Doctors Still Billing Medicare After Losing Their State Licenses

Federal data from 2012 shows that at least seven U.S. physicians who lost their medical licenses still billed Medicare for their services, collecting some $6.5 million from the national health insurance program. Their licenses had been revoked for serious transgressions including violations of prescription drug laws, sexual assault and gross medical negligence. Perhaps even more alarming is that Medicare was aware of the doctors’ lack of state licensure, according to records.

The information was compiled and released by the Federal Centers for Medicare and Medicaid Services (CMS), marking the first data of its kind published in more than three decades. To date, the administrator has only issued payment info for 2012, which officials hope will spur action and help prevent future Medicare fraud committed by unlicensed medical professionals.

Medicare fraud an area of growing concern

Among all federal agencies, Medicare has been considered a “high risk” program for more than 15 years by the U.S. Government Accountability Office (GAO), which found roughly $44 billion in improper Medicare payments in 2012. Officials say some of this money may have been lost to simple billing errors in addition to fraud.

In a phone interview with MSN Money Kathleen King, GAO director of health care, said: “Part of it is the sheer size of the program and its complexity…They can’t be like a private insurance company and exclude people because they don’t like their practices.”

In its responsibility to administer Medicare, the CMS has the authority to stop doctors from participating in the health insurance system if their license to practice medicine has been revoked by the state. However, while they have the right to exclude such physicians from the Medicare system, they aren’t required to by law.

An agency spokesperson for the U.S. Department of Health and Human Services Inspector General – which is also authorized to bar doctors from Medicare for the same reason – says that this rarely happens as long as the physician in question is allowed to practice medicine in another state that already knows about the license revocation.

Doctor stripped of his license still participates in Medicare

This was precisely the scenario of Dr. Robert Graor, a cardiologist who was convicted of felony embezzling and lost his license to practice medicine in Ohio in 1995. He spent three years in prison, had his Ohio medical license reinstated after his release, and later had it permanently revoked after it was determined that Graor had repeatedly lied about his credentials.

In 1998, Graor moved to New Mexico, which gave him a license to practice medicine. And in 2012, he collected $660,005 from Medicare for the treatment of his patients. To this day, despite his prior criminal conviction, loss of Ohio state license and misrepresentation of his credentials, Graor is allowed to practice medicine in New Mexico and participate in Medicare with no restrictions.

Graor is one of seven physicians that lost their license in one state and were later granted license to practice in another state, while continuing to bill Medicare. This “permissive area” has raised concerns among consumer advocacy groups, such as Washington-based Public Citizen.

“If a doctor is thrown out of one state, that should be enough to exclude them from Medicare,” said Public Citizen founder Sydney Wolfe, who calls the situation ridiculous.