For Professionals: Medicare Fraud and Abuse

New Medicare Fraud Tools to Help Curb Rising Diabetes Supply Scams

Print this page

Published: May 3, 2011

A growing number of seniors are reporting suspicious and persistent phone calls from diabetes suppliers. Around the clock, callers are offering “free supplies” regardless of whether beneficiaries have diabetes, and requesting beneficiaries’ Medicare numbers and personal health information. This could be fraud or just highly aggressive marketing. Either impinges on the privacy of seniors and could be costing the Medicare system millions of dollars. Recently a Senior Medicare Patrol (SMP) volunteer called into her local SMP office with such a case, and left the following message:

“I just received a call from a diabetic supplier. They asked about my diabetes supplies, yet, I don't have diabetes nor does anyone else in my household. They also asked if I had a red white and blue Medicare card, and I lied saying ‘yes’ just to see what would happen. They then said they would have someone call me to arrange delivery of free supplies. This is most incredible! I asked for the phone number of the company and she declined but said someone would call me.”

After doing a quick Google search, this volunteer found this “company’s” website with a disconnected 800 number. She also found several message board threads about how this “company” is harassing people around the clock.

In another example, Diane Caradeuc, our California SMP Liaison, reported a similar case with her mother. She has diabetes and is already getting supplies from a company she likes and with whom she is satisfied. Yet, for the past several weeks, her mother has been getting persistent calls about receiving diabetic supplies from different suppliers. One weekend she got 2 early morning calls, one of them being at 8:15 am. Diane answered and asked where they were calling from. “Columbia….,” there was a pause, “South Carolina,” said the caller. Yet when Diane asked what time it was there (as they would be on EDT), they said 9 a.m. She then asked how they got her number as she’s on a Do Not Call Registry, and they replied it came from someone else in the home. Well, it’s only Diane and her mother living there. When asked if the contact was from Diane’s father, they immediately had his name and implied that yes, the contact was from him – yet he had died 6 years ago! With more questions, the caller hung up.

The Cost of Fraud

The F.B.I. reports that fraud costs the Medicare system anywhere between $70 billion and $234 billion annually.

While anti-fraud efforts have strengthened and diversified from top level government officials down to on-the-ground volunteers since the passage of health care reform, aggressive pressure to obtain Medicare numbers for billing purposes, such as these diabetes supplies cases, seem to be growing. The difficulty is knowing which calls are legitimate providers and which ones have the purpose to abuse the Medicare program and its trust funds.

Currently there are no official estimates for how much fraud costs but the National Healthcare Anti-Fraud Association (NHCAA), a watchdog group, cites information from the FBI that anywhere between $70 billion and $234 billion is lost annually. That ranges between 3% and 10% of the $2.34 trillion Americans spent on healthcare in 2008. This means that scams, such as these diabetes supplies cases, are a huge financial drain for taxpayers and the government, which spent $895.9 billion on Medicare, Medicaid and the Children's Health Insurance Program in fiscal 2009.

The scammers involved in healthcare fraud include business owners, healthcare providers and suppliers, doctors, pharmacists and even Medicare beneficiaries. Those involved in the fraud ring include both independent, scattered groups, and competitive, organized businesses complete with hierarchies and opportunities for advancement. And, as the Medicare population is blooming at a current 48.1 million Medicare beneficiaries with 1 new beneficiary becoming eligible for Medicare every 8 seconds, scammers see their potential opportunities growing. Medicare also processes over 4 million claims/day, paying an average of $1.5 billion/day in claims.

New Fraud Tools to Curb Fraud Growth

Yet, many scam artists may have overlooked several “minor” provisions of Obama's healthcare reform law, including some that took effect last month, that will “beef up” the prevention of fraud or abuse, such as the diabetes scammers mentioned above, as well as strengthen the penalties when caught.

These include implementing a risk-based screening of the roughly 19,000 new applications Medicare receives each month from people seeking to become Medicare-approved healthcare providers. Applicants who fall into a "high risk" category will be subject to fingerprinting and criminal background checks through law enforcement. This is one way the government can assess and choose with whom they’re doing business. They will also be requiring a $500 application fee.

Another new provision will allow U.S. Health and Human Services Secretary Kathleen Sebelius to place a temporary moratorium on new enrollments of providers and suppliers to government-run healthcare programs, whenever such a move is deemed necessary to fight fraud.

In addition, the Medicare and Medicaid computer payment systems will be much less vulnerable to fraud, due to new and smarter software programs and algorithms (see our article on new tools to fight Medicare fraud). Payments to the hundreds of thousands of providers and suppliers already in the system can now also be suspended in cases involving credible allegations of fraud. Before health care reform, the government required credible evidence to suspend payments; now a credible allegation is enough to warrant such an action.

These new tools, in addition to the strong cooperative and coordinated multi-agency efforts to prevent, detect and report fraud, including our Senior Medicare Patrol (SMP) teams and the Health Care Fraud Prevention and Enforcement Action Teams (HEAT), are substantially changing the health care fraud front. President Obama has made it a government priority to fight and prevent health care fraud and abuse. And the efforts are paying off; over the last 3 years, for every $1 invested in fraud prevention and detection, close to $7 are returned to Medicare.

If you or someone you know receives a suspicious call requesting your Medicare number or promising something free in return for your Medicare number or you suspect some other kind of Medicare fraud, call your state’s SMP program. In California, call us at our SMP helpline listed below.

For more info on Medicare fraud, tips for prevention and how to become an SMP volunteer:

back to Medicare Fraud and Abuse News

Get Help with Free
Medicare Counseling:

Find your local HICAP.

1-800-434-0222

California Health Advocates: the best source of unbiased Medicare information for California beneficiaries.