Lawmakers: Medicare vulnerable to shell companies

The Centers for Medicare & Medicaid Services is not efficiently addressing Medicare fraudsters, particularly around nominee owners, fake store fronts and shell companies, Republican lawmakers said yesterday, calling for the agency to strengthen its identification of these scams.

"...CMS's provider screening efforts are still not effectively safeguarding the Medicare program from individuals intent on committing fraud within the Medicare program and that CMS should revise its screening efforts to address nominee owners," wrote Senate Finance Committee Ranking Member Orrin Hatch (R-Utah), Committee member Tom Coburn (R-Okla.), House Ways and Means Health Subcommittee Chairman Wally Herger (R-Calif.) and Oversight Subcommittee Chairman Charles Boustany (R-La.) in a letter to CMS Acting Administrator Marilyn Tavenner.

The House and Senate Committees that oversee Medicare requested CMS identify ways it is addressing nominee owners, that is, people who control a scheming entity but don't identify themselves as owners. The Office of Inspector General also recently expressed concerns about the use of nominee owners and recommended CMS take aggressive action against the potential scammers.

For instance, a Reuters investigation published in December revealed that Michel De Jesus Huarte set up fake AIDS clinics in Florida, but not before he bilked Medicare for more than $4.5 million and formed at least 29 other shell companies in Florida, Georgia, Louisiana, North Carolina and South Carolina.

The strategy of shell companies can go unnoticed for years as scam artists evade detection. Schemers can use fake names and addresses for corporations or real information from others.

The congressional leaders requested CMS explain what safeguards, such as smart-card technology and authentic tokens, it has in place for Medicare contractors to verify the identity or providers and owners. They also called for CMS to describe the process for identifying high-risk providers and explain why nonphysician-owned clinics are considered "low risk."

For more information:
- read the Senate Finance Committee statement

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