Organized Crime Hits Medicare/Medicaid

October 23, 2009

Policymakers considering the creation of a health insurance “public option,” or even an expansion of Medicare, should remember that government health programs already wear a bullseye when it comes to fraud and abuse. According to a report on, organized crime has found a cash cow in Medicare and Medicaid.

From the article: 

Experienced in running drug, prostitution and gambling rings, crime groups of various ethnicities and nationalities are learning it’s safer and potentially more profitable to file fraudulent claims with the federal Medicare program and state-run Medicaid plans. 
Recent cases include crime boss Konstantin Grigoryan, a former Soviet army colonel who pleaded guilty to taking $20 million from Medicare. Karapet “Doc” Khacheryan, boss of a Eurasian crime gang, was recently convicted with five lieutenants of stealing doctor identities in a $2 million scam. Two Nigerians, Christopher Iruke and his wife, Connie Ikpoh, were charged October 15 with bilking Medicare of $6 million dollars by fraudulently billing the government for electric wheelchairs and other expensive medical equipment. 
One small-time abuser puts it this way: 
Jimmy Rodgers of San Bernadino, California, tells CNN he went to a clinic three times a week, receiving $100 per visit but little medical care.”This is just like Carte Blanche,” said Rodgers, holding his Medicare card. “Matter of fact, better than Carte Blanche. Carte Blanche has limitations on it. 
The story says that the Department of Health and Human Service’s inspector general’s office is on pace to recoup $4 billion this year from breaking up health care fraud schemes. Although that figure is alarming, it’s a drop in the bucket compared to the total amount of taxpayer money Medicare and Medicaid will lose to improper and illegal payments.
The Government Accountability Office estimates that the two major government health programs are currently losing a combined $50 billion annually to such payments. But that estimate probably low-balls the actual losses. Harvard’s Malcolm Sparrow, a top specialist in health care fraud, estimates that 20 percent of federal health program budgets are consumed by improper payments, which would be a staggering $150 billion a year for Medicare and Medicaid.  
See here for more on fraud and abuse in federal programs.



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