Medicaid presents crime of opportunity: Fraud investigators see steady stream of people ripping off the system

Keywords Health Care
  • Comments
  • Print

Pictures may be worth a thousand words, but they could cost dentist Michael Bajza $200,000 and six months of home detention.

The Griffith dentist pleaded guilty in federal court this month to one count of health care fraud. He admitted asking Medicaid for reimbursement of oral Xrays when he knew his employees had only taken photographs of patients’ teeth.

Bajza and Thomas Hoshour, a former operator of central Indiana detox centers who is scheduled for sentencing Nov. 4, are but two of many perpetrators of Medicaid fraud nabbed by investigators in recent years. In just the fiscal year that ended in March, the state’s Medicaid Fraud Control Unit recovered more than $10 million.

Recent cases show a problem that spans the length of the state and a reimbursement system that presents temptation in many forms.

“There’s a lot of money here, and it attracts people looking for ways to rip the system off, and it tempts people that are in the system that need some extra cash,” said Allen Pope, director of the fraud control unit, which is part of the Indiana Attorney General’s Office.

Medicaid is a state- and federally funded program that provides health care coverage for the poor, disabled and elderly. In Indiana, about 800,000 people receive Medicaid benefits.

Roughly 10 percent of all Medicaid billings nationally are fraudulent, Pope said. His office deals mostly with three varieties: providers who bill for services they don’t perform, those who do unnecessary procedures like filling a healthy tooth, and those who bill for more expensive services than they provided.

Hoshour falls into the first category. The Indianapolis man faces up to 10 years in federal prison and a maximum fine of $250,000 for pleading guilty to one count of health care fraud.

He billed Medicaid about $118,000 for psychotherapy he did not provide patients of his Sober Life Alternatives treatment centers, according to the office of Susan Brooks, U.S. attorney for the Southern District of Indiana.

Hoshour, who’s serving six years in state prison for a separate case, is small potatoes compared with other Medicaid fraud cases that have worked their way through civil and criminal courts in Indiana.

For instance, in late 2003, a federal judge ordered Peggy Bisig to pay $1.9 million and sentenced her to more than four years in prison. Bisig charged “outrageous amounts” to Indiana Medicaid for drugs she delivered to home-bound patients in southern Indiana, according to Brooks.

The Louisville resident would pay $12 for a drug that cleans the ports of intravenous lines and bill Medicaid more than $18,000, the federal prosecutor said.

More recently, New Jersey-based Schering-Plough Corp. repaid Indiana Medicaid $6.8 million for charging the program a higher price than it charged other purchasers of its allergy drug Claritin, Pope said.

Investigators and prosecutors say those cases are among the most extreme.

Medicaid fraud is generally committed by the provider, by a state employee, or by an individual receiving the benefit. Most of the big-money recoveries come from providers, said John Davis, general counsel for the Family & Social Services Administration, which administers Medicaid in Indiana.

That revenue stream shows few signs of drying up.

Medicaid payment systems are set up to handle millions of claims daily, making it difficult to spot fraud, noted Winfield Ong, an assistant U.S. attorney who coleads Brooks’ health care fraud task force.

“It’s a misperception of the health care system to the extent that people think it’s full of checks and flags,” he said.

The system depends upon the integrity of people who use it, added Jill Zengler, chief of the civil division for Brooks’ office.

“I think that any time you have that kind of system, you’re going to have people who try to find the holes in it and take advantage of it,” she said.

Please enable JavaScript to view this content.

Story Continues Below

Editor's note: You can comment on IBJ stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Please note our updated comment policy that will govern how comments are moderated.