According to a statement on Tuesday from the federal authorities, a $1.2 billion Medicare scam has been broken up. The scammers used foreign call centers to sell unnecessary orthopedic braces to hundreds of thousands of vulnerable senior citizens. The Justice Department explained that they charged 24 people from all over the United States. The list of people charged includes doctors who were accused of writing fraudulent prescriptions for unneeded shoulder, wrist, back, and knee braces, call center owners, medical equipment companies, and telemedicine firms.
The inspector general’s office for Health and Human Services said that this scheme quickly turned into several other related scams, fueled by the kickbacks provided by those that were involved. 17 U.S. attorney’s offices, the FBI, and the IRS were involved in the process of arresting the 24 suspects on Tuesday morning.
According to Medicare’s anti-fraud unit, they’re also taking action against the 130 medical equipment companies that were implicated on Tuesday. The scam billed Medicare $1.7 billion and they received more than $900 million of what they attempted to get.
Hired telemarketers would call senior citizens to offer them “free” orthopedic braces. Those that seemed interested would be transferred to call centers that were in on the scheme. With call centers in the Philippines and Latin America, officials described the illicit organization as an “international telemarketing network.” Once the call centers verified the seniors’ coverage with Medicare, they transferred them to different telemedicine companies to consult with doctors.
Gary Cantrell, the person responsible for conducting fraud investigations for the HHS inspector general’s office, said: “The telemedicine we are talking about is basically a tele-scam. We are not talking about the use of advanced technology to provide better access to care.”
The doctors would then write prescriptions for the braces, even if the patients didn’t need them. Many times, one patient would receive multiple braces from the “tele-scam.” The call centers would then collect the prescriptions and sell them to different medical equipment companies, who would then ship the braces to the senior citizen and bill Medicare. Medicare would pay the medical equipment companies $500 to $900 for each brace, and then the companies would turn around and dish out kickbacks of almost $300 for each brace.
According to officials, the scam was discovered last summer after beneficiaries began calling the Medicare fraud hotline with complaints, which happened around the same time as a few consumer news organizations started warning senior citizens about the scam. Cantrell said that the longer the investigation continued, the more cooperation federal agents received from those that were familiar with similar schemes.
Officials claim that this is one of the biggest scams the inspector general’s office has ever seen. People from New Jersey, Florida, California, Pennsylvania, South Carolina, and Texas were being brought up on charges. Chief Don Fort from the IRS criminal investigations unit said: “The breadth of this nationwide conspiracy should be frightening to all who rely on some form of health care. The conspiracy…details broad corruption, massive amounts of greed and systemic flaws in our health care system that were exploited by the defendants.”
Taxpayers unknowingly dish out billions of dollars each year to health care fraud, and according to experts part of the problem is caused by Medicare being required to quickly pay medical bills, which means that money is dished out before fraudulent behavior can be detected. Investigators in the business call this “pay and chase.” Recently, Medicare has attempted to try new techniques used by credit card companies to detect fraud before it becomes a major issue.
Even though the seniors that received the orthopedic braces didn’t have to pay anything up front, they did release their private information to scammers, which could be sold for many different illegal activities. Also, if a senior did, in fact, need a brace, they may have to wait long periods of time for Medicare to help because there are limits to how often they can pay for certain supplies. “It can be very attractive to receive equipment. But after giving out your identifying information, it could be compromised to perpetuate additional fraud. There is no fraud without the ID number of a Medicare beneficiary,” said Cantrell.