WASHINGTON — Federal agents on Tuesday broke up a billion-dollar Medicare scam that peddled unneeded orthopedic braces to hundreds of thousands of seniors. Two dozen people were charged, including doctors accused of writing bogus prescriptions.
The Justice Department said the scheme relied on overseas call centers to pry Medicare numbers from beneficiaries. Authorities also announced charges against owners of call centers, telemedicine firms and medical equipment companies that shipped unneeded back, shoulder, wrist and knee braces.
Profits from the scheme were laundered through offshore shell companies and then used to buy high-end cars, yachts and luxury homes here and abroad, officials said.
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.
The Health and Human Services inspector general's office said the fast-moving scam was fueled by kickbacks. The FBI, the IRS, and 17 U.S. attorney's offices took part in the crackdown.
"The telemedicine we are talking about is basically a tele-scam," said Gary Cantrell, who oversees fraud investigations for the HHS inspector general's office. "We are not talking about the use of advanced technology to provide better access to care."
Officials said the scam was detected last summer as complaints from beneficiaries poured in to the Medicare fraud hotline.
They said telemarketers would reach out to seniors offering "free" orthopedic braces, also touted through television and radio ads. Interested beneficiaries would be patched through to call centers, part of what officials described as an "international telemarketing network" with operations in the Philippines and throughout Latin America.
After verifying Medicare coverage, the seniors would be transferred to telemedicine companies for consultations with doctors, who wrote prescriptions for orthopedic braces, regardless of whether the patients needed them or not. Sometimes the same patient would get several braces.
The call centers would collect prescriptions and sell them to medical equipment companies, which would ship the braces to beneficiaries and bill Medicare. Medical equipment companies would get $500 to $900 per brace from Medicare and would pay kickbacks of nearly $300 per brace.
Officials said it's one of the biggest frauds the inspector general's office has seen. Charges were being brought against defendants in California, Florida, New Jersey, Pennsylvania, South Carolina and Texas.