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Senators: Medicare felons on 'OK-to-pay' list despite ban

More than two years after receiving complaints from U.S. senators that it was routinely failing to remove criminal doctors from a list of approved Medicare providers as required by law, the federal agency responsible for that list is once again under fire.

In a recent letter to the Centers for Medicare and Medicaid Services, Sens. Thomas Carper, D-Del., and Dr. Tom Coburn, R-Okla., said their staffers were able to easily identify, through Google and other online searches, at least 16 physicians who remain enrolled in the government-run Medicare programs despite having "been convicted of a crime that requires CMS to exclude the individual from participation in Medicare or any other federal health-care program."

Dr. Jose Katz
Source: WNBC-TV
Dr. Jose Katz

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Days after that Nov. 4 letter, staffers found five more such doctors, according to a document provided to CNBC.com. The convicted doctors, like others on the Medicare list, therefore remain eligible to receive reimbursements from the government for treating older Americans covered by the Medicare health insurance program.

"We are concerned, moreover, that the examples identified by our analysis may be illustrative of a larger problem," Carper and Coburn wrote CMS administrator Marilyn Tavenner on letterhead of the Senate Homeland Security and Governmental Affairs Committee, where Carper and Coburn are chairman and a ranking member, respectively.

The 21 doctors cited by Carper, Coburn and their staffs include people convicted of Medicare and Medicaid fraud, and illegal distribution of the powerful painkiller oxycodone.

One doctor, Jose Katz of New Jersey, pleaded guilty last April to a $19 million scheme in which he billed insurance companies fraudulently after falsely diagnosing patients with heart conditions, a crime for which he was sentenced to 6½ years in federal prison. The sentencing judge said the scope of the Katz's fraud "boggles the mind."

Another doctor mentioned in the letter, Steven Armus of Illinois, pleaded guilty in 2011 of conspiring to distribute more than 5 kilograms of cocaine, and is still awaiting sentencing.

"We are writing to express our concerns that the Centers for Medicare & Medicaid Services (CMS) has not taken sufficient steps to screen Medicare providers who pose a risk to beneficiaries and taxpayers," the senators wrote Tavenner.

The senators noted the Social Security Act "requires CMS to exclude individuals from participation in any federal health-care program, including removal from the list of authorized Medicare providers, if they have been convicted of Medicare-related crimes, patient neglect or abuse, or felonies related to health-care fraud or controlled substances."

"Yet, disturbingly, it appears that at least some individuals convicted of such offenses may continue to remain on the list of eligible providers," Carper and Coburn wrote.

Staffers said it is impossible to know how many doctors who should have been bounced because of their crimes remain on the list, and how many of them have been reimbursed by Medicare after their convictions, because such payments are not publicly disclosed.

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The senators' letter comes two years after Coburn and Utah's Sen. Orrin Hatch, as members of the Finance Committee, wrote Health and Human Services Secretary Kathleen Sebelius another letter on Nov. 29, 2011, telling her "we find it unacceptable that CMS failed to identify that convicted felons were furnishing services to Medicare beneficiaries, and when informed, made the decision not to take immediate action to protect Medicare beneficiaries." Sebelius' department oversees CMS.

Coburn and Hatch's letter mentioned that in September 2011, they had in a prior letter identified 34 people, both physicians and nonphysicians, convicted of relevant felonies who nonetheless still retained Medicare billing privileges, and another 48 doctors and others who "may be enrolling and billing the Medicare programs" despite relevant felony convictions.

Coburn and Hatch also noted at that time that Dr. Conrad Murray, the personal physician of superstar singer Michael Jackson, "remains enrolled in the Medicare program after the State of California suspended his medical license on Jan. 11, 2011, and a California court convicted Dr. Murray of involuntary manslaughter on Nov. 7, 2011" for the overdose death of the "Thriller" performer.

Getty Images

In the latest letter on Nov. 4 by Carper and Coburn, they asked Tavenner for detailed answers about how CMS goes about removing convicted doctors from the Medicare list, how it obtains data from other entities to justify removal and explanations about each of the doctors mentioned in its attachment to the letter.

The senators, who requested that CMS respond to their letter and questions by this past Sunday, had not received a reply as of late Monday. And despite repeated requests by CNBC.com, CMS also failed to provide comment for this article.

Asked again for comment on Monday, CMS spokesman Tony Salters said: "The official CMS response letter [to the senators] has not been sent. Protocol won't allow us to give it to you before the official letter is shared."

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Asked whether Dr. Murray, who was recently released from prison, is enrolled in the Medicare program, Salters said, "Privacy laws don't allow us to share information on individual providers."

Carper told CNBC.com, "I'm troubled that we don't seem to have an effective strategy in place to remove Medicare providers who have been convicted of egregious felonies. Clearly, this is a problem that exposes the Medicare program to a higher risk of fraud."

"The good news is that this problem can be fixed," Carper said. "We can and must ensure that screening physicians for criminal conviction is a high priority, and I will continue to work closely with my colleagues and the administration to ensure that [CMS] have the tools and resources they need to better protect the integrity of Medicare."

Sen. Tom Coburn, R-Okla.
Getty Images
Sen. Tom Coburn, R-Okla.

Coburn said, "The law clearly states felons convicted of abusing any health program are not entitled to further Medicare privileges."

"So I am very disappointed that, despite repeatedly raising the concern with Medicare officials, such felons continue to retain Medicare privileges," Coburn said. "A simple Internet search shows that Medicare officials have not instituted needed safeguards. This is a straightforward problem that Medicare's administrators can readily fix, but until they do so, the integrity of the program and the safety of patients will remain vulnerable to exploitation."

It's not uncommon for CMS to not meet a deadline imposed by a senator for response, according to Senate staffers who spoke to CNBC.com.

Noting that in the past "we have raised this issue of individuals being convicted of felonies and being able to still bill Medicare, and we have been told, 'Oh, we'll take a look at that,' " said one staffer, referring to CMS.

"We're always hearing that 'we're glad your concerned.' Now what are you going to do about it?"

Another staffer said that the failure to boot felonious doctors from the list isn't only a bureaucratic issue, it's also one that could affect the safety of patients.

"There's a real patient-care angle," that staffer said. "Doctors that have proven they don't regard the law as important, don't necessarily have patients' issues at heart."

The staffer also said that while there is "no silver-bullet solution to medical waste and fraud," kicking doctors off the list of people eligible for Medicare reimbursements when they're convicted of relevant crimes is much easier to tackle than some other issues.

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"This is kind of low-hanging fruit," the staffer said, noting the ease by which Carper's and Coburn's staffs were able to compile a list of convicted doctors who remained enrolled in Medicare. "If we can do this and point out the problem, then it's easy enough to fix."

Asked whether it was likely that there were many more doctors on the list, beyond the 21 the staff identified through public searches, that should have been bounced because they have been convicted of crimes, a staffer said, "Oh, absolutely. These are the ones that are public."

By CNBC's Dan Mangan. Follow him on Twitter @_Dan Mangan

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