Three companies hired to process Medicare bills and protect the system from fraud recently pled guilty to defrauding the program and agreed to settle for a total of $16 million, government officials told a House subcommittee.
In addition, two insurance company senior executives were found guilty of defrauding Medicare by knowingly submitting false information to HCFA.
The information helped Blue Shield of Western New York move from the rank of one of the worst Medicare carriers to the position of best in the nation.
George Grob, deputy inspector general of the Department of Health and Human Services, told a House Commerce subcommittee investigating Medicare contractor fraud that 'problems with Medicare contractors remain a serious concern.'
At its last hearing, on July 14, the Subcommittee on Oversight and Investigations heard from the General Accounting Office how, since 1993, six Medicare contractors have been fined over $235 million for defrauding the program.
The contractors, among other things, paid claims which they shouldn't have, destroyed claims, failed to collect money from providers and falsified their performance results to HCFA officials.
According to Grob, New Mexico Blue Cross and Blue Shield concealed billing errors during an annual audit and blocked federal auditors from reviewing hospital-billing claims. The company has agreed to a settlement of $5.86 million.
Blue Cross and Blue Shield of Colorado concealed, destroyed and falsified information HCFA uses to evaluate contractors' effectiveness. Contractors can receive bonuses for good reviews. The company has agreed to pay $6.84 million to settle its case.
A third company, Rocky Mountain Health Care Corp., jointly owned by the New Mexico and Colorado contractors, pled guilty to conspiring to obstruct a federal audit and agreed to pay a $500,000 fine.
The three companies no longer work for Medicare.
The two executives, one from Blue Shield of Western New York and the other from Blue Shield of Eastern New York, fooled HCFA into believing some employees had worked on Medicare claims when, in fact, they hadn't. The two will be sentenced on Oct. 21.
HCFA employs 58 contractors to, among other things, ensure that Medicare pays the right claims, report payment errors to HCFA and answer beneficiary and provider questions.
These contractors pay more than $700 million in Medicare claims every business day. In 1998, HCFA paid them $1.6 billion.
At the hearing, Michael Huotari, executive vice president for Blue Cross and Blue Shield of Colorado, expressed dismay over the Department of Justice's legal action against his company.
He said a company employee reported to management that other employees had, among other things, altered documents. The employees were then fired, and HCFA was notified of the wrongdoing, he said.
'We blew the whistle on ourselves,' Huotari said.
Huotari said there was no conspiracy to commit wrongdoing, no Medicare beneficiaries were harmed and the government didn't lose money as a result of the fraud.
'There should be some protection in [the False Claims Act] for self-reporting, particularly when it is evident that there was no participation in, or knowledge of, wrongdoing on the part of management,' he said.
'Contrary to sound public policy, our experience could be interpreted to encourage companies to look away from suspected bad acts rather than investigate, cure and report possible problems to the government,' Huotari said.
The Colorado contractor agreed to settle, Huotari said, to end a long and expensive legal battle.
Whistleblower Darcy Flynn told the committee how Blue Cross and Blue Shield of Michigan duped Medicare, costing the program perhaps hundreds of millions of dollars.
Darcy said for five years the company's audits of 50 Michigan hospitals failed to recoup the millions of Medicare dollars such audits usually yield from providers. The contractor, which had received poor reviews from HCFA and faced possible termination, covered its tracks by submitting doctored audits to HCFA upon the agency's request for review. Before submission, company officials performed audit steps that were never done and backdated records to make it appear that the company had done its job.
The Michigan contractor settled a civil suit for $27.6 million but did not admit wrongdoing.
