Scam Artists Beware! Health Care Reform Makes Medicare Fraud Prevention/Investigation a National Priority

Scam Artists Beware! Health Care Reform Makes Medicare Fraud Prevention/Investigation a National Priority

With the recent passage of health care reform, new scams are popping up. In some cases, scam artists call beneficiaries asking for their Medicare information, they say, in order to get them their Part D $250 rebate. Others tell beneficiaries that they must sign up for their ‘new’ Medicare card in order to continue getting benefits under health care reform. Neither of these statements are true, yet they are among some of the schemes used to obtain beneficiaries’ Medicare numbers, sell their identities and pocket thousands, sometimes millions of Medicare dollars.

Yet, thanks to making health care fraud prevention a priority, our Administration, the Secretary of Health and Human Services (HHS), our Attorney General, the Office of Inspector General (OIG), the many Senior Medicare Patrol (SMP) projects throughout the nation, and the beneficiary population themselves are all cracking down on fraud. In a recent press conference on health care fraud, HHS Secretary, Kathleen Sebelius, stated that now is actually one of the worst times to engage in health care fraud as the newly passed health care reforms is one of the strongest pieces of anti-fraud legislation in history. With this new legislation:

  1. the government can more thoroughly check providers who want to participate in Medicare;
  2. law enforcement agents have easier, faster and more efficient access to claims data for identifying fraudulent billing patterns quickly;
  3. penalties for fraud have increased; and
  4. more resources are available for ‘on-the-ground’ support, specifically $600 million over the next 10 years. And these resources are well worth the investment, as Attorney General Eric Holder pointed out that for every $1 invested into anti-fraud efforts, $4 are returned to our U.S. Treasury.

Also, the Health Care Fraud and Abuse Control Program 2009 Annual Report recently submitted to Congress, outlines last year’s unprecedented successes in fraud prevention and enforcement efforts. In summary, last year:

  • Over $2.5 billion were deposited back into the Medicare Trust Fund (29% more than the previous year);
  • The federal government won or negotiated over $1.6 billion in judgments and settlements;
  • U.S. attorneys offices opened 1,014 new criminal health care fraud investigations with 1,786 potential defendants in 2009; and
  • There were over 600 convictions and 250 imprisonments with terms ranging from 2 months to 30 years.

What’s happening in California: Spotlight on the Office of Inspector General (OIG)

While California is a known Medicare fraud ‘hot spot,’ the state’s local branch of the Office of Inspector General (OIG), our local Senior Medicare Patrol (SMP) project and a growing number of educated beneficiaries are also saying ‘no’ to fraud. Similar to the national successes outlined above, these groups have aligned their efforts to create one of the strongest local teams for fraud investigation and prevention. While they address various kinds of fraud (such as medical clinic fraud, provider/physician fraud, and durable medical equipment fraud), medical identity theft is at the heart of their focus as it is often “the key component of most health care fraud cases” said Glenn Ferry, Special Agent in Charge (SAC) with the OIG. Many times beneficiaries may unknowingly give away their Medicare number which then ends up being sold from one scam artist to another. “The problem is rampant,” he said, “and beneficiaries aren’t the only victims of identity theft; providers and physicians are too.” The OIG has had many cases where a false, fraudulent clinic has been opened under an unknowing provider’s name. When the OIG investigative agents contact the provider, s/he has no idea someone else has opened a clinic and billed Medicare under their information.

OIG investigative agents are out on the street actively getting leads on such identity theft cases. They’re finding the links between the criminal rings of clinics, providers, and ‘cappers.’ Cappers are the ones who sell beneficiary and/or provider information. Often they make contact with medical office staff, such as nurses, medical assistants, or providers themselves, and offer to give them a kickback – some sort of bribe or cash benefit – in exchange for beneficiary or provider Medicare numbers. These numbers are then sold to other crooks, who then sell them to other fraud rings and so on. The resulting fraudulent billing of Medicare-covered benefits and services can exponentially escalate. Crooks also often approach beneficiaries directly on street corners, in parking lots, and/or via phone calls offering free shoes, lunch, blood tests or even up to $200 cash in exchange for their Medicare numbers.

The OIG develops their leads through their partnership with the Centers for Medicare and Medicaid Services (CMS) and the local SMP projects, and through seniors that call directly into their OIG hotline. Sometimes they even go out for personal interviews with these beneficiaries.

Medicare Fraud Strike Force Teams and ‘HEAT’

In addition, the OIG is part of L.A.’s Medicare Fraud Strike Force. This is a multi-agency team established in March 2008 of Federal prosecutors and Special Agents from 3 agencies – Health and Human Services/Office of Inspector General (HHS/OIG), Federal Bureau of Investigations (FBI) and the California Department of Justice. It’s designed to combat Medicare fraud through the use of Medicare data analysis techniques (such as “data mining,” where, with their increased access to billing data, they’re able to identify spike patterns and develop targets much more quickly than in the past) and an increased focus on community policing (which involves the partnership with the SMPs, CMS and beneficiaries mentioned above). The L.A. Strike Force team is one of 7 such teams established in ‘fraud hot spot’ cities nationwide. The other cities include: Miami, Detroit, Houston, Brooklyn, Tampa, and Baton Rouge. These fast-paced, multi-agency teams of federal prosecutors and agents have been highly successful in developing targets and making aggressive, effective hits on their area’s worst offenders.

The Medicare Fraud Strike Force teams and their operations are now also a part of the larger Health Care Fraud Prevention & Enforcement Action Team (HEAT) , a joint initiative announced in May 2009 between the Department of Justice (DOJ) and Health and Human Services (HHS) to focus their combined efforts to reduce and prevent Medicare and Medicaid fraud through enhanced cooperation. The HEAT taskforce is made up of top-level law enforcement agents, prosecutors and staff from both Departments and their operating divisions. The creation of HEAT again reflects that addressing Medicare fraud has become a major government priority. As HHS Secretary Sebelius stated in a press release late last year, “Medicare is a sacred promise to America’s seniors and we will do everything we can to protect it. The announcement [of expanding HEAT through our Strike Force teams] is a significant step towards securing Medicare for seniors today and generations to come.”

In addition, the website has developed out of this multi-agency collaboration. It has information on: how to protect one’s self from fraud; how to detect and report fraud; highlights on fraud news and ways to look up state-specific fraud news; HEAT taskforce successes (see a listing of current California cases/prosecutions now in the news); and several consumer materials, including a new brochure on medical identity theft (also available in Spanish, Tagalog and Vietnamese).

Medicare Beneficiaries as Our New ‘Undercover Agents’

While new fraud schemes are arising from the recent health care reform legislation, fraud prevention and investigation efforts have never been stronger and are only continuing to strengthen. Crooks are finding themselves in a new, more challenging ‘landscape.’ They have long relied on a vulnerable, uninformed Medicare population for their success, yet, thanks to the education and outreach efforts of the SMP projects, their staff and volunteers, and the increased local and national media attention Strike Force teams and HEAT are receiving for their successful prosecutions of major fraud players, many beneficiaries are informed. They know what’s going in terms of fraud in their communities. They know what’s wrong or suspicious fraudulent behavior and willingly report it. SAC Ferry from the Los Angeles OIG Office echoed Secretary Kathleen Sebelius’ recent comment that Medicare beneficiaries themselves have become some of our most “important undercover agents.”


If you work with Medicare beneficiaries and or are a beneficiary yourself and would like more information, training and/or education on these issues, contact your local Senior Medicare Patrol (SMP) project. Our California SMP offers onsite staff and volunteer trainings, as well as public educational presentations to groups of beneficiaries on Medicare fraud, how to detect and report it and how to protect oneself from fraud. Contact our SMP Project Director, Julie Schoen, for information at jschoen(at) or 714-560-0309.
Below is also a list of helpful resources:

  • Medicare Fraud – our website section providing an overview on Medicare fraud, how to stop and report fraud, information on our SMP project, and a list of additional resources and websites.
  • Medical Identity Theft brochure (pdf)– Also available in Spanish, Tagalog, and Vietnamese.
  • – a collaborative website from the U.S. Department of Health and Human Services and the Department of Justice with consumer information on Medicare fraud; highlights of Medicare fraud in the news (state specific and nationwide); consumer educational materials; and government press releases on top fraud cases.
Karen Fletcher
Our blogger Karen J. Fletcher is CHA's publications consultant. She provides technical expertise, writing and research on Medicare, health disparities and other health care issues. With a Masters in Public Health from UC Berkeley, she serves in health advocacy as a trainer and consultant. See her current articles.

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