And Medicare officials admit that with their skimpy anti-fraud budget they are hamstrung because the system’s goal is to pay for medically necessary services quickly—within 14 days—which leaves little time to verify the millions of claims handled each week.

Shady health care operators have repeatedly proved they can circumvent Medicare’s weak technological defenses by simply altering computer billing codes to get their claims approved or by changing their scams to stay one step ahead of the system.

But this year Congress stepped up, allocating an extra $200 million for Medicare’s anti-fraud budget. An additional $300 million is on tap for 2010. The money has enabled the agency to make more unannounced visits to providers, launch more audits of dubious claims and upgrade its computer software that flags suspicious bills. And Medicare crime fighting is becoming more resourceful to keep up with the crooks. Now, for example, the agency is trying to rein in billing for expensive home visits to Medicare patients that are not needed or never made.

Miami’s average cost for each Medicare home health care patient with diabetes and related illnesses runs $11,928 every two months, according to a new HHS report—32 times the national average of $378. “That’s how bad things have gotten in Miami,” says Cecilia Franco, who heads the Medicare office there. So her office is sending nurses and investigators door-to-door to see if beneficiaries that health care agencies claim as clients really need twice-daily visits by skilled nurses. To discourage this scam, in January federal officials will impose a 10 percent cap on payments while they investigate claims—a first in Medicare history.

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