Today's Washington Post reports on page A1 that "(s)cammers discover that power wheelchair are perfect vehicle for fraud." The story was reported by David Fahrenthold from Los Angeles.
The subtitle of the online story was even clearer: "The government has paid billions to buy power wheelchairs. It has no idea how many of the claims are bogus." Although the story continues on for two complete pages, the essence of the story seems to be:
"The wheelchair scam was designed to exploit blind spots in Medicare, which often pays insurance claims without checking them first. Criminals disguised themselves as medical-supply companies. They ginned up bogus bills, saying they’d provided expensive wheelchairs to Medicare patients — who, in reality, didn’t need wheelchairs at all. Then the scammers asked Medicare to pay them back, so they could pocket the huge markup that the government paid on each chair.
"A lot of the time, Medicare was fooled. The government paid.
"Since 1999, Medicare has spent $8.2 billion to procure power wheelchairs and “scooters” for 2.7 million people. Today, the government cannot even guess at how much of that money was paid out to scammers.
"Now, the golden age of the wheelchair scam is probably over.
"But, while it lasted, the scam illuminated a critical failure point in the federal bureaucracy: Medicare’s weak defenses against fraud. The government knew how the wheelchair scheme worked in 1998. But it wasn’t until 15 years later that officials finally did enough to significantly curb the practice.
“If you play it right, you can make a lot of money quickly, stealing from Medicare,” said James Quiggle, of the nonprofit Coalition Against Insurance Fraud, recounting the lesson of the past decade and a half."
Fahrenthold reports the scam "first appeared in the mid-1990s in Miami — a city whose mix of elderly people and professional scammers has always made it the DARPA of Medicare fraud, where bad ideas begin" although it quickly spread to other cities. The profit margins were also noteworthy. According to Fahrenthold:
"Let me put it to you this way: An $840 power wheelchair, Medicare pays close to $5,000 for. So there’s a huge profit margin there. Huge,” said one California man who participated in a recent fraud scheme involving wheelchairs."
A graphic of the scam shows "who gained and lost" in a typical transaction. While the patient gained a wheelchair, there was $200 - $900 to the recruiter (aka "capper"), $400 - $1,000 to the doctor. $3,600 to the medical supplier, but Medicare was out $5,000 for each wheelchair.
Here are a few of the more information-rich paragraphs in Mr. Fahrenthold's report:
- "Medicare used to set its payments for most power wheelchairs based on manufacturers’ suggested retail prices. It did not lower those prices significantly for years, even when it was obvious that wholesale prices were far, far lower. So for scammers, each wheelchair brought a hefty profit."
- "As early as 1998, Medicare had recognized the existence of the wheelchair scam with a national “fraud alert.” But, to front-line fraud investigators, it was obvious that the crooks were still getting their claims paid."
- "In 2004, for instance, Medicare started to require that any doctor who prescribed a power wheelchair actually had to see the patient, in person. For the scammers, that was a new obstacle. But not a big one. They just had their corrupt doctors see patients in person.
"Then, in 2007, the government began a legal crackdown. It began a “strike force” of prosecutors, who targeted equipment fraud in problem cities."
Federal efforts have slowed the scam, according to Fahrenthold. Total spending, which reached $964 million in 2003, "fell to $190 million last year," adding:
"Finally, last year the feds went after the Scooter Store.
"That company had become famous for its commercials telling seniors: “Your power chair will be paid in full.” In 2007, the store had already been fined for fraudulent practices, which included billing Medicare for power wheelchairs that patients did not want or need.
"Last year, as part of a new investigation, federal agents with a search warrant raided the Scooter Store headquarters in New Braunfels, Texas. No new criminal charges have been brought. But Medicare was still concerned enough to cut off funding to the Scooter Store.
"It was a death sentence. The business, heavily dependent on federal payments, shut down last fall."
Finally, Fahrenthold's report included the following chart shows how the number of beneficiaries and dollars paid has changed from 1999 to 2013:
Unlike so many news reports about government waste, fraud and abuse, Mr. Fahrenthold's report actually addresses why this scam went on for so long. He writes:
"No one knows how much of that money was actually lost to fraud, and how much of it was caused by innocent errors.
"The power-wheelchair scam provided a painful and expensive example of why Medicare fraud works so often. The fault lay partly with Congress, which designed this system to be fast and generous. And it lay partly with Medicare bureaucrats — who were slow to recognize the threat and use the powers they had to stop it. As a result, scammers took advantage of a system that was overwhelmed by its own claims and lacked the manpower and money to check most of those claims before it paid." (emphasis added)
Kudos to David Fahrenthold for an outstanding report, and kudos to the Washington Post for devoting the resources that were obviously necessary to complete the report.
Check out the pictures in the Post story, too.. The ones in the online version are so much better than those in the print edition. They're sure to reinforce just how ridiculous the scam really was. Fahrentold also provides a lot of the outrageous testimony from the scammers trial.
Taxpayers reading Growls who are upset that Congress seems to approve so many programs that are susceptible to waste, fraud and abuse are urged to contact their members of Congress. Information is available at Thomas (use left-hand column). Readers living in Virginia's Arlington County, should contact:
- Senator Mark Warner (D) - write to him or call (202) 224-2023
- Senator Tim Kaine (D) -- write to him or call (202) 224-4024
- Representative Jim Moran (D) -- write to him or call (202) 225-4376