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Medical equipment scams cost the US billions every year

Doctors can unknowingly aid in scams targeting Medicare beneficiaries.
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· 4 min read

As you’re likely aware, the US spends *ahem* a lot on healthcare ($4.3 trillion in 2021, to be exact). But did you know that healthcare fraud makes up a not-so-small piece of that pie?

The National Health Care Anti-Fraud Association (NHCAA), a national organization that works to prevent health insurance fraud, conservatively estimates that 3% of the US’s total annual healthcare spend—a hearty $129 billion—is lost to healthcare fraud. Some government agencies estimate that percentage to be as high as 10% (that’s $430 billion), according to the NHCAA.

Overall, Medicare fraud costs the US about $60 billion each year, Nicole Liebau, national resource center director for Senior Medicare Patrol, a government-funded organization designed to help prevent Medicare fraud, told Healthcare Brew, though she added that “the exact figure is impossible to measure.”

While Medicare fraud isn’t new, the US saw a rise in one particular tactic during the pandemic: a durable medical equipment (DME) scheme.

How the schemes work

In a DME scheme, scammers target Medicare patients—often after a procedure or an injury—and cold-call them to offer free equipment, said Jennifer Stewart, senior associate general counsel and senior director of fraud prevention and investigation at Blue Cross Blue Shield of Massachusetts. The scammers offer consumers items like lidocaine, wheelchairs, walkers, or braces.

The scammers have roped in doctors—who are unaware they’re working with scammers instead of legitimate medical companies—to sign off on prescriptions that are then used to bill Medicare for the equipment, Stewart said. Sometimes patients actually receive the products, and sometimes they don’t.

“It’s really dangerous because [a prescription like lidocaine] could have reactions with other medications. The durable medical equipment isn’t sized for them, and certainly the doctor who treated their injury didn’t prescribe it […] There is a lot of patient harm involved,” Stewart said.

She added that these schemes primarily target seniors on Medicare, but they’re not the only people affected.

Taxpayers, who fund Medicare, bear the burden of the costs lost to these schemes as well as beneficiaries who pay higher premiums and out-of-pocket costs, according to AARP. Insurers are also on the hook if they end up reimbursing the scammers—though it’s hard to measure exactly how much is lost specifically to DME schemes each year, Liebau said.

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“I don’t know anyone who’s immune,” Stewart said.

Doctors might participate unknowingly

Doctors may not know they’re playing a part in a DME scheme, Stewart said. For one, scammers can incorporate companies and get an National Provider Identifier number, which helps the bad actors masquerade as covered healthcare providers.

Scammers also fax doctors “mass amounts” of prescription forms for them to sign, Stewart said, and doctors may not realize that some are fraudulent. It just takes one doctor to sign one form for scammers to be able to replicate a signature and use it on future prescription forms.

“It’s amazing […] that even though it’s been going on for a while, there isn’t better knowledge of this scheme,” Stewart said. “Because I don’t think most of these doctors are intentionally trying to defraud people or hurt people; I think they just don’t know.”

So, what do we do about it?

Unfortunately, there’s no single group of people who can stop these kinds of schemes from happening. Doctors, patients, and insurers all have to take steps to reduce the frequency of fraud.

For doctors, Stewart said it’s important to let patients know to only talk with their primary care provider who has their full medical history if they have questions after a surgery or an injury, and to not give anyone else their health information.

Doctors should also pay close attention to the prescription forms they’re signing, she said.

“Their practices are absolutely overwhelmed—we get that. But you’ve got to watch what comes in […] and just do that sort of gut check. Does this look like what you remember prescribing to your patients? Or are you getting way too many of these or ones that just don’t look right to you?” Stewart said.

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