WASHINGTON — Sen. Susan Collins on Thursday called Medicare “too important a program” to waste $23 billion each year on fraudulent payments, and that the money instead should be used to shore up its shaky finances.
“It is difficult for me to justify to my constituents in Maine why we need to slow the growth of the Medicare program when fraud, waste and abuse remain rampant in the program,” Collins told the Senate Permanent Subcommittee on Investigations.
The senator chairs the subcommittee, which held its second hearing on Medicare fraud Thursday.
Unlike traditional health care fraud, in which services usually are provided but at an inflated cost, Medicare fraud involves criminal “medical centers” that bill the government for services sometimes never provided, Collins said.
Criminals with little or no health care experience enter the system only to “rip it off,” she said.
Collins noted the importance of preventing fraud in a program so many elderly Americans rely on for health care: Around 14 percent of all Americans are on Medicare. In Maine, more than 200,000 people are enrolled, representing an even higher 17 percent of the population.
This second hearing focused on how criminals get into the system, and then how the system could be made safer. For expert testimony, Collins turned to “Mr. Smith,” a convicted Medicare fraud felon who is serving 10 years in federal prison. To protect his identity, Mr. Smith — not his real name — was shielded behind a wall during his testimony.
By the time he was arrested in 1994, he already had billed Medicare about $32 million for services never provided. Before entering the Medicare fraud business, he was an electrical engineer and owned a nightclub in Miami.
“Before purchasing a medical supply company, I had no experience or training in health care services. I also didn’t know anything about the medical supply business or the Medicare billing process,” Mr. Smith explained.
But in 1988 he simply filled out an application, sent it to Medicare and then got his provider number over the phone. No one ever checked his credentials or asked if he was qualified for the job, Mr. Smith said.
He soon began swindling elderly citizens into giving him their Medicare numbers, which allowed him to bill the government for the services never provided.
If one of his associates hadn’t been arrested on other charges and then told prosecutors about his business, Mr. Smith said he still would be defrauding Medicare. “This program was a gold mine. I planned to retire in a couple of years.”
Two government investigators told the subcommittee that the best way to curb fraud was to establish on-site visits of the Medicare applicant’s business — which never happened with Mr. Smith.
In one case, one of the investigators actually performed an on-site investigation and discovered that a health clinic that was billing Medicare turned out to be a laundromat.
“We must crack down on bogus providers who have no business participating in a program vital to 38 million Americans,” Collins said.