Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder partnered in 2009 to increase enforcement by allocating more money and staff and creating strike forces in fraud hot spots.

On Wednesday, hundreds of federal agents fanned out around the country, raiding businesses, seizing documents and charging 107 suspects in Miami, Los Angeles, Houston, Detroit, Chicago, Tampa, Fla., and Baton Rouge, La. The government suspended payment to 52 providers as part of the investigations.

“When President Obama took office he asked Attorney General Holder and me to make fraud prevention a cabinet-level priority,” Sebelius said in remarks prepared for a news conference in Washington.

Among those arrested Wednesday were the owners of two community mental health centers in Baton Rouge, charged with billing $225 million in their scams. Hoor Naz Jafri and Roslyn Dogan allegedly recruited vulnerable patients, including elderly people, drug addicts and the mentally ill. Patient charts were doctored to show services that were billed to Medicare but often never given, according to an indictment.

Authorities suspended their companies in May 2011, but the pair continued billing Medicare after purchasing another fraudulent company, according to the indictment. When feds shut down that company, the pair tried to sell their “beneficiaries” to other providers in an attempt to keep making money.

During the investigation, federal authorities tried to put a hold on the company’s bank account. Dogan asked to visit the U.S. Attorney’s Office to review and copy documents that had been seized as part of a search. After the visit, “Dogan and co-conspirators bragged that, while pretending to copy files, they actually stole incriminating documents from the files and later destroyed them.” Dogan referred to herself as a “smooth criminal,” according to the indictment.

Another co-conspirator bragged to Dogan and others that he had a “bonfire with fabricated notes that law enforcement officers had failed to seize during the search,” according to the indictment.

They could face life in prison if convicted. A woman who answered the phone at one of the companies hung up and an email to the company was not immediately returned.

Five others were charged in connection with the Baton Rouge scam, capping a six-year investigation.

“The results we are announcing today are at the heart of an administration-wide commitment to protecting American taxpayers from health care fraud,” said Attorney General Eric Holder. “We are determined to bring to justice those who violate our laws and defraud the Medicare program for personal gain.

More than 50 defendants were also arrested in Miami in unrelated scams totaling $136 million involving community mental health centers and home health care agencies. A handful of those arrested also had criminal backgrounds, according to federal agents.

Community mental health centers are the latest trend in Medicare fraud, which has developed more complex schemes over the years, moving from medical equipment and HIV infusion fraud to ambulance scams, as crooks try to stay one step ahead of authorities. The scams have also grown more sophisticated using patient recruiters who are paid kickbacks for recruiting patients, while doctors, nurses and company owners coordinate to make it appear they are delivering medical services which they are not.

“Medicare fraud also exposes some of our most vulnerable citizens to identity theft, and, in some cases, endangers patients’ lives,” said Gary Cantrell, Deputy Inspector General for Investigations for HHS. “The indictments announced today demonstrate that we’re fighting back.”

Wednesday’s arrests come as top lawmakers appealed to health care professionals in the private sector to help combat Medicare fraud. Six members of the Senate Finance Committee, led by Ranking Member Orrin Hatch (R-Utah) and Chairman Max Baucus (D-Mont.), announced a bipartisan effort to begin soliciting ideas from interested stakeholders in the health care community looking for a fresh perspective and potentially solutions that may have been overlooked.

“To date, numerous efforts have been made to reduce fraud, yielding a mixed record of successes and failures,” according to the letter.

Sebelius said her agency and the Justice Department have more than quadrupled the number of strike teams around the country, charging hundreds of individuals with Medicare fraud.

Medicare fraud has been a hot button issue as federal officials have repeatedly come under fire for seemingly staying one step behind the criminals, using outdated technology and not coordinating efficiently with law enforcement.

But Sebelius touted a new data system that will allow authorities to spot trends in billing patterns more quickly, which will ideally stop payments before they go out the door.

The Centers for Medicare and Medicaid Services launched a $77 million computer system last summer to serve that purpose, but the program has yielded few results in the early stages and drawn criticism from the Senate Finance Committee.

___

Yost reported from Washington.

“Most jurisdictions end up being in a reactive mode because they don’t have enough fosters parents so they’re just focused on getting people into the fold instead of making sure standards for parents are elevated,” said David Sanders, an executive vice president at Casey Family Programs, an advocacy organization in Seattle.

In Florida, the demand for foster homes was so dire that children were sleeping in child welfare offices as recently as a few years ago. And there were recurring problems for the parents that it could recruit: unreturned phone calls, condescending caseworkers and an inability to get the records they needed. They also weren’t invited to staff meetings where the child welfare professionals were making decisions about the foster child’s case.

Former Department of Children and Families Secretary Bob Butterworth worked with Carole Shauffer, executive director of Youth Law Center and an attorney who often sued the state, to make sweeping changes to the system in 2007.

Through a far-reaching Quality Parenting Initiative program, Shauffer worked with foster parents and child welfare workers in Florida to address those issues during a 90-day program. Meetings were designed to bring foster parents and caseworkers together to open the lines of communication. Florida changed the way it trains staff and recruits foster parents, even offering online training to make it more convenient to get certified. Overall, the changes led to a distinct cultural change in how the two view each other.

The program also encourages small improvements, like returning foster parents’ phone calls or writing a thank-you note to them. Shauffer’s team heads the initial effort and stresses the program is not a marketing campaign, but rather an ongoing effort to change stereotypes, increase communication and cut through barriers between foster parents and state agencies. Shauffer’s organization spent more than $150,000 in 15 regions across Florida this past year. The tab was picked up by an advocacy group. Several counties in California began using the program in 2009 after seeing Florida’s success.

“The cost is minimal. It’s the commitment that’s hard,” said Shauffer, who said child welfare agencies in both states have made the changes a priority.

Foster parent groups say the changes are sorely needed.

“We can use overhauling,” said David Sharp, public policy chairman for National Foster Parent Association.

Sharp says that while conditions vary by state and county, foster parents often don’t get to comment in court on how the child is doing on a daily basis. Instead, volunteers representing the children and attorneys for the state typically give their opinions about where they think a judge should place a child.

“Agencies don’t take us seriously. No matter how upset or concerned we might get for children’s wellbeing, there’s really nothing we can do,” said Sharp, who is also a former Alabama foster parent of 27 children. “(Foster parents)…see they don’t have any effect on the child’s life long term and they quit.”

Around the country, smaller-scale efforts are springing up to address problems.

Connecticut’s new child welfare Commissioner Joette Katz has pushed for massive foster care reform, saying the agency needs to respect foster parents, include them in decision making and provide better support services.

Her changes come in the aftermath of a class-action lawsuit in 1989 alleging Connecticut’s child welfare system was failing to find quality permanent families for foster children. At one point, 30 to 35 percent of foster kids were being housed in group homes and institutions — a costly but generally inferior alternative to foster homes, said Ira Lustbader, lead attorney for the lawsuit filed by the advocacy group Children’s Rights.

The state was so short on foster homes they were sometimes keeping unqualified foster parents, he said.

An independent federal court that is monitoring reform efforts has repeatedly said the state overuses group homes and institutions instead of recruiting more foster parents. In 2008, the state agreed to add 850 foster family homes by July 2010, yet had a net loss of 84 foster homes as of July 2011.

Tennessee and New Jersey have had success launching efforts to recruit homes specifically for teenagers and children with disabilities and other special needs — populations that often end up in group homes or institutions.

In 2006, Wisconsin launched a four-year marketing campaign where child welfare officials assessed the motivations of their best foster parents. They realized the majority did it for personal fulfillment or spiritual desires. They crafted a marketing campaign, trying to attract foster families akin to Peace Corps recruits — an honest way to balance tough work and poor pay with a priceless human reward.

The website didn’t just include rosy stories from foster parents. Officials were up front that “this is painful, this is hard work. There are no rewards sometimes,” said Colleen Ellingson, CEO of Adoption Resources of Wisconsin, who coordinated the effort.

Some foster care agencies initially felt it was a waste of money.

“Within a year they all said this was the most effective help we’ve ever had. It was driving families to them,” she said. One area had 25 potential foster families contact them in one month. In the past they’d never had more than five.

Some states are also cutting foster parents who don’t meet expectations.

Miami foster parent Maritza Moreno says she’s frustrated when she hears of fellow foster parents relying on medical transport provided by the state to take their child to the doctor.

“A parent would never do that,” said Moreno, an insurance adjuster, who has fostered eight children, mostly babies, in the past four years.

She says foster children “really need a parent, not a caregiver.”

“Most jurisdictions end up being in a reactive mode because they don’t have enough fosters parents so they’re just focused on getting people into the fold instead of making sure standards for parents are elevated,” said David Sanders, an executive vice president at Casey Family Programs, an advocacy organization in Seattle.

In Florida, the demand for foster homes was so dire that children were sleeping in child welfare offices as recently as a few years ago. And there were recurring problems for the parents that it could recruit: unreturned phone calls, condescending caseworkers and an inability to get the records they needed. They also weren’t invited to staff meetings where the child welfare professionals were making decisions about the foster child’s case.

Former Department of Children and Families Secretary Bob Butterworth worked with Carole Shauffer, executive director of Youth Law Center and an attorney who often sued the state, to make sweeping changes to the system in 2007.

Through a far-reaching Quality Parenting Initiative program, Shauffer worked with foster parents and child welfare workers in Florida to address those issues during a 90-day program. Meetings were designed to bring foster parents and caseworkers together to open the lines of communication. Florida changed the way it trains staff and recruits foster parents, even offering online training to make it more convenient to get certified. Overall, the changes led to a distinct cultural change in how the two view each other.

The program also encourages small improvements, like returning foster parents’ phone calls or writing a thank-you note to them. Shauffer’s team heads the initial effort and stresses the program is not a marketing campaign, but rather an ongoing effort to change stereotypes, increase communication and cut through barriers between foster parents and state agencies. Shauffer’s organization spent more than $150,000 in 15 regions across Florida this past year. The tab was picked up by an advocacy group. Several counties in California began using the program in 2009 after seeing Florida’s success.

“The cost is minimal. It’s the commitment that’s hard,” said Shauffer, who said child welfare agencies in both states have made the changes a priority.

Foster parent groups say the changes are sorely needed.

“We can use overhauling,” said David Sharp, public policy chairman for National Foster Parent Association.

Sharp says that while conditions vary by state and county, foster parents often don’t get to comment in court on how the child is doing on a daily basis. Instead, volunteers representing the children and attorneys for the state typically give their opinions about where they think a judge should place a child.

“Agencies don’t take us seriously. No matter how upset or concerned we might get for children’s wellbeing, there’s really nothing we can do,” said Sharp, who is also a former Alabama foster parent of 27 children. “(Foster parents)…see they don’t have any effect on the child’s life long term and they quit.”

Around the country, smaller-scale efforts are springing up to address problems.

Connecticut’s new child welfare Commissioner Joette Katz has pushed for massive foster care reform, saying the agency needs to respect foster parents, include them in decision making and provide better support services.

Her changes come in the aftermath of a class-action lawsuit in 1989 alleging Connecticut’s child welfare system was failing to find quality permanent families for foster children. At one point, 30 to 35 percent of foster kids were being housed in group homes and institutions — a costly but generally inferior alternative to foster homes, said Ira Lustbader, lead attorney for the lawsuit filed by the advocacy group Children’s Rights.

The state was so short on foster homes they were sometimes keeping unqualified foster parents, he said.

An independent federal court that is monitoring reform efforts has repeatedly said the state overuses group homes and institutions instead of recruiting more foster parents. In 2008, the state agreed to add 850 foster family homes by July 2010, yet had a net loss of 84 foster homes as of July 2011.

Tennessee and New Jersey have had success launching efforts to recruit homes specifically for teenagers and children with disabilities and other special needs — populations that often end up in group homes or institutions.

In 2006, Wisconsin launched a four-year marketing campaign where child welfare officials assessed the motivations of their best foster parents. They realized the majority did it for personal fulfillment or spiritual desires. They crafted a marketing campaign, trying to attract foster families akin to Peace Corps recruits — an honest way to balance tough work and poor pay with a priceless human reward.

The website didn’t just include rosy stories from foster parents. Officials were up front that “this is painful, this is hard work. There are no rewards sometimes,” said Colleen Ellingson, CEO of Adoption Resources of Wisconsin, who coordinated the effort.

Some foster care agencies initially felt it was a waste of money.

“Within a year they all said this was the most effective help we’ve ever had. It was driving families to them,” she said. One area had 25 potential foster families contact them in one month. In the past they’d never had more than five.

Some states are also cutting foster parents who don’t meet expectations.

Miami foster parent Maritza Moreno says she’s frustrated when she hears of fellow foster parents relying on medical transport provided by the state to take their child to the doctor.

“A parent would never do that,” said Moreno, an insurance adjuster, who has fostered eight children, mostly babies, in the past four years.

She says foster children “really need a parent, not a caregiver.”

Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder partnered in 2009 to allocate more money and manpower in fraud hot spots. Thursday’s indictments were for suspects in Miami, Los Angeles, Dallas, Houston, Detroit, Chicago, Brooklyn, Tampa, Fla., and Baton Rouge, La.

They show that “health care fraud is not easy money,” Holder said at a press conference in Washington.

A podiatrist performing partial toenail removals was among 21 indicted in Detroit. Dr. Errol Sherman is accused of billing Medicare about $700,000 for the costly and unnecessary procedures, which authorities said amounted to little more than toenail clippings. The podiatrist billed Medicare for 20 nail removals on three toes of one patient, according to the indictment. He charged Medicare about $110 for each procedure.

A message could not be left at Sherman’s office Thursday.

A Brooklyn, N.Y., proctologist was charged with billing $6.5 million for hemorrhoid removals, most of which he never performed. Dr. Boris Sachakov claimed he performed 10 hemorrhoid removals on one patient, which authorities said is not possible. An employee who answered at Sachakov’s office declined comment Thursday.

Sachakov had been arrested last year on charges related to a separate scam. Sachokov denied the charges.

Authorities also busted three physical therapy clinics in Brooklyn, run by an organized network of Russian immigrants accused of paying recruiters to find elderly patients so they could bill for nearly $57 million in physical therapy that amounted to little more than back rubs, according to the indictment.

In Miami, two doctors and several nurses from ABC Home Health Care Inc. were charged with swindling $25 million by writing fake prescriptions recommending nurses and other expensive aids to treat homebound patients, authorities said. The services were never provided. A message left Thursday was not immediately returned.

In total, nearly three dozen defendants were charged in Miami in various scams that topped about $56 million.

Thursday’s totals exclude busts two days earlier in Miami that netted 21 suspects accused of bilking $200 million from Medicare.

“These unprecedented operations send a clear message. We will not tolerate criminals lining their pockets at the expense of Medicare patients and taxpayers,” HHS Inspector General Daniel R. Levinson said.

For decades, Medicare has operated under a pay-and-chase system, paying providers first and investigating suspicious claims later. The system worked when the agency was paying hospitals and institutions that couldn’t close up shop and flee the country if they’d been overpaid. But as Medicare has expanded to one of the largest payer systems in the world, he agency has struggled to weed out crooks. There are about 1.3 million licensed suppliers nationwide with 18,000 new applications coming in every month.

“We can arrest and charge people every day and it still won’t make a dent until changes are made to Medicare,” said FBI special agent in charge John Gillies.

He called for criminal background checks and fingerprints of providers. He also suggested Medicare use unique, secure numbers for patients instead of Social Security numbers, making it easier to cancel Medicare cards in fraud cases.

Sebelius has promised more decisive action on the front end, by vigorously screening providers and stopping payment to suspicious ones, under greater authority granted by the Affordable Care Act.

Authorities also announced Thursday they were adding strike forces in Chicago and Dallas.

——

Associated Press Writers Pete Yost in Washington, Tom Hays in New York and Curt Anderson in Miami contributed to this report.

Health and Human Services Secretary Kathleen Sebelius touted the Affordable Care Act as one of the toughest anti-fraud laws in history.

“The days when you could just hang out a shingle and start billing the government are over,” she said.

Sebelius and Attorney General Eric Holder forged a partnership in 2009 to target fraud hot spots around the country with teams of investigators and prosecutors.

Sebelius said new technology will help authorities view Medicare claims data closer to real time and flag suspicious patterns. More comprehensive background checks, including possibly fingerprinting providers, may also follow. The agency gets roughly 18,000 applications a month to become Medicare providers. Now it can put a moratorium on new applications in certain areas, like physical therapy, if it notices a spike in fraudulent activities.

The Centers for Medicare and Medicaid Services has come under fire for lax screening as news reports surfaced of criminals with violent records, including a convicted murderer, obtaining Medicare supplier licenses. Applicants with felony records can only be rejected if their convictions are 10 years old or less.

By the time officials catch on to suspicious billing patterns, crooks typically dump that provider ID and open a new one, or flee the country. Violent criminals and mobsters are also getting involved, seeing Medicare fraud as more lucrative than dealing drugs and having less severe criminal penalties, officials said. The Affordable Care Act will increase the penalties for Medicare fraud.

FBI officials also acknowledge the mob’s involvement in Medicare fraud Monday, saying they investigated a record 2,600 cases in 2010 and helped dismantle more than 60 fraudulent companies.

Scams that once bilked $1 million or $2 million from Medicare a decade ago have also morphed into sophisticated multimillion dollar networks involving doctors, patient recruiters and patients.

“Prosecutions are not the solution to the problem of fraud,” said Miami U.S. Attorney Willy Ferrer. Miami is ground zero for Medicare fraud, racking up around $3 billion a year.

“The best way to prevent fraud in the first place is to close loopholes that allow the fraud to occur on the front end,” he said.

In fiscal 2010, HHS inspector general excluded 3,340 from being health care providers, according to the report.

The Medicare fraud strike force filed charges against nearly 300 defendants who collectively billed the Medicare program more than $590 million in 2010, including the largest takedown in Medicare fraud history in July. The busts, carried out in Miami, New York City, Detroit, Houston and Baton Rouge, La., netted 94 suspects — including several doctors and nurses — charged in scams totaling $251 million.

Authorities expanded the strike force last year to Brooklyn, Baton Rouge, and Tampa, Fla., for a total of seven cities in the U.S.

On Monday, authorities attributed the record number of recovered funds to stepped up initiatives from HHS and Department of Justice and increased number of whistle blowers from the corporate world. Federal authorities recovered $4 billion, including $1.5 billion in administrative findings. Whistle-blowers received about $300 million in 2010.

The bulk of the recovered funds came from pharmaceutical companies.

In August 2010, Allergan, Inc. agreed to pay $600 million for promoting Botox for headaches and other pain that hadn’t been approved by the FDA. Novartis Pharmaceuticals Corporation also agreed to a $422.5 million settlement for the illegal marketing.

“Consumers should have treatment that is not tainted by kickbacks, not influenced by misleading marketing schemes and not made more expensive by a fraudsters desires to put profits over patients,” Associate Attorney General Tom Perrelli said.

Check out this report by 60 Minutes in which Steve Kroft says that, in Florida, Medicare fraud has replaced cocaine as the number one criminal enterprise, funneling billions of taxpayer dollars into criminal bank accounts. Infuriating.