2008 Safety, Security and International Affairs

Scott Hutchison, Steven Zerebeck and the Team

Identified more than $2 billion in aberrant Medicare claims and created a model for reducing fraud in the program.

Medicare is one of our government’s largest programs, occupying more than 10 percent of the federal budget. While most people see Medicare as one of government’s most successful programs, providing vital care to millions of Americans each year, others look at its size and see an opportunity to make money by defrauding our government. In fact, experts estimate that there are upwards of $40 billion in fraudulent Medicare claims each year. Thanks to the recent work of Scott Hutchison, Steven Zerebecki, Michael Henry, Cindy Lemesh, China Tantameng and Marcia Wong in the Health and Human Services’ Inspector General’s Office, some of the worst offenders of this fraud are now being identified and turned into cautionary tales for other would-be criminals.

Hutchison and Zerebecki’s office is based in San Francisco, but they track fraud across the country. In 2006, a team of senior analysts led by Hutchison identified abnormal billing patterns associated with HIV/AIDS infusion therapy in South Florida. In the last half of 2006, Medicare claims from suppliers in three counties totaled $976 million, 50 percent of the amount billed nationally for beneficiaries with HIV/AIDS. The claims for the related drugs were even worse. Suppliers in the three counties billed 79 percent of the amount billed nationally for drugs. The average South Florida supplier billed more than $40,000 over the national average for drugs for beneficiaries with HIV/AIDS. The Centers for Medicare & Medicaid Services (CMS) found no explanation for the high level of billing in South Florida.

In one particularly egregious case, a woman was identified as having fraudulently billed more than $170 million to serve nonexistent HIV/AIDS patients. The woman was indicted on federal charges. This is just one example of the types of suppliers that Hutchison and his colleagues identified.

The work in Florida helped reduce future fraudulent Medicare payments and curtail unscrupulous providers from preying on unsuspecting beneficiaries. In addition, the work paved the way for reforms that could decrease large-scale fraud in Medicare. The work was so significant that NBC featured it in a two-part series on Medicare fraud in South Florida. The evaluation resulted in recommendations to CMS to strengthen the supplier enrollment process, increase monitoring of claims patterns, and improve the process for revoking fraudulent suppliers’ billing privileges.

On the other side of the country, in 2007, a team headed by Zerebecki was leading an effort in Southern California to crack down on fraudulent and abusive billing for durable medical equipment (items such as wheelchairs and hospital beds). The four member team, along with staff from all components of the Health and Human Services’ Office of Inspector General, coordinated more than 1,200 unannounced on-site visits to 905 medical equipment suppliers in Los Angeles County to determine whether they met basic Medicare requirements, such as having a physical location and being open during posted business hours. Shockingly, they found 115 suppliers failed to meet these basic standards, yet Medicare had allowed $21 million for these suppliers’ claims in a 12-months period beginning July 1, 2006.

Altogether, Scott Hutchison, Steven Zerebecki, Michael Henry, Cindy Lemesh, China Tantameng and Marcia Wong have helped identify at least $2 billion in fraudulent claims. They created and completed models, profiles and data analysis that help the government crack down on fraud and protect Medicare and its beneficiaries from unscrupulous suppliers. They are saving Medicare money, so Medicare will have more money to provide life-saving care for all Americans who benefit from the program.