Justice Department Announces Charges Against 78 for Healthcare Fraud
The U.S. Department of Justice announced charges against 78 people across 16 states, including Florida, for charges related to healthcare fraud. The schemes allegedly were meant to net $2.5 billion in potential earnings and targeted the elderly, HIV patients, and pregnant women, according to the report. 24 doctors, nurses, and medical professionals were among the 78 individuals targeted by the Justice Department.
Investigators allege that two men from Kansas orchestrated one of the largest healthcare fraud schemes ever uncovered. The case involves healthcare claims made in the Southern District of Florida and an estimated $1.9 billion in false or fraudulent claims to Medicare and Medicaid.
Three of the men were executives for a company known as DMERx, a company that sold templates of doctors’ orders. The indictment alleges that the company used the templates to file billions in false or fraudulent claims and then pocketed the cash. Many of the fraudulent orders were related to durable medical equipment such as orthotic braces. The company would exchange these orders for kickbacks. Many of the items were not reimbursable through Medicare.
Durable medical equipment fraud
Durable medical equipment fraud is among the leading causes of losses to Medicare and Medicaid. Durable medical equipment includes equipment that is used by patients in their own homes. This includes items like:
- Oxygen machines
- Blood and glucose monitors
- CPAP machines
- Prosthetic limbs
Medical device and equipment fraud fall into several categories. In the case mentioned above, you have an instance of illegal kickbacks. The False Claims Act makes certain arrangements illegal because they incentivize overuse of durable medical equipment that patients don’t need. In these cases, some patients may need the equipment but the market for those patients is smaller. Companies earn money based on volume so doctors over-prescribe the use of this equipment in exchange for money from a company that manufactures the equipment.
The losses to public health insurance programs like Medicare and Medicaid are extreme. In the case mentioned above, the companies netted nearly $2 billion in proceeds by overprescribing durable medical equipment to patients who didn’t need the equipment. Doctors would receive kickbacks and the company that manufactured the equipment would receive extra orders.
In many cases, the equipment is unnecessary for the patient. Medicare and Medicaid require that a device be medically reasonable and necessary for treatment. Some doctors will expand the capacities of this equipment or make recommendations that are off-label simply so that they can sell more equipment. Medical device companies commit fraud by forging a determination that a medical device is medically necessary.
The U.S. government is currently cracking down on medical fraud because it costs public health insurance billions annually. Defendants in these cases are doctors and healthcare professionals who have allegedly filed false claims on public health insurance.
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