WCC Test Two

Why is Medicare such an easy target for fraudulent equipment sales and how do they work? 

• Fails to investigate the legitimacy of suppliers and no documentation is required for “druable medical products”

• Sell like telemarkerters, hgired teens to sell and take advantage of elderly. Doctors signatures were used that were given n bak paper, paid off, kickbacks etc.. or even used ID number of dead or retired doctors

•  A government study estimated that as much as 10 percent of all medicare billing is fraudulent: forged invoices, falsely inflating # of house nurses spent with patients, unnecessary lab tests, false/phoney claims for unapproved procedures.  

• Kidney dialysis: some providers use obsolete and potentially dangerous machines to cut costs

• Ambulances: unnecessary or billing for one even when the patient drove a car. Billing for oxygen when none was administered 

• Individual doctors can cheat Medicare by: 

• Overcharges: make petients sign contracts for services at a higher rate than medicare covers and requiring the patient to pay the difference

• Retainers: make patients pay up front for services sayng they are not covered by medicare 

• Waivers: make patients waive their right to have the physican bill medicare direct;y and forcing patient to pay for the services

What forms does Home Health Care fraud take. 

• Overbilling Medicare or Medicaid: charge for several hours when nurse was only there one

• Send untrained workers billing as if trained  

• Send no one: 

• Overcharging: charge more hours than provided 

• Split proceeds with patient: patient signs off 

• Bill for services provided to patients never seen 

Growing concern in Home health care 

• Home infusion services rpoviding intravenious drugs in hime, drigs are marked up 150% - 1,000%, even 2,000%

Is Home Health Care well regulated?

• Easier to watch for fraud in consolidated hispital, new opportunities now open for more businesses and hard to track fraud. 

What are the repercussions of doctors referring patients to labs in which the doctor has an ownership stake.

• Self-referrals: Doctors will commonly send patients to have tests done outside their office, but may own the lab or company doing the test. Not illegal but raises an ethical issue. Doctors who owned diagnostic labs ordered tests at a rate 45% more often than Doctors who did not, and another study found that doctor-owned labs charge 40% more than non-doctor-owned labs 

How does the quality of care in Nursing Homes compare

• Now owned by corporations, it is a business that wants to make money 

1. Staff are often the lowest paid in healthcare

2. Profit-driven care: want to cut costs

• People have died from negligent care

• Mistreatment 

• Many nursing homes have resorted to using powerful sedatives to keep patients docile and reguring less care and supervision 

• Unsupervised patients have wandered away and died, developed bedsores, fallen, had gangrene and foot amputations, and received incorrect medication doses resulting in death. Rest homes: no 24-hour supervision; patients wander and are not found

What percentage of nursing homes in the US were cited for patient abuse in 1999-2000 and are the employees compensated well

• Nation wide 30% of nurcing homes were cited for violations in just one year(19999-2000). 

• NOPE LOWEST PAID IN HELTHCARE

How large is the health care industry in the US

• ⅙ or 15.5 % of our economy is healthcare; Largest industry in the U.S. 

How large is health care fraud

• Size estimations of fraud = 250 billion FBI: 

• $ 750 billion Institute of Medicine

• Makes healthcare fraud a large portion of the cost of WCC each year

 Why is it so hard to monitor the health care system and stop the fraud

The system is so large it is difficult to monitor and police

What tactics have some psychiatric hospitals used to get patients

• Private psychiatrists: began opening and charging higher rates to insurance companies 

• Hospitals engaged in paying bounty hunters who brought in patients, patients hospitalized against their will, until the insurance ran out, false diagnosis, overbilling, unnecessary treatment, and kickbacks to recruit patients. 

• Even patients who voluntarily sought help were imprisoned, and abuse was difficult to prove because the “patients were crazy

What percentage of fraud among doctors is committed by psychiatrists.

• Psychiatrists are about 8% of physicians but are 20% of the doctors who are suspended from medicaid for fraud 

Are doctors willing to let “outsiders” monitor the profession and are they willing to do it themselves

Policing doctors: majority of physicians are doing things by the book; doctors argue that the profession is capable of policing itself and does not need oversight. Like law enforcement, doctors have a “white coat of silence” and are reluctant to report colleagues who provide substandard care

What is the estimated loss from health care fraud annually and does it affect anyone other than the government and insurance companies.  What methods have been successful in catching hospital overbilling

• Size estimations of fraud = 250 billion FBI: 

• $ 750 billion Institute of Medicine

• Impacts patients, families, consumers, and businesses, in terms of higher insurance premiums and costs for government healthcare programs

• AARP has provided training to senior citizens on how to spot fraud and overbilling and how to report it. Patients carefully review the summary of charges submitted to Medicare 

• Many caught simply because they are reckless in how they bill their srvises X- rays without film, overbilling, hysterectomies on males etc… 

• Investigators are underfunded and have some success which causes some deterrence for a time when prosecuted and dent ti prison 

Why is Medicaid fraud higher than for Medicare.  Why are many who commit fraud caught.

• Medicaid: a program where the federal government run by the states that provides medical coverage for the poor 

• Lazy in paperwork

• Fraud higher in medicade because 10 percent of all billing is fraud

What was the Quiz Show scandal and who was punished

• 64 Thousand Dollar Question: two people compete: one average person and one “genuis” often a college profesor; fed answers in advance for higher ratings

• Those prosecuted were the contestants not the producers  

Has the practice of Payola ended.

No digital marketing expanded

What other media groups have been the subject of scandals

Print media, religion, non profits

What has the mass media been identified as the most influence source of what

• “Our social construction of reality” how we see the world, 

What role does religion play in society.  Is the embezzlement of church funds limited to one denomination

•  Functions as society's conscience. No Catholic, Baptist, etc…LAX ACCOUNTING PRACTICES  

What were the consequences of the televangelist scandal.  What forms did the scandals take

• Misappropriation of donated funds by televanglests

• Sanctuaries, colleges, universities, religious theme parks, living communities, city of faith hospital. 

• PTL: praise the Lord pass the loot scandle- 350 thousand dollars used to pay bills for lavish lifestyles 

• Religious scandals' effects: Decline in teleministries; damage to televangelists not involved in scandals; weakening of organized religion, with church memberships declining. Billy Graham is the only one not affected  

What options exist to prevent corruption in the world of religion

• Ward Rule 6: any non-profit or religious Institution needs a yearly auditor 

Which televangelist has avoided direct appeals for money.  What impact has the code of ethics of the National Religious Broadcasters had.

• Jim Baker PTL: praise the Lord pass the loot scandle- 350 thousand dollars used to pay bills for lavsh lifestyles. Diverted money for satellite bills to pay for home 

• The code of ethics is voluntary and has no enforcement powers. Often church leaders will give tearful confesion and beg for forgiveness

Why has the government stayed away from regulating televangelists

The government is reluctant to get involved in policing religious groups because of the first ammendment

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What other groups have been the victims of WCC crime besides religious.  Why.

• Other non-profits, 

• charities, American Cancer society, The United Way, KEEP FAMILY AND FRIENDS ON PAYROLL AND KEEP MONEY FOR LAVISH LIFE. ORGANIZATIONS HIRED AS FUND RAISERS FOR CHARITIES:  lot. of the groups keep 90 percent of what they raise and many in charge are fakes or professional fund raers who colitis donations for dozens of charitie

What is our most dominant institution.   

The economy is the most dominant institution

What effects does WCC have on society as a whole

• Undermine public trust in the economy. 

• People must be able to trust the economy to feel like it is fair; heart of market: honest and fair trading. Public trust in the honesty of the financial markets was shaken beginning in the 1980s financial scandals 

1. Misleading of investors

2. Misrepresentation of the financial conduct of firms' investments 

3. Risky investments by deliberately making false statements about the financial returns investors could expect

What are the consequences of many corporate take overs

• Corporate restructuring was actually downsizing with large scale layoffs and loss of jobs Manny employees can not find other jobs, If they do its lower wage 

What did Warren Buffet offer as a solution to curb insider trading

• Decreasing the profit- rewards of capitalism should come from building a business not just shuffling paper 

How does arbitrage work

• Arbitrage: an investment specialty in so called “deal stocks”. Occurs when company A and company B are negotiating a merger and, when completed, would result in shares of company A (valued at 50) being exchanged for company B (30). Arbitrators job is tio assess the likelihood of a merger and to buy a lot of company B stock at 30 so when merger is complete, it is exchanged for company A’s profit stock 

• Ivan Boesky 

Why has the law been unsuccessful in deterring insider trading

• Free enterprise system based on risk and reward, and therefore it is a level playing field. 

• Those who push little regulation want laissez faire model which means no even playing fielild, cant trust it. 

Who can be guilty of insider trading.  What are the penalties for committing it

Tip from insider: employee, board, officer, shareholder, people they give inside info to, non public info 

• Illigeal to use inside information  for you benefit and for insiders as well 

• Have the gift of gab yet feed off eavhother and turn on eachother if caught 

• Penalties: prosecution, 

1. Fraus accompanied many leveraged buycouts has been linked to many corporate bankruptcies. 

2. Corporate restructuring was actually downsizing with large scale layoffs and loss of jobs 

3. Manny employees can not find other jobs 

4. If they do its lower wage 

What impact has insider trading had on individual investment.

• Corporate raiding and market manipulation has hurt the confidence of individual investors so many abandoned the stick markey  

Is the information used to commit insider trading still passed face to face

• Now many people are sharing inf0rmation in emails which leave a paper trail “your word against mone” does not cover anymore 

What percentage of its value did Enron lose in a matter of months.

99 percent

What concerns did Arthur Anderson accounting firm find at Enron and did they make them 

• Concerned with Enron’s use of limited partnerships to disguise debt 

• They knew they should reveal this practice however they did not 

What is the primary purpose for setting up a limited partnership.  What were they used for at Enron

• Primary purpose: set up to raise venture capital- no liability beyons their capital contribution
  Enron used them as shells to hide finicial debt. Shifted debt to the limited partnership, they could maintain their A rating 

• Insiders were reaping huge profits  (andrew fatsow earned more than 30 million when his investment was just a fe thousand dollars)

What were the reasons for Enron’s collapse and what are the results from any corporate fraud.

• Top management, outside auditor (Arthur Andersen), stock analysis took what they said at face value, bankers, financial press,  but ultimately Enron fell to its own arrogant culture. 

Were the lower level Enron employees aware of what was going on at the top

Nope they invested and lost all their savings

What classic fraud schemes were included in the Enron failure

• Ponzi Scheme: executives at the top of the pyramid got rich at the expense of employees at the bottom

• PUMP AND DUMP: GOAL WAS TO SELL THE COMPANY’S STOCK 

• Insider trading scandal: with the executives selling their stock knowing the company was about to go under

• High con game by the use of the limited partnerships to gain capital and hide debt 

What is the primary responsibility of a company’s Board of Directors.  How should they exercise their authority

• To act in the best interest of the shareholders 

• They should select and oversee ethical managers who run day to day operatioms 

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How were the Enron Board of Directors compensated

• Grossly overpaid to sit on the board so they oversought the sketchy accounting practices. 

What recommendations came from the Worldcom investigation.

• Largest accounting fraud in US history, 

• Three issues: financial reporting responsibilities of the PCAOB,  corporations and external auditors 

• Board independence, Non executive chairman, independent committees, governance constitution 

What is the purpose of Sarbanes-Oxley.  Who does it hold accountable.  Does it have only civil penalties.

• Purpose: to increase investor confidence in the financial reports provided by corporations

• Affected the responsibilities of the auditors, board of directors, and corporate managers with respect to financial reporting. Also holds CEO and CFO responsible with their signature that they have reviewed reports 

• No it has criminal peanilties: