Thanks to the legendary work of Mario Puzo, Francis Ford Coppola and yes, Jimmy Hoffa, for many people in this country, say the word “Italian” in a room with more than 5 people, and the first thing that comes to mind for at least one person is “mafia”. Being half-Italian, I have attempted as best as I can in my life to explain that I came from an Italian family that believed without variation that the Italians involved in organized crime were pigs. My family didn’t so much have piano wire as they did rosary beads. After about 35 years of trying, I gave up and developed an Abe Vigoda as Clemenza impersonation in case the subject comes up again in conversation.

As the new and dumber generation of Italian mobsters have all turned against one another and found new homes under new names in far-flung communities thanks to the Witness Protection program, a new generation of organized criminals have risen up in their place, mostly from countries formerly behind the Iron Curtain. This generation of organized criminals specializes in insurance fraud. As an example, when I lived in Philadelphia, there was a Russian enclave in one section of the city that had mastered the art of faking accidents at great cost to the local public transportation authority. After a few too many claims and a few incarcerations, the large-scale practice stopped. Aren’t we happy that Stalinism taught such a marvelous skill set?

This week, the world of health care met the world of the East Bloc mafia with the arrest of 73 people in 5 states for Medicare fraud. Many of the people involved have ties to an Armenian-American organized crime family known as Mirzoyan-Terdjanian. A man by the name of Armen Kazarian of Glendale, California has been charged as the vor (the Russian equivalent of “Godfather”) of the organization. Kazarian entered the United States fraudulently by claiming political asylum from Azerbaijan, Armenia’s geographic neighbor, in 1996. This same group has extensive experience in insurance fraud, particularly by staging car accidents for false claims, which to me sounds all too familiar.

The size and scope of the Medicare fraud involved is somewhat astonishing given the low overhead of the operation. The organization set up 118 fictitious clinics in 25 states, generating a total of $163 million in fraudulent claims to the Medicare program, resulting in nearly $36 million in payments to the people involved.

The stolen identities of thousands of patients and doctors in the affected states provided the billing data, and the majority of the billing was done out of one office over an auto body shop in Brooklyn, mostly by one woman working the equivalent of sweat shop hours filling out claims.

The intellectual part of me had a good laugh not only about this group being rounded up and perp-walked, but by what types of claims they were billing that eventually caught up with them. The services submitted for reimbursement didn’t pay any particular attention to the specialties of the physicians being billed. This resulted in such improbable claims as an ophthalmologist doing bladder testing,  patient visits to forensic pathologists (coroners; the ones that do autopsies) and an obstetrician performing skin tests.

Three things stand out about this case. First, the sheer scope and size of this fraud is massive. To encompass half the states in the country, including the major population centers of New York, Texas and California, and to do it with such ruthless efficiency, should give pause to all of us in the industry. Organized crime has placed two feet firmly in billing fraud because the sentences for these crimes are light compared to traditional mob businesses such as narcotics. Yet when you add the words “organized crime” to any crime, the acronym “RICO” is sure to follow, which hands down just as stiff a sentence no matter what crime is involved.

Second, the false clinics have been generating bills and resulting in Medicare payments since 2006. With some of the claim examples indicated above, it is obvious that Medicare’s internal claim controls, while strong (after all, the bad guys were caught), could probably use some enhancements.

Last, and most importantly, this and other recent Medicare fraud arrests, demonstrate unequivocally that when it comes to fraud and abuse, we have arrived in a new world. The funding of the Patient Protection and Affordable Care Act (PPACA) will come mostly from fraud and abuse crackdowns. RAC’s, MIC’s, ZPIC’s and HEAT teams are out in force, they are focused, incentivized, growing and are demonstrating that they are very good at their jobs. While the typical doctor doesn’t bill from an office over a Brooklyn auto body shop, audit vulnerabilities are not strictly the problem of the Armenian mob. Like any self-respecting fisherman, the investigative entities are casting a wide net. It is time for every medical provider to ask themselves, “Am I a tuna or an unsuspecting porpoise?”.

Now, if you’ll excuse me for the balance of the day, I’m late for my coroner’s appointment.

10:51 am, October 15th, 2010 |