Category: Daily News

Crooks love American health care for two reasons. First, as Willie Sutton said of banks, it’s where the money is – no other country spends nearly as much on pills and procedures. Second, unlike a bank, it is barely guarded.

Health care is a tempting target for thieves. Medicaid doles out $415 billion a year; Medicare nearly $600 billion. Total health spending in America is a massive $2.7 trillion, or 17% of GDP. In America the scale of medical embezzlement is extraordinary. According to Donald Berwick, the ex-boss of Medicare and Medicaid, America lost between $82 billion and $272 billion in 2011 to medical fraud and abuse. The higher figure is 10% of medical spending and a whopping 1.7% of GDP – as if robbers had made off with the entire output of Tennessee or nearly twice the budget of Britain’s National Health Service (NHS).

Federal prosecutors had over 2,000 health-fraud probes open at the end of 2013. A Medicare “strike force”, which was formed in 2007, boasts of seven nationwide “takedowns”. In the latest, on May 13th, 90 people, including 16 doctors, were rounded up in six cities – more than half of them in Miami, the capital city of medical fraud.

Punishments have grown tougher: last year the owner of a mental-health clinic got 30 years for false billing. Efforts to claw back stolen cash are highly cost-effective: in 2011-13 the government’s main fraud-control program, run jointly by the Department of Health and Human Services (HHS) and the Department of Justice, recovered $8 for every $1 it spent.

As fraud-fighting has intensified, dodgy billing has tumbled in areas that were most prone to abuse, such as durable medical and home visits. Home-health fraud – such as charging for non-existent visits to give insulin injections – got so bad that the CMS, which runs the programs, called a moratorium on enrolling new providers in several large cities last year. Since tighter screening was introduced under Obamacare, the CMS has stripped 17,000 providers of their license to bill Medicare. Thousands of suppliers also quit after being required to seek accreditation and to post surety bonds of $50,000.

Fraud migrates. Take one popular scam: overbilling for HIV infusion, an outdated therapy that Medicare still covers despite the existence of cheaper, better alternatives. This scam waned in Florida after a crackdown, only to pop up in Detroit, run by relatives of the original perpetrators. Fraud mutates, too. As old hustles are rumbled, fraudsters invent new ones. “We’ve taken out much of the low-hanging fruit,” says Gary Cantrell, an investigator at HHS – an example being the thousands of bogus equipment suppliers registered to empty shopfronts. Scams now need to be more sophisticated to succeed, he argues. Doctors, pharmacies, and patients act in league. Scammers over-bill for real services rather than charging for non-existent ones. That makes them harder to spot.

Some criminals are switching from cocaine trafficking to prescription-drug fraud because the risk-adjusted rewards are higher: the money is still good, the work safer and the penalties lighter. Medicare gumshoes in Florida regularly find stockpiles of weapons when making arrests. The gangs are often bound by ethnic ties: Russians in New York, Cubans in Miami, Nigerians in Houston and so on.

In one fast-growing area of fraud, involving pharmacies and prescription drugs, federal investigators have seen caseloads quadruple over the past five years. Elderly patients may receive kickbacks to sell their details to a pharmacist. He will then provide them with drugs they need while billing Medicare for costlier ones. Another scam is to turn a doctor’s clinic into a prescription-writing factory for painkillers and resell them on the street. A clinic in New York was recently charged with fraudulently producing prescriptions for more than 5m oxycodone tablets, which were sold locally for $30-$90 each. The alleged conspirators included doctors and traffickers who ran crews of “patients” so large that long queues sometimes formed outside the clinic. The doctors charged $300 per large prescription. One raked in $12m. To cover their backs they would ask for scans or urine samples purporting to show injuries. The fake patients typically obtained these from the traffickers at the clinic door.

False billing by pharmacies is rife. New York’s Medicaid sleuths have stepped up spot checks to see if the drugs in the back room square with invoices. But this is a lot of work, so most outlets are never checked.

The NFL considered expanding the playoffs, one of a number of issues on the agenda for the Spring League Meeting. But even if, as expected, there’s enough support in the room to go forward with the idea, the owners are expected to move carefully. And it’s not simply the idea of more playoff games that could get in the way.

Chances are, the burgeoning issue of workers compensation benefits will set up as the primary roadblock in the owners adding two teams to the playoff field for 2015. The NFL Players Association has stood in staunch opposition of a bill introduced in the Louisiana state legislature, and supported by the Saints, that would limit workers comp benefits based on the week in which a player is injured. Because players are paid their base salary in 17 installments during the regular-season weeks, it would leave them vulnerable during the playoffs, the offseason program, training camp and the preseason. The union has opposed similar legislation in California, Arizona and North Carolina. The controversial workers’ compensation bill in Louisiana that sparked a battle between the New Orleans Saints and the NFL Players Association has been pulled from consideration for the current legislative session.

Union sources say the NFLPA isn’t necessarily opposed to expanded playoffs — which would bring explicit (financial) and implicit (added job security) benefits for players — but is prepared to use approving such a measure as a negotiating point. The NFL has not yet presented the NFLPA with any proposal for changes to the existing playoff structure.

Cowboys owner Jerry Jones said that he believes the league could move forward unilaterally, but the NFLPA vehemently disagrees. Union sources say it would constitute a change in work conditions, and those types of changes must be collectively bargained. Also, the NFLPA would cite Article (XX) of the NFL’s Constitution and Bylaws, which spells out the playoff structure. The front of the Constitution and Bylaws reads that “provisions of the constitution relating to the players remain subject to provisions of the collective bargaining agreement.” It then cites a number of Articles, but not Article XX explicitly, which leaves some gray area on whether or not the league could move forward without the NFLPA’s consent.

Two league sources said that the NFL doesn’t plan to force expanded playoffs through. The idea, rather, will be to come up with a plan, and then present it to the players and have extensive discussions before implementing it. That could be when the NFLPA looks to the NFL for workers comp reform.While there are five pages on workers comp in the CBA, the NFLPA’s proposal to have a comprehensive policy implemented during the 2011 negotiations didn’t result in an agreement. Since then, the union has been wary of the NFL taking players out state by state with the type of legislation that’s been presented in Louisiana.

So the NFLPA now views the owners’ desire to expand the playoffs as a chance to amend what it views as a growing problem.

The Los Angeles Times reports that one of the actors who played a dancing hamster in those infectious Kia car commercials has been charged with fraud for allegedly working – including shooting at least one of the ads – while collecting state disability payments. Leroy Barnes, 27, of Los Angeles also worked as a backup dancer for pop stars Madonna, Kelly Rowland and Chris Brown while collecting state workers’ compensation benefits, said Nancy Kincaid, spokeswoman for the California Department of Insurance.

Barnes claimed he was struck and injured by a falling piece of ceiling in June 2010 while dancing for a theatrical production company, Kincaid said. He collected $51,000 in workers’ compensation benefits from September 2010 to September 2011, according to investigators for the department of insurance. He is accused of continuing to work while claiming to be disabled.

“Fraudulently collecting disability benefits is not only illegal, it disrespects legitimately injured Californians who are unable to work,” said Insurance Commissioner Dave Jones.

Barnes told his doctors he was not working during the year he collected the benefits, Kincaid said. In addition to the car commercial and the backup dancing, Barnes also performed in a rap group called the Rej3ctz while on disability, Kincaid said. Barnes could not be reached for comment Wednesday afternoon.

Barnes was arrested March 20, 2014, when LAPD officers were conducting a traffic stop. He was released the next day from the L.A. County Valley Jail on $50,000 bail.

If Congress does not reauthorize the Terrorism Risk Insurance Act by the end of 2014, it could significantly affect the cost and availability of workers’ compensation coverage, according to new policy brief by RAND researchers. The report examines how insurers might respond if TRIA expires, especially in the workers’ compensation markets because states “rigidly define the terms of the coverage.” For example, insurers cannot exclude terrorism from such policies, impose policy limits or exclude losses from nuclear, biological, chemical or radiological attacks as a way to control their exposure.

Congress passed TRIA the year after the Sept. 11, 2011 terrorist attacks, which resulted in $40 billion of insured losses – considered “the most expensive man made catastrophe in insurance history,” the brief said. TRIA provides a high-level federal backstop in case of large catastrophic losses greater than $100 million. This helps mitigate the impact of terrorism on the insurance markets by spreading the losses across all property and casualty policyholders.

RAND researchers said if the TRIA expires and there is not a sufficient private reinsurance capacity covering terrorism losses then insurers could decline to provide workers’ compensation coverage to businesses considered high risk. Compared with other insurance lines covered by the Terrorism Risk Insurance Act (TRIA), workers’ compensation offers insurers less flexibility to control terrorism exposure through modifications in coverage: WC policies cannot exclude terrorism, impose policy limits, or exclude losses from nuclear, biological, chemical, or radiological (NBCR) attacks.

Terrorism does present the potential for extremely large WC losses. Attack simulations performed by Risk Management Solutions (RMS) for previous RAND work suggest that losses in WC could be more than $10 billion from a large conventional attack (10-ton truck bomb) and more than $300 billion from a nuclear attack. In comparison, the 9/11 attacks caused approximately $2.6 billion (in 2013 dollars) of WC losses. What is more, the probabilities of these catastrophic events are highly uncertain. As discussed in a previous RAND policy brief on TRIA, terrorism risk models are limited in their ability to predict the frequency of events.

As a result, some employers might have to get coverage in residual markets where higher premiums are charged. The higher cost of coverage could reduce incomes and economic growth although the brief said this effect would likely be small. And if TRIA expires and there is another terrorist attack, then businesses and taxpayers would likely finance workers’ compensation losses within the state where the attack occurred, adding to the challenge of rebuilding. “It is important that policy makers be aware of this plausible scenario when debating how to proceed with TRIA,” the brief said.

California’s State Average Weekly Wage (SAWW) climbed just under 2.666% from $1,067.25 to $1095.70 in the 12 months ending March 31, 2014, which the California Workers’ Compensation Institute (CWCI) notes will push the maximum temporary total disability (TTD) rate for 2015 job injuries to more than $1,100 a week and boost other workers’ comp benefits that are tied to changes in the SAWW as well.

California’s current maximum TTD rate is $1,074.64 per week for 2014 job injuries, but under state law the increase in the SAWW will boost the weekly maximum to $1,103.29 for claims with injury dates on or after January 1, 2015. The minimum weekly TTD rate is also tied to increases in the SAWW, so CWCI calculates that the minimum will rise from the current $161.19 to $165.49 for claims with 2015 injury dates. The Institute has confirmed both the minimum and maximum TTD rates for 2015 injury claims with the state Division of Workers’ Compensation.

Other benefits that will be bumped up by the SAWW increase include TTD paid 2 years or more after injury, life pension and Permanent Total Disability payments for injuries on or after January 1, 2003, and death claim installment payments. Underpayment of benefits results in penalties, so CWCI encourages claims administrators to review changes in benefit rates with legal counsel to assure that adjustments are appropriate and accurate. A CWCI Bulletin with more details is available to Institute members and subscribers who log in at www.cwci.org.