Federal authorities have busted up what they say is a $1.2 billion Medicare fraud that should give taxpayers and patients pause about long-distance medical consultations and the huge sums of cash washing around the medical device industry.
Two dozen people, some of them doctors, have been charged in a complex ploy to gull seniors into asking about back, shoulder, wrist, and knee braces that were promoted as free on TV and radio ads nationwide. When the older adults called to inquire about the devices, they were transferred to telemarketing centers in the Philippines and Latin America.
In the far-away boiler rooms, trained operators extracted important personal information from callers, then connected them for “telemedicine” consultations with cooperating doctors. The MDs asked cursory questions before then prescribing the devices, whether needed or not. The orders were filled by select companies, which then would send out the braces and charge them to Medicare.
The firms billed taxpayers $500 to $900 per device, often sending seniors multiple items, whether they had requested them or not. The companies, federal prosecutors say, then paid the doctors kick backs of $300 per brace.
Get out those calculators or do even simple math and the scope of this activity is hard to fathom, as in, what, a million devices at, say, $1,000 per? Or as Don Fort, a ranking IRS investigator, described it, “The breadth of this nationwide conspiracy should be frightening to all who rely on some form of healthcare.”
Prosecutors said this was one of the largest Medicare fraud cases they have brought, with FBI Assistant Director Robert Johnson commenting, “Health care fraud causes billions of dollars in losses, it deprives real patients of the critical health care services they need, and it can endanger the lives of real patients so individuals like those arrested today can profit from their criminal activity.”
Authorities knew they had a big mess on their hands when seniors flooded Medicare hotlines to report fraud claims. Patients didn’t lose money in this illicit activity, because they weren’t required to pay any cash to get the braces.
But their private information may be circulating online, and it may be traded by identity-scamming criminals for years. If patients also develop bonafide medical need for orthopedic braces, they may find their Medicare requests from them bogged down in system limits on the issue and payment of such devices.
Defendants in the case were charged in California, Florida, New Jersey, Pennsylvania, South Carolina, and Texas. The charges against them were developed by investigators from Medicare and Medicaid fraud units, the FBI, IRS and 17 U.S. attorney’s offices.
Authorities said the defendants laundered their profits through “offshore shell companies and then used to buy high-end cars, yachts and luxury homes here and abroad,” the Associated Press reported, adding:
Medicare’s anti-fraud unit said it’s taking action against 130 medical equipment companies implicated. The companies billed the program a total of $1.7 billion, but not all of it was paid out. The loss to Medicare was estimated at more than $1.2 billion.
Although the charges specify that the defendants bilked the government for roughly three years, authorities called the fraud fast-moving and said it grew rapidly. The AP noted that Medicare is required to make fast payment on prescriptions, and even when officials begin to suspect problems with them and their volume, the agency is stuck in what critics call a “pay and chase” situation. Uncle Sam has tried to increase its systems’ sophistication, just as credit card companies have, detecting purchasing patterns and patients’ claims to detect aberrant and criminal behaviors.
Officials underscored that the remote diagnoses by doctors who have been charged with fraudulent actions should not be a negative mark against telemedicine. It is a burgeoning technology that advocates say could increase access to medical expertise and improve care for many now underserved Americans.
Telemedicine can be useful as a stop-gap way to provide help after natural disasters, though it has its limitations and should not be seen as an automatic way to reduce costs because it can lead patients to seek more care, according to a building body of research by the independent, nonpartisan RAND Corporation.
The New York Times, in a recent article, has reported on questions arising with telemedicine consults for men who want to get drugs through internet providers for sexual enhancement or to prevent hair loss but don’t want to undergo embarrassing face-to-face safety checkups for the medications with doctors. As the newspaper describes the new, online providers of male meds:
The sites invert the usual practice of medicine by turning the act of prescribing drugs into a service. Instead of doctors making diagnoses and then suggesting treatments, patients request drugs and physicians serve largely as gatekeepers.
In my practice, I see not only the harms that patients suffer while seeking medical services, but also their struggles to afford and access safe, efficient, and excellent medical care, especially with appropriate, necessary products — notably medical devices — that don’t prove to be defective and dangerous.
Medical device makers, with the help of business-friendly lawmakers, have fought oversight and regulation of their products. The makers have insisted that the federal Food and Drug Administration can best benefit patients with technological and other innovations by speeding and streamlining the process by which devices get cleared for sale.
But with Uncle Sam already grandfathering in so many items or allowing new products to bootstrap in for new clearances with lightweight comparisons to existing devices, the markets have become what one prominent safety advocate has termed a “Wild, Wild West,” rife, too, with patient harms.
The lamentable oversight of medical devices could not have been detailed more than it was in the Wall Street Journal’s recent return to its prize-winning investigation of morcellators. They are tissue-grinding tools used in keyhole or minimally invasive operations. They have been implicated, however, in spreading cancers, particularly when used in gynecological surgeries. The FDA has issued stern warning about the devices but declined to ban them, and the newspaper found them in use in hospital ORs still.
The FDA itself also revisited a problematic medical device—special scopes “vital for minimally invasive procedures to diagnose and treat conditions of the pancreas and bile duct.” The agency cracked down on the devices, their cleaning, and makers after The Los Angeles Times and other news organizations reported that dirty scopes were involved in dozens of infections and at least 35 deaths. The agency says that the number of complaints it has received about the devices has fallen, as have deaths tied to them. Still, there were three deaths, and the agency said that is too many. It is considering further steps.
Americans deserve more not less protection and oversight, and the billion-dollar brace scam shows how vulnerable we all can be. The Trump Administration, however, has now created a clear record of how it approaches public safeguards of our health and well-being, whether by appointing industry lobbyists to head agencies they have attacked, or by turning watchdog agencies into lap kittens. Yes, the officials who cracked down on the bogus braces deserve taxpayer praise, though questions still may need to be asked on improving the pay and chase practices in Medicare and Medicaid.
Still, even as officials announced this investigation, an outcry built over a toy maker’s sleeper, and why the federal Consumer Product Safety Commission (CPSC) had failed to order a recall of it. The American Academy of Pediatricians called for the action and for Fischer-Price to withdraw its cloth-covered Rock ‘n Play cradle because it can turn “deadly” and lead to infants’ asphyxiation. CPSC has conceded it knows of 30 such deaths since 2009. The maker insisted that the device meets all safety standards, and the agency had decided a warning about the Rock ‘n Play is sufficient.
But the toy maker, after the public shaming by pediatricians and a Consumer Reports investigation, abruptly changed course and decided to voluntarily recall its sleeper.
This was yet another instance in which CPSC inaction has frustrated and enraged parents and safety advocates. Voters may wish to take note whether the agency’s shift to industry friendly positions is what they really want in what has been a reasonable and often effective public watchdog protecting consumers, yes, including and especially vulnerable kids. Kudos to the pediatricians, Consumer Reports, and shame on the safety commissioners.