Feds Bust $1.2 Billion Orthotic Brace Medicare Fraud Scheme

medicare fraud orthotic brace scheme

On April 9, the United States Department of Justice announced charges filed against individuals and companies that participated in one of the biggest Medicare fraud schemes the country has ever seen. Over 24 people have been charged in relation to the scheme, and 130 companies are being investigated due to their participation in the effort to defraud Medicare.

How the Medicare fraud scheme worked

The people charged in this Medicare fraud scheme include five telemedicine company executives, three licensed medical professionals, and owners of dozens of medical equipment companies that provided Medicare beneficiaries with durable medical equipment (DME).

Here’s how the scheme worked:

  1. Telemedicine call centers in the Philippines and Latin America contacted Medicare beneficiaries who may or may not have needed orthotic braces.
  2. Once they had this information, they passed it along to doctors who held brief phone conversations with the patients, wrote them prescriptions for low- or no-cost braces, and referred them to specific DME suppliers.
  3. After the DME suppliers received reimbursement for the orthotic braces from Medicare, they paid the doctors and call centers in the form of kickbacks and bribes.

The profits were laundered through offshore shell accounts and used to buy exotic cars, yachts, and luxury real estate around the world.

The case is being overseen by U.S. Attorney Craig Carpenito of New Jersey. Carpenito said in a statement, “The defendants took advantage of unwitting patients who were simply trying to get relief from their health concerns. Instead, the defendants preyed upon their weakened state and pushed millions of dollars’ worth of unnecessary medical devices, which Medicare paid for, and then set up an elaborate system for laundering their ill-gotten proceeds.”

The growing problem of Medicare fraud

The increasing frequency of telemedicine makes it easy for some to abuse Medicare, costing the health insurance program and taxpayers billions of dollars each year.

To combat this rampant and growing fraud, Medicare launched a predictive analytical tool in 2011 which identifies physicians engaging in suspicious behavior and stops Medicare payments to them until the matter can be investigated. In 2016 alone, the tool saved Medicare $1.5 billion by detecting fraudulent claims and stopping improper payments and reimbursements.

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