$100 million Pay Back

Tricare/CHAMPUS Fraud Update 08: A federal judge ordered a Philippines company to pay back $100 million (euro63 million) it swindled from the US military’s health insurance program. Health Visions (HV) Corp., which pleaded guilty to mail fraud, was ordered to liquidate all assets within 10 months and give the proceeds to the US government. Federal prosecutors say the company bilked the military’s Tricare program out of $99.9 million (euro63.35 million) between 1998 and 2004. The company routinely inflated claims by more than 230%, operated a phony insurance program and billed for medical services never delivered, court records showed, and the Pentagon moved slowly to uncover the scheme. Assistant US Attorney Peter Jarosz described Health Visions as the biggest violator yet in a long-running investigation into Tricare fraud in the Philippines. "This is basically a death sentence for the company. It will no longer exist and that will protect the Tricare program since it was the biggest violator," he said after the hearing. "We got what we needed out of this prosecution."

The US closed its military bases in the Philippines in 1992 and withdrew its active-duty forces, but thousands of retirees remained. Formed in 1997, Health Visions owned and operated hospitals and clinics in the Philippines and billed Tricare on behalf of other health care providers. On top of the $99.9 million (euro63.35 million) in restitution, US District Judge Barbara Crabb ordered the company to forfeit an additional $910,000 (euro577,000) and pay a $500,000 (euro317,000) fine. Health Visions will be required to sell off land, office buildings and hospitals in the Philippines and an airplane and houses in the US under Crabb’s order. The company has run into problems selling hospitals because of ownership disputes, and Jarosz said it was uncertain whether the U.S. government would ever recover the full amount. The company’s lawyer, Christopher Kelly, declined to comment. He told Crabb he had nothing to add beyond a plea agreement, which was unsealed on 24 APR. Health Visions and its former president, Thomas Lutz, were hit with a 75-count indictment in 2005. Lutz, a US citizen who turned 41 on 24 APR, has pleaded guilty to his role in a kickback scheme and could face up to five years in prison when he is sentenced. A date for that hearing will be scheduled shortly now that the company has been sentenced, Jarosz said. No word has been released yet on what action will be taken against the hundreds of military vets/dependents who knowingly aided and abetted this fraud. All were required to sign Tricare claim forms verifying treatment and all received EOB’s identifying what had been billed to Tricare by HV.

The case has been an embarrassment to the Pentagon, where different branches have blamed one another for allowing the company’s fraud to slip through the cracks. The fraud was so extensive that claims from the Philippines increased by 2,000% between 1998 and 2003 even as the number of Tricare beneficiaries remained the same. Payments to the country went up from less than $3 million (euro1.9 million) to more than $60 million (euro38.05 million) during that time. The Office of Inspector General has criticized Tricare’s managers for waiting years to cut off payments to Health Visions after suspecting the company of fraud. William Winkenwerder, former assistant secretary of defense for health affairs, said that the inspector general’s office was partly to blame because it refused his requests to send additional investigators to the country. He said he worked hard to stop the problems after they came to his attention in 2003. Asked how the company was able to defraud the program of $100 million (euro63.42 million), Winkenwerder said: "There were some very deceptive practices that were occurring. The fact that this was a faraway location did add to the challenge of uncovering problems. And they didn’t get away with it ultimately, which is the good news." The investigation has been handled by prosecutors in Wisconsin because WPS Health Insurance, a Madison company, is the subcontractor that handles most overseas claims. About three dozen others have been indicted to date, mostly US military veterans and Philippine doctors.

Tricare Scam Continuing

Tricare/CHAMPUS Fraud Update 9: The clinic where Dr. Alberto Marzan allegedly played his role in a $100 million swindle of the U.S. military’s health insurance program sits abandoned, along with the adjacent family home. But a legacy remains, with a U.S. Navy retiree saying scams are still rife even after a federal judge ordered a Philippines company to pay back the money it skimmed.

Marzan, one of the longest-wanted fugitives in the probe, recruited dozens of military retirees to falsely claim they and their relatives were confined at his clinic and received expensive medical services, U.S. prosecutors say. He made fraudulent claims of $1.5 million to the program and was paid more than $1 million, prosecutors add. In return, he typically paid kickbacks to the retirees. A U.S. federal grand jury returned a 35-count indictment against Marzan in 1999, but he has apparently remained free in the Philippines after vanishing from Moncada RP. Neighbors, village leaders, police and former co-workers in the Moncada town hall, where he used to sit as councilor, say the doctor’s family slipped out of town more than three years ago and remains underground. Claro de Castro, head of the National Bureau of Investigation’s Interpol division, said his office has arrest warrants for a doctor and a beneficiary. But he refused to identify them or say if the wanted doctor was Marzan because agents are still working on the case.

Jerry Minor, a Navy retiree and administrator of Lifeline Medical Center - a Tricare-accredited clinic in western Olongapo city near the former U.S.-run Subic Naval Base - said many accredited doctors and clinics in the city continue to overprice their services. Retirees are usually lured into the scheme because the clinics do not charge them the required 25% share of the cost, instead sending the whole bill to Tricare, Minor said. One clinic blacklisted by Tricare for fraudulent claims simply changed its name and is back in business, he told The Associated Press in an interview 25 APR. Minor said a retiree’s wife who was convinced by a clinic four years ago to sign a stack of blank claim forms - one is filled out every time a beneficiary goes to a clinic - was shocked to find out last December that several women were collecting on claims using her details. "It was like signing a blank check," he added. He said he tried to find out for himself about the overpricing by going to a doctor, who told him he would be charged 850 pesos ($20) for a 15-minute consultation. The price was higher than the 500 peso ($12) fee per consultation under Tricare regulations. Minor said when he brought up his share of the cost, the doctor told him, "Don’t worry about it, you pay nothing. Tricare does." He said he has reported the anomalies to Tricare officials but the scams continue.

Vicky Gross, a retiree’s widow who used to work for Health Visions, said many doctors and clinics don’t charge beneficiaries their share of costs but she did not know what they were charging to Tricare. Austin Camacho, a spokesman for the Pentagon’s Tricare Management Activity, said the program has implemented new controls to combat fraud in the Philippines in recent years. Among other things, the program looks for patterns of aberrant practices and reviews claims that appear excessive. In 2001-07, the program refused to pay $288 million in fraudulent or excessive claims from the country, he said. Still, he said it is hard to catch all fraud overseas and Tricare does not exclude providers "without sufficient evidence. This can be difficult in an environment where law enforcement resources are limited, providers are not always cooperative and are not subject to the U.S. government’s subpoena power," he said. Rufino Bayao Jr., a Navy retiree who served a 1.5-year U.S. prison term and three years of probation for taking part in the scam with Marzan, advises retirees not to fall for the bait. "If they are caught, they will also suffer," he told AP in his home in northern Tayug town. "It’s not worth it." Aside from the prison term, Buyao is having more than a third of his $800 monthly pension deducted to pay for $132,390 in restitution that a U.S. court ordered him to pay. He says he got only 200,000 pesos ($4,760) from Marzan for signing false claims, with much of the money going for drinking binges

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The U.S. military’s health insurance program has been swindled out of more than $100 million over the past decade in the Philippines, where doctors, hospitals and clinics have conspired with American veterans to submit bogus claims, according to prosecutors and court records. Seventeen people have been convicted so far — including at least a dozen U.S. military retirees — in a little-noticed investigation that has been handled by federal prosecutors out of Wisconsin because Madison-based WPS Health Insurance holds the contract to process many of the claims. It has not been accused of any wrongdoing. At the center of the case is Tricare, a Pentagon-run program that insures 9.2 million current and former service members and dependents worldwide. The United States closed its military bases in the Philippines in 1992 and withdrew its active-duty forces, but thousands of retirees remained. Some saw an opportunity to pry easy cash from Tricare. Health care providers in the Philippines filed claims for medical services never delivered, inflated claims by as much as 2,000% and shared kickbacks with retirees who played along, court records reviewed by The Associated Press show. "There just seemed to be so many possibilities for abuse of the system, and there were so few controls in terms of monitoring," said former U.S. Attorney Peg Lautenschlager, who oversaw prosecutions in the late 1990s.

Pentagon auditors say Tricare moved slowly to uncover and stop the fraud. And a FEB 08 audit warned that the program is still vulnerable to rip-offs because of lax controls and that similar fraud schemes are starting to emerge in Latin America. News of the scope of the fraud comes as the Pentagon seeks to raise fees for Tricare’s beneficiaries — fourfold, in some cases. The proposed increases have outraged groups representing servicemen and have been blocked by Congress. Tricare paid $210.9 million in overseas claims in 2006, the latest year for which figures were available. At the height of the fraud in 2003, Pentagon officials say, two-thirds of the $61.8 million paid to Philippine providers — about $40 million — was fraudulent. The fraud in the Philippines was so extensive that the number of claims filed there skyrocketed nearly 2,000% between 1998 and 2003 even as beneficiaries there — about 9,000 mostly retired military members and dependents — remained constant. "I know this is illegal and wrong to submit fraudulent claims to get money, but I did it for fun," U.S. Navy retiree Romulo Estoesta told investigators. He died in 2002.

Austin Camacho, a spokesman for the Pentagon’s Tricare Management Activity, which runs the program, said the fraud has been hard to prove because of language barriers, a lack of cooperation from providers and limited law enforcement resources. But he said the agency added numerous controls and is making every effort to stop fraud. In one big case, prosecutors say Health Visions Corp. — which owns hospitals and clinics in the Philippines — bilked the program out of nearly $100 million from 1998 to 2004. Its former president, Thomas Lutz, has pleaded guilty to his role in a kickback scheme and could get five years in prison. He could be sentenced in Madison as early as 2 4APR. The company has also reached a plea agreement, but it is sealed. Prosecutors say Health Visions executives instructed billers to inflate every claim by at least 233% and falsify diagnoses. Lutz refused to comment when reached by telephone in Columbia, Mo., where he is living with relatives. The company’s lawyer had no comment. Pentagon officials received fraud allegations against the company in 2000 but waited until late 2005 to move to cut off payments, according to an internal audit report. The company reaped tens of millions of dollars in payments in the meantime. In a 2005 memo, William Winkenwerder, then assistant secretary of defense for health affairs, complained that his requests to send additional investigators to the Philippines were ignored.

The fraud went well beyond Health Visions. A Pentagon official warned in 2004 that the Philippine schemes were costing U.S. taxpayers $40 million a year. In all, those convicted have been ordered to pay back only about $1.8 million. Assistant U.S. Attorney Peter Jarosz said of the 37 people indicted, about 20 remain free, in part because requests to extradite suspects from the Philippines have rarely succeeded. Claro de Castro, chief of the Philippine National Bureau of Investigation’s Interpol division, insisted Philippine authorities have cooperated with the U.S. Nevertheless, federal agents have resorted to trying to capture defendants when they step on U.S. soil. Dr. Diogenes Dionisio, who ran a clinic near Manila, was arrested earlier this year after he arrived in Guam for a vacation. He has pleaded not guilty to submitting $2 million in fraudulent claims. His lawyer, Charles Giesen, said his client was never notified he was facing indictment. "He was getting off the plane with his golf clubs and they put him in handcuffs," Giesen said. "It was a complete surprise and somewhat baffling." [Source: Associated Press Ryan J. Foley article 23 Apr 08 +]

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In the proposed FY09 budget DoD included the “Task Force for the Future of Military” recommendations to dramatically raise the TRICARE enrollment fees, co-pays and deductibles for working age military retirees and their families. They estimate a savings to them (and a cost to the retirees) of $1.2 billion. On 7 FEB, representatives from The Military Coalition testified against these proposals before the House Armed Service Committee’s personnel subcommittee. The increases proposed for 2009 are as follows:

• For retirees with retired pay from $0 to $19,999 for TRICARE Prime (presently $230 for an individual and $460 for a family) up to $364 for an individual and $728 for a family.

• For TRICARE Standard (presently there is no yearly enrollment fee and the deductible is $150 for an individual and $300 for a family) there will be an enrollment fee of $32 for an individual, $64 for a family, a deductible of $209 for an individual and $407 for an family.

• For retirees with retired pay from $20,000-$39,000 for TRICARE Prime (presently $230 for an individual and $460 for a family) up to $444 for an individual and $888 for a family.

• For TRICARE Standard (presently there is no yearly enrollment fee and the deductible is $150 for an individual and $300 for a family) there will be an enrollment fee of $32 for an individual, $64 for a family, a deductible of $252 for an individual and $503 for an family.

• For retirees with retired pay from $40,000 and above for TRICARE Prime (presently $230 for an individual and $460 for a family) up to $594 for an individual and $1,188 for a family.

• For TRICARE Standard (presently there is no yearly enrollment fee and the deductible is $150 for an individual and $300 for a family) there will be an enrollment fee of $32 for an individual, $64 for a family, a deductible of $337 for an individual and $675 for an family.

• The present co-pays in retail for a 30 day supply are $3 for a generic drug, $9 for a brand name and $22 for a non-formulary drug. Under this proposal it would increase to $15 for a generic; $25 for a brand name and $45 for a non-formulary drug.

• Mail order for 90 day supply co-pays are presently $3 for a generic, $9 for a brand and $22 for a non-formulary. Under the proposal the generic they would have $0 co-pay generic, $15 for the brand and $45 for the non-formulary.

[Source: TREA Washington Update 8 Feb 08 ++]

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TFL FACTS & TIPS UPDATE 01: Tricare for Life (TFL) is TRICARE’s Medicare-wraparound coverage available to all Medicare-eligible Tricare beneficiaries, regardless of age, provided they have Medicare Parts A and B. Under TFL Medicare is your primary insurance and TRICARE acts as your secondary payer minimizing your out-of-pocket expenses. Tricare benefits include covering Medicare’s coinsurance and deductible. Key features of Tricare for Life include:

• Minimal out-of-pocket costs (aside from Medicare part B premium).

• No enrollment fees for TFL. But, you must purchase Medicare Part B and pay monthly premiums to be eligible for TFL.

• Coordination of benefits between Medicare and Tricare.

• Tricare is the secondary payer for all services covered by both Tricare and Medicare.

• Tricare is the primary payer for those services covered only by Tricare.

• Additional steps may be required in order to coordinate benefits if you have other health insurance in addition to Tricare and Medicare.

• Freedom to manage your own health care.

• No assigned primary care manager.

• Visit any Medicare provider.

• Receive care at a military treatment facility on a space-available basis.

• No claims to file (in most cases).

• Your provider files your claim with Medicare. Medicare processes the claims and forwards them electronically to Tricare.

• Tricare pays similarly to Tricare Standard in those overseas locations where Medicare is not available.

• You can apply to suspend your FEHBP coverage by calling the Office of Personnel Management’s Retirement Information line at 1-888-767-6738 to obtain a suspension form.

• Although the age for full Social Security retirement benefits has increased, the age for Medicare entitlement has not changed; it continues to be age 65.

TFL is available to all Medicare-eligible Tricare beneficiaries, regardless of age, including retired members of the National Guard and Reserve who are in receipt of retired pay, family members, widows and widowers and certain former spouses. Dependent parents and parents-in-law are not eligible for TFL. If you’re under age 65, have Medicare Part B, and live in a Tricare Prime service area, you have the option to enroll in Tricare Prime; Tricare waives your Tricare Prime enrollment fee. You should confirm that your Medicare status is current in the Defense Enrollment Eligibility Reporting System (DEERS). Your uniformed services ID card and your Medicare card, which must reflect enrollment in Medicare Part B, are evidence of your TFL eligibility. To learn more about how TFL works for you, you can enter your profile at http://www.tricare.mil/mybenefit/index.jsp and select “Tricare for Life” as your health plan. For help in determining which plan options are available to you refer to http://www.tricare.mil/mybenefit/ProfileFilter.do?puri=%2Fhome%2Foverview%2FPlanWizard.jsp? After answering a series of questions, it will tell you which plan options you may be eligible for. If you are not sure which plan you are in now, or if you want to compare your options side by side refer to http://www.tricare.mil/mybenefit/ProfileFilter.do?puri=%2Fhome%2Foverview%2FComparePlans. [Source: http://www.tricare.mil/mybenefit/ Jan 08 ++]

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