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Shell Practices that Defraud Medicare–One Good Reason to Clean Up The Flawed Data on the Internet-Hunting Ground for Thiev

Posted Dec 22 2011 6:12pm

If you read the Medical Quack often enough this is fairly common topic that comes up for me to write about as it is such a big problem.  The “shell” practices as they are called can sometimes find provider IDs online, for “dead” doctors and then they go to work billing.  It really makes for a huge problem all the way around without some decent audit trails and checking.  It’s funny we have all the data being sold out there and they grab stuff for free and use it for all kinds of intelligence, but when it comes to simple verification we have little.  Chapter 7 of the Attack of the Killer Algorithms shows how flawed data hurts us from the consumer side. 

The thieves know how to mine data too unfortunately and run the gambit as I wrote about over a year ago.  As a consumer you may be using the doctor sites to find a doctor, but the other side is looking for flawed data, dead, retired doctors, what ever they can get with folks not updating records. 

Here’s an interesting article from 2010, obviously one of the so called shell companies.

Biggest Prescriber of Medicaid Drugs In New Jersey Charged with Fraud–Only Had 3 Employees

How many women received penis pumps?  Again it’s an auditing algorithm that can be used to catch some of this and HHS is moving in this direction with new auditing software and I would be surprise if one woman received one <grin>. 

Two Florida Business Men–Medicare Fraud For Billing for Penis Pumps for Female and Male Patients–Lot of Transaction Money Made And Who’s Running the Algorithms for Profit?

The key here is though to use the math and queries wisely so legitimate practices don’t get caught in “false positives” as that happens too.  Most of the time though as this investigative article indicated it’s a matter of a few queries, like business licenses and names that can be researched but if nobody looks at the obvious the claims fly.  One of the biggest fraud stories with this well known oncologist in the OC and he got caught twice and in court his attorney said he had a compulsive disorder where he couldn’t help himself as it was so easy, go figure that one out.

Prominent Orange County Oncologist Pleads Guilty to Medicare/Insurance Fraud – Over $1 Million

A few queries and auditing algorithms can help out a lot.  The new algorithms used by CMS should help identify a lot of the obvious before anyone has to step a foot outside a door to investigate.

Medicare Federal Investigators Getting Algorithms to Analyze And Find Fraud-Good Move as Contractors Efforts Are Weak With Risking Loss Of Transaction Revenue

Again as mentioned, there is a downside with the formulas wrenched down too tight for false positives.  Here’s a story from 2010 from San Diego to where the Ingenix algorithms said the dermatologists practices were billing fraudulently and this was ugly and I don’t know the outcome but it was bad the way it was handled and some doctors had to close as there was no money in the way that it was handled and law suits are on going with this one so we went from “shells to skins” in this case.  BD

Skins game With Dermatology Offices in California – All Insurance Carriers Quit Paying For Treatment Within a 5 Day Period

MIAMI/ATLANTA (Reuters) - By the time authorities busted a fake AIDS clinic in Miami, it had bilked Medicare of more than $4.5 million. Still, the man behind the scheme remained far ahead of the agents pursuing him.

Michel De Jesus Huarte, a 40-year-old Cuban-American, hadn't simply avoided arrest. He had hatched a plan to steal millions more from Medicare by forming at least 29 other shell companies - paper-only firms with no real operations. Each time, he would keep his name out of any corporate records. Other people - some paid by Huarte, some whose identities had been stolen - would be listed in incorporation papers.

The shells functioned as a vital tool to hide the Medicare deceit - and not only for Huarte. Hundreds of others have used the veil of corporate secrecy to help steal hundreds of millions of dollars from one of the nation's largest social service programs, a Reuters investigation has found.

Huarte is now behind bars and did not respond to requests for comment. But basic checks by Reuters of Medicare providers in one city - Miami - suggest shell companies remain prime tools in perpetrating fraud. Simply by reviewing the incorporation records of Medicare providers in two buildings there, reporters uncovered information that one government official said could prompt "a serious criminal investigation" of some of the companies.

The fraud rings merge stolen doctor and patient data under the auspices of a shell company and then bill Medicare as rapidly as possible. Other shell companies are often layered on top to camouflage the fraud, law enforcement officials say.


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