'60 Minutes': Medicare Fraud Raises 'Troubling Questions About Our Government's Ability to Manage a Medical Bureaucracy'

"60 Minutes" did a fabulous exposé Sunday on Medicare fraud that should be required viewing for all people who support a government run healthcare program in this country.

The facts and figures presented by CBS's Steve Kroft were disturbing as were the details concerning how shysters bilk the system for an estimated $60 billion a year. 

As Kroft warned viewers in the segment's teaser, "We caution you that this story may raise your blood pressure, along with some troubling questions about our government's ability to manage a medical bureaucracy" (video embedded below the fold with partial transcript, h/t Marc Sheppard):

STEVE KROFT, CBS: Of all the problems facing the United States right now, none are more important than healthcare. President Obama says rising costs are driving huge federal budget deficits that imperil our future, and that there is enough waste and fraud in the system to pay for health care reform if it was eliminated.

At the center of both issues is Medicare, the government insurance program that provides health care to 46 million elderly and disabled Americans. But it also provides a rich and steady income stream for criminals who are constantly finding new ways to steal a sizable chunk of the half a trillion dollars that are paid out each year in Medicare benefits.

In fact, Medicare fraud - estimated now to total about $60 billion a year - has become one of, if not the most profitable crimes in America.

We caution you that this story may raise your blood pressure, along with some troubling questions about our government's ability to manage a medical bureaucracy.

Kroft spoke with FBI special agent Brian Waterman and Kirk Ogrosky, a top justice department prosecutor:

BRIAN WATERMAN, FBI: There's a healthcare fraud industry where people do nothing but recruit patients, get patient lists, find doctors, look on the Internet, find different scams. There are entire groups and entire organizations of people that are dedicated to nothing but committing fraud, finding a better way to steal from Medicare

KROFT: Is the Medicare fraud business bigger than the drug business in Miami now?

KIRK OGROSKY, JUSTICE DEPARTMENT: I think it's way bigger.

KROFT: What changed?

OGROSKY: The criminals changed...

WATERMAN: Sophistication.

OGROSKY: They've figured out that rather than stealing $100,000 or $200,000, they can steal $100 million. We have seen cases in the last six, eight months that involve a couple of guys that if they weren't stealing from Medicare might be stealing your car.

WATERMAN: You know, we were the king of the drugs in the '80s. We're king of healthcare fraud in the '90s and the 2000's.

Kroft also spoke to Attorney General Eric Holder:

ERIC HOLDER, ATTORNEY GENERAL: We have to understand this is a major fraud area. [...]

KROFT: Why do you think it's been so attractive for the criminals?

HOLDER: Because I think it's been pretty easy. I think that they have found a way in which they have been able to get pretty substantial amounts of money with not a huge amount of effort and at least until now, without the possibility of great detection.

KROFT: With much fewer risks.

HOLDER: Much fewer risks. You'll see some of these people and they'll say "You know there is not a chance that you are going to have some other drug dealer shooting at you." The chances of being incarcerated were lower, the amount of time that you would spend in jail was smaller. All of which is different now.

Kroft then spoke to a man who claimed to have defrauded Medicare out of $20 million, after which Kroft said, "According to the FBI, all you have to do to get into this business is rent a cheap storefront office, find or create a front man to get an occupational license, bribe a doctor or forge a prescription pad, and obtain the names and ID numbers of legitimate Medicare patients you can bill the phony charges to."

WATERMAN: There's a whole industry of people out there that do nothing but provide patients.

Kroft narrated, "Once the crooked companies get hold of the patient lists, usually stolen from doctors' offices or hospitals, they begin running up all sorts of outlandish charges and submit them to Medicare for payment, knowing full well that the agency is required by law to pay the claims within 15 to 30 days, and that it has only enough auditors to check a tiny fraction of the charges to see if they are legitimate."

Later, Kroft asked Waterman, "There's something I don't understand. I mean, you're saying essentially people just fill out the phony paperwork, they send a bill to Medicare and they pay it."

WATERMAN: That's why you have companies that can run for 60, 90 days, and bill for ridiculous things. Because there are very few checks and balances to even determine whether these things a, were medically necessary, b, were ever given, or c, even physically possible for a patient with the kind of conditions they have.

A bit later in the segment, Kroft spoke with Kim Brandt, Medicare's director of program integrity. After he shared with her some of the scams he'd previously witnessed or been told about, he asked how crooks get away with it:

KIM BRANDT, MEDICARE DIRECTOR: We're as frustrated by that as the law enforcement officials that you went out with. And in fact, our primary focus over the past years has been to tighten our enrollment standards to make it so it's much harder for people like that to be able to get in the program, and to be able to commit that kind of fraud.

KROFT: Look, I'm sure that you're aware of these problems. But it doesn't seem like you're doing a very good job. I don't mean you personally, but I mean, the government. This is still like a huge problem, and getting worse, right?

BRANDT: Well, it really does come down to the size and scope of the Medicare program, and the resources that are dedicated to oversight and anti-fraud work. One of our biggest challenges has been that we have a program that pays out over a billion claims a year, over $430 billion, and our oversight budget has been extremely limited.

Just imagine what the fraud will be like if the government is responsible for everyone's healthcare.

As the segment drew to a close, Holder told Kroft something that should scare the heck out of everyone who wants government run insurance for all Americans: "I think people I don't think necessarily thought that something as well intentioned as Medicare and Medicaid would necessarily attract fraudsters. But I think we have to understand that it certainly has."

Yes we do.

Yet, shortly after this marvelous segment came to a close, "60 Minutes" concluded this installment with Andy Rooney telling viewers:

I'm not much interested in hearing anymore talk about health care.

President Obama wants to overhaul what they call the "health care industry." Well good, but I hate that phrase the "heath care Industry." I just don't like to think of my health as an industry.

The fact is though being sick is often the least of our health problem. Even if you're insured, what hospitals charge now is ridiculous. I had what they call "an outpatient procedure" recently and it cost my insurance company $9,361. I say it cost my insurance company but let's face it. In the end, I'm the one who pays.

The U.S. spends more than any other country on Earth on its health: $2.5 trillion. And what do we get for $2.5 trillion? Well, we're 50th in the world for life expectancy, below the Polynesian French Island Territory of Wallis and Futuna, wherever Wallis and Futuna are.

As Steve Kroft said earlier on 60 Minutes, we are losing billions of dollars on health care fraud. Not on healthcare - on healthcare fraud.

Everyone cheats - companies, hospitals, patients, doctors, drug companies, and government agencies. Cheating goes on everywhere in the get well business.

During my recent outpatient procedure a doctor came into my room, asked how I was doing and said, "By the way I love your work on television." He left without touching me and a couple of weeks later when the bill came, it turned out his visit cost my insurance company $250.00.

I mean who knows what he would have charged if he didn't like my work.

There's just no doubt we need healthcare reform because the way it is now, makes me sick.

Makes you wonder if he even watched Kroft's segment, doesn't it?