Part B of the program which covers doctor visits and clinician services. While Medicare enrollment in Part B rose 10% from 2005 to 2010, spending for lab services rose 29%.

(3/10/14)- President Obama’s administration officials unveiled new Medicare regulations that hopefully will remove illegal immigrants from the Medicare rolls and explicitly require citizenship or lawful presence in the United States as  a condition to receiving Medicare.

Under a 1996 law, the administration said, immigrants are generally ineligible to receive federal benefits if they are “unlawfully in the United States.”

In Mr. Obama’s budget he proposed substantial cuts to nursing homes and home health agencies. The administration said it hoped to save at least $67 million over 5 years, mainly by requiring private Medicare Advantage plans and prescription drug plans to deny or revoke coverage for people who are in the country illegally.

Medicare would make a single “bundled payment” for post-hospital care of a patient lasting two or three months to nursing homes and home health agencies to coordinate care of discharged patients.

(6/5/13)- A federal judge vacated a 33-year-old injunction that had barred the government from releasing Medicare information on individual doctors to the public. Dow Jones & Co., The Wall Street Journal's parent company, challenged the injunction in 2011 after the Journal published a series of articles showing how the information could be used to expose fraud and abuse in the $549 billion health-care program for the elderly and disabled.

Please see our item dated 4/13/11 for what Congress attempted to do to get around this injunction.

In lifting the injunction, U.S. District Judge Marcia Morales Howard cited case law that had narrowed the scope of the Privacy Act over the ensuing three decades and no longer supported such a broad injunction.

The AMA has not decided if it would appeal Judge Morales' ruling. The Department of Health and Human Services, which oversees Medicare, could still decide to deny requests on a case-by-case basis since anyone seeking the information will have to file Freedom of Information requests.

(11/14/12)- A report issued by the staff of Daniel R. Levinson, inspector general of the Health and Human Services Department concluded that nursing homes overcharge Medicare for so-called skilled nursing services, adding $1.5 billion in annual costs.

About one-fourth of Medicare bills from skilled nursing home facilities over billed, according to the report. Most of the incorrect billing came from so-called up-coding, or falsifying the type of treatment the beneficiary received in the facility. In many of the other cases services were performed that were entirely unnecessary or even inappropriate.

There are about 15,000 skilled nursing facilities in this country, for which the government paid $32.2 billion in the fiscal year that ended September 30, 2012. The researchers for the study used data from 2009 to arrive at their conclusions.

As of July, the government had recovered $3.7 billion in fraudulently obtained health-care money over 3 years.

Depending on the type of services administered to a skilled-nursing care patient, the government paid between $214 and $623 per Medicare patient per day in 2009.

(6/20/11)- In a hearing before a Congressional panel, Patrick P. O'Carroll Jr., the inspector general for Social Security estimated that the Social Security Administration made $6.5 billion in overpayments to people not entitled to receive them in 2009. About 10% of the payments made by the agency's Supplemental Security Income (SSI) program were improper.

Most of the payments went to people who did not report all their assets. Error rates were much smaller for retirement, survivor and disability payments, which make up the bulk of Social Security disbursements, according to Mr. O'Carroll.

(4/13/11)- Senators Ron Wyden (D., Ore) and Charles Grassley (R., Iowa) introduced legislation aimed at overturning the 1979 court injunction that bars the government from revealing information from the Medicare database. Both senators serve on the Senate Finance Committee, which oversees Medicare and Medicaid.

The Medicare Data Access for Transparency and Accountability Act, or DATA Act is aimed at allowing access to Medicare doctor and medical professionals billings for the purpose of determining acts of fraud. In issuing the injunction in 1979, the judge ruled that physicians' privacy overrode the public's in finding out how tax dollars were being spent by the government.

He relied on a privacy provision in the Freedom of Information Act (FOIA). The new bill explicitly exempts physician Medicare billing data from that FOIA provision. Please see our item dated 3/10/11 below.

(3/10/11)- Senator Charles Grassley (Rep.-Io.) and Senator Ron Wyden (Dem.-Ore.) have drafted separate legislation aimed at overturning the 1979 court injunction that bars the public from finding out how much individual physicians earn from Medicare. For additional information on this topic see our item dated 2/5/11 below.

That injunction stemmed from a suit filed by the Florida Medical Association, and the American Medical Association, the doctor's trade group against President Jimmy Carter who sought to have published a list of all annual Medicare medical reimbursements to physicians and medical professionals. That ruling remains in effect today.

Senator Grassley said his bill was aimed at changing the court decision. "The intention is to make government transparent, because with transparency there comes accountability."

Senator Wyden said he had drafted his legislation "designed to make (the Medicare) database public." He said he planned to talk to Senator Grassley to see if they could join forces in getting a bipartisan bill passed by Congress to remedy this situation.

(2/5/11)- There has been a lot of publicity about trying to uncover Medicare fraud, but were you aware of the fact that there is a Medicare database that is kept by the government, but it can not be searched by those seeking to uncover Medicare fraud?

Dow Jones & Co., the publishers of the Wall St Journal which in turn is owned by Rupert Murdoch's News Corp., filed a suit in the U.S. District Court for the Middle District of Florida seeking to overturn a decades long court order barring public access to this database.

The plaintiffs claim that the 1979 injunction is hampering its efforts to detect fraud by Medicare doctors who under the ruling are free from public scrutiny.

The American Medical Association has withstood at least 2 cases that sought to overturn the injunction. In one case, the U.S. Court of Appeals for the District of Columbia ruled that under the Freedom of Information Act, physicians' privacy interest outweighed the public interest in finding out how much doctors were being paid by their Medicare patients.

"It's time to overturn an injunction that, for decades, has allowed some doctors to defraud Medicare free from public scrutiny,: was the comment from Dow Jones general counsel Mark Jackson.

(11/26/09)- Excerpts from a new federal report, obtained by the Associated Press, show a dramatic increase in improper payments in the $440 billion Medicare program. The report claimed that the government paid more than $47 billion, yes that is billion, in questionable Medicare claims. This was almost a threefold increase over last year's level.

Much of the increase is attributed to a change in the Health and Human Services Department's methodology that imposes stricter documentation requirements and includes more improper payments, including medical treatment showing little relation to a patient's condition.

President Obama is expected to announce new initiatives to help crack down on Medicare fraud, including a government-wide Web site aimed at providing a fuller account of health-care spending and improper payments made by various agencies.

(8/23/08)- A recent report from the Office of Inspector General for the Department of Health and Human Services concluded that Medicare fraud is much more widespread than previous reports from Medicare had indicated.

The report scrutinized a program known as Comprehensive Error Rate Testing, or CERT, that audits a sample of Medicare claims submitted by sellers of durable medical equipment. CERT randomly reviews the medical records and other supporting documents to determine if Medicare has made correct payments.

AdvanceMed Corp., a subsidiary of Computer Science Corp., does the auditing for Medicare. The agency had previously reported to Congress that, for fiscal year 2006, AdvanceMed's investigators had found that 7.5% of claims paid by Medicare were not supported by appropriate documentation. The inspector general's review indicated that the actual error rate was closer to 31.5%.

The report alleges that AdvanceMed's auditors were told by Medicare officials to ignore government policies that would have accurately measured fraud. For example, auditors were told not to compare invoices from salespeople against doctors' records, as required by law, to make sure that medical equipment went to actual patients.

"This is outrageous," said Senator Charles E. Grassley, the top ranking Republican on the Senate Finance Committee, which oversees Medicare and Medicaid. " If heads don't roll, you can't change the culture of this organization".

(2/6/00)-The Justice Department's San Francisco office and the Inspector General of the Department of Health and Human Services announced that they had secured the largest settlement against a nursing home for fraud in a nursing home case. Beverly Enterprises Inc. the parent company of Beverly Healthcare, the nation's largest nursing home chain has agreed to pay a civil settlement fine of $170 million and to relinquish control of 10 of their homes in California. Their subsidiary, Beverly-California, will pay a $5 million criminal fine settlement.

Under the terms of the settlement Beverly will pay $25 million within 30 days to the government. The balance of $145 million will be deducted from Medicare reimbursements to the chain over an 8-year period of time. The settlement also included a corporate integrity agreement that provides for a reporting and compliance program to be overseen by the company and the Office of Inspector General.

The government's case alleged that Beverly had falsely inflated the number of hours nurses spent caring for Medicare patients at the 10 California homes and elsewhere. The government further alleged that the chain had submitted false nurse sign-in sheets and other fabricated documents to support the bills.

Beverly-California will plead criminally guilty to one count of fraud through an inter-state carrier in connection with a cost report relating to one facility, and 10 counts of making false statements to Medicare. The charges arose for the period of time from 1992 to 1998.

We urge our viewers to report to Medicare fraud to the proper authorities when they become aware of it. Cutting back on fraud not only saves the taxpayers money, but will mean a monetary reward for the "whistle blower" who helps bring the fraud to the government's attention, and there is a recovery of $100 or more. The fraud hotline telephone number is 1-800-HHS-TIPS or 1-800-447-8477.


By Allan Rubin
updated August 21, 2017

To e-mail: or

Return to Home