The Justice Department on Tuesday charged 450 people with stealing $6.5 billion from Medicare and Medicaid — the largest single healthcare fraud sweep in the department’s history. The sweep comes two weeks after the department secured six healthcare fraud convictions in three weeks, and a month after Vice President Vance announced a $1.3 billion Medicaid deferral and a hospice enrollment freeze. The administration is also starving the program the fraud was stealing from. One of these makes press releases. The other makes the next wave of fraud inevitable.
Among the defendants is Oren David Shachar, the owner of several hospices in the Los Angeles area. According to the indictment, he paid kickbacks and bribes to enroll people who were not terminally ill in hospice care, then billed Medicare for nearly $27.7 million in medically unnecessary services. He used a funeral-home employee to steal the personal information of deceased Medicare beneficiaries and enrolled them in hospice after they were dead, creating backdated medical records to make it appear they had qualified for hospice before they died. He paid living beneficiaries up to $400 a month in cash and provided them with alcohol, televisions, and groceries to keep them enrolled, and offered referral payments to beneficiaries who recruited others into the scheme.
I won’t say he was a businessman first and a caregiver second. The indictment says that for me. He is an end-of-life entrepreneur. That is not a caregiver. That is a salesman who saw dying people as a product.
The evidence chain runs from Medicare billing records to funeral homes to backdated medical records to cash payments in grocery bags. The arithmetic tells the story. The record number of Medicaid fraud defendants — more than 100 people — are accused of submitting over $100 million in false claims. The administration froze $1.3 billion in Medicaid payments to a single state. That is thirteen times the false claims being prosecuted. The prosecution is the smaller number. The funding freeze is the larger one. The pharmacy benefit managers, the insurance companies, the hospital consolidation schemes that raise prices and bill the difference — they remain largely untouched. They write the rules.
The same kind of fraud has been seen before. In 2016, a Miami healthcare executive was charged with running a $1 billion Medicare fraud scheme that involved kickbacks for home health services. In 2019, a Texas hospice owner was sentenced for a $150 million fraud scheme involving false claims for patients who were not terminally ill. The pattern is the same: a provider sees a Medicare benefit, and they see a way to bill for it without providing the care. The machine-learning fraud-detection system the Justice Department announced this week — new data-sharing agreements with the FTC, DHS, and CMS that will give prosecutors real-time access to suspicious billing — could have spotted Shachar’s scheme when it was still small. But the administration has not built that system. A federal official called it “a cat-and-mouse game that we’re involved in.” The administration is not trying to catch the mice. It is performing the hunt while the program dies.
The critics who call the fraud crackdown political are missing the point. Don’t change the subject, dear. The fraud is real, and the defendants are in 57 federal court districts and 41 states. The $6.5 billion in alleged fraud is not a political number. It is a list of people who stole from the rest of us. The only question is why it took a crackdown this big to find them. This is the cycle I have watched since the savings-and-loans: prosecute the men who stole from the system, defund the system, then claim credit for the cleanup. The government seized $127 million in cash, luxury vehicles, and jewelry. The largest healthcare fraud bust in history, and the only thing that changed was the size of the net. The nearly 75 million Americans on Medicaid get the bill.