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                                                                                THE WEEK, Page 20

SOCIETY

The Medicaid Grifters


Operation Goldpill uncovers a massive prescription fraud


    Sometimes a scam becomes too successful for its own good. So
it was in the case of about 100 people -- including 82
pharmacists and a doctor -- arrested last week in 50 cities. Two
of the conspirators had complained, in a phone call that was
wiretapped, that they were running out of places to stash all
the illicit cash they were taking in. With such evidence in
hand, an army of more than 1,100 FBI agents and other federal
law-enforcement officials ended the largest health-care fraud
investigation to date. Under the complex scheme, medical
professionals and their accomplices stole tens of millions of
dollars from Medicaid as prescriptions were falsified or resold.
Said President Bush after the arrests: "These people are charged
with betraying a sacred trust."

    The crooked network, centered in New York City, Chicago
and Atlanta, reportedly used several grifts. The simpler
versions included billing Medicaid for prescriptions that were
never filled or substituting cheaper generic drugs while billing
Medicaid for higher-priced alternatives. But the operation also
did a brisk business in reselling drugs. A doctor, for example,
would prescribe medicine for a healthy Medicaid beneficiary, who
would fill the prescription at a crooked pharmacy. The "patient"
would then sell the medicine for about 10% of its value to a
"diverter," who would repackage and resell it, often on the
black market in Puerto Rico. In New York City, this sort of
scheme is known on the street as "playing the doctor."
Law-enforcement officials estimate that these and many other
forms of fraud drain upwards of $75 billion from the U.S.
health-care system every year.