Two U.S. senators and a representative worry that billions of tax dollars could be going to Cuba and other foreign countries via criminal schemes designed to defraud Medicare and Medicaid.
The schemes often involve the use of "nominees," individuals who are paid to be fronts for the actual owners of corporate entities being used in the fraudulent operation. By concealing the identities of true owners, the approach invites its use to funnel tax dollars out of the country.
In a letter made public yesterday to Marilyn Tavenner, acting administrator of the Center for Medicare and Medicaid, senators Orrin Hatch, R-UT, and Tom Coburn, R-OK, were joined by Rep. Peter Roskam, R-IL, said they fear billions of tax dollars are being lost annually as a result.
"Clearly, the program vulnerabilities that facilitate billions of dollars to be stolen from the Medicare program each year also allow for some of that money to be funneled to foreign countries," the three congressmen said.
"While the fraud itself is unacceptable, the loss of American dollars to foreign countries because of flaws in our system is totally unacceptable. The American people deserve the peace of mind to know that federal officials are doing everything they can to safeguard taxpayers' dollars and the Medicare program."
"Thus far, it does not appear that CMS has addressed the concept of nominee owners, false storefronts, and shell companies in any of its enrollment regulations or its Provider Screening statement of work," they said.
Earlier this week, federal officials in Miami charged Oscar Sanchez in connection with a criminal operation that resulted in an estimated $31 million going to Cuban banks.
"Prosecutors say Oscar Sanchez, 46, was a key leader in a group that funneled $31 million in Medicare dollars into banks in Havana — the first such case that directly traces money fleeced from the beleaguered program into the Cuban banking system," the Miami Herald reported Monday.
"Most of the money moved through an intricate web of foreign shell companies before ending up in Cuba, to avoid being detected in the United States, said investigators," the Herald said.
Also earlier this week, federal officials announced the capture of two other individuals who had been involved in multi-million dollar frauds with overseas connections. In one, Irina Shelikhova was arrested Monday at JFK Airport in New York when shetried to re-enter the country from the Ukraine.
"From approximately March 2005 until July 2010, Shelikhova and her co-conspirators allegedly paid cash kickbacks to Medicare beneficiaries to induce them to receive unnecessary physicians' services, physical therapy, and diagnostic tests at the medical clinics," according to the Inspector-General of the Department of Health and Human Services.
"The co-conspirators created fraudulent medical records for these beneficiaries and then filed false claims with Medicare for these medical services, which either were never provided or were not medically necessary," the HHS IG said.
Shelikhova and her co-conspirators are believed to have defrauded Medicare of as much as $70 million.
In the second case, federal officials arrested Miguel Cabello last week when he attempted to re-enter the country through Champlain, New York.
Cabello fled the country to Cuba in July 2008 after being indicted on health care fraud charges. "Cabello submitted approximately $2.1 million in fraudulent Medicare claims on behalf of south-Florida-based OB Pharmacy, Inc., and he received approximately $1.3 million in Medicare payments," according to the HHS IG.
"Before Cabello's involvement, OB Pharmacy, a durable medical equipment company that specialized in aerosol medications, submitted $151,572 in Medicare claims and was paid approximately $58,653.
"Around April 2008, Cabello became vice-president of OB Pharmacy. Investigators have concluded that OB Pharmacy submitted claims to Medicare for services that were not rendered, including approximately 10 claims for deceased beneficiaries.
"Investigators interviewed physicians who stated that they did not know the OB Pharmacy patients in question nor did they prescribe the medication purportedly provided to them."
In their letter to Tavenner, Hatch, Coburn and Roskam cited a University of Miami report that quoted a former Cuban intelligence officer saying there are "strong indications" that the Castro government aids Medicare fraud, especially in South Florida, and provides safe harbor for individuals involved in those efforts.
"If confirmed, this indicates that Medicare program dollars are not only funding international criminal syndicates, but may be helping prop up the Castro government," the congressmen said.
Back in April, Hatch and Coburn were joined in another letter to Tavenner by representatives Charles Boustenay, R-LA, and Wally Herger, R-CA, on the nominees issue, and expressed concern then that the problem was not being addressed.
The HHS IG "has expressed concerns regarding the use of nominee owners and recommended that CMS take aggressive action to identify them," they wrote. "Thus far, it does not appear that CMS has addressed the concept of nominee owners, false storefronts, and shell companies …"
