Medical Device and Equipment Scams

The rise of medical device and equipment scams poses a significant threat to the healthcare industry and the welfare of vulnerable individuals, especially older adults and Medicare beneficiaries. Fraudsters exploit these individuals through methods such as phone calls and text messages to compel them into divulging personal information or purchasing unnecessary and often nonexistent medical equipment. Understanding these scams is vital in a world where Medicare spends billions of dollars annually on durable medical equipment (DME) like wheelchairs, walkers, and braces.

Victims are often contacted with an offer of “free” medical devices, sometimes presented as a benefit covered by Medicare. These scams are frequently executed via unsolicited phone calls, advertisements, or direct approaches at health-related events. Scammers often pose as Medicare representatives to gain trust, obtaining personal information such as Medicare or Social Security numbers under false pretenses. Once they have this information, they can commit identity theft or bill Medicare for devices that are not medically necessary, improperly prescribed, or never delivered to the patient at all.

Awareness of these scams is essential for both individuals and systemic protection. By staying informed and vigilant, we can collectively mitigate the detrimental effects of these scams on our healthcare system and the vulnerable populations relying on it for essential medical support.

Identifying red flags

Urgency and high-pressure tactics

Scammers frequently resort to creating a sense of urgency and employing high-pressure tactics to manipulate victims into making rash decisions. By fabricating scenarios that require immediate action, they exploit vulnerabilities and induce panic. An unsolicited call urging someone to order medical equipment right away for potential future needs is a significant red flag. This technique places the individual in a state of stress, making them more likely to comply without proper verification or consideration.

Unauthorized billing

Unauthorized billing is a prevalent issue in medical device and equipment scams, where scammers manipulate billing processes to their advantage. By billing insurance for devices before obtaining the requisite certification of medical necessity from a doctor, these scams create a cascade of illegal charges. Patients often discover unauthorized charges too late, which is why it is essential to conduct regular reviews of billing activity.

Offers of free equipment

Scammers often lure victims with offers of free medical equipment to gain their trust and personal information. Promising no-cost devices, they may ask for insurance details to process the supposed “free” order. Once they have this information, they can bill insurance for unauthorized services or devices, leaving the victim unaware until unexpected charges appear.

Common medical device and equipment fraud schemes

Misrepresentation and defective products

Unapproved or defective medical products are a major component of medical device scams. These schemes involve selling devices that are either fraudulent in their claims or substandard in quality, often not approved by regulatory bodies like the FDA. Fraudulently selling defective devices undermines patient safety and contributes to significant financial waste. A notable example includes the case of a company paying $33.2 million to resolve allegations that it sold unreliable point-of-care diagnostic testing devices, which posed risks to patients due to their inaccuracy.

Fraudulent marketing practices

Fraudulent marketing practices often involve promoting medical devices for unapproved uses or demographics, thereby expanding the market at the expense of safety. Companies may market devices for off-label uses that have not been sanctioned by the FDA, misleading both healthcare providers and patients. In 2016, Biocompatibles Inc. paid $25 million to resolve allegations related to the misleading promotion of its LC Bead as a drug-delivery device for chemotherapy, a use the FDA had not approved.

Medically unnecessary products

Durable Medical Equipment (DME) fraud schemes are effective because they exploit gaps in the healthcare system, such as inadequate oversight of medical equipment prescriptions and reimbursement processes. In many such cases, individuals and organizations find ways to fraudulently process claims for medical equipment for which the patient has no medical need or benefit.

The Healthcare and Human Services Office of Inspector General (HHS-OIG) has identified multiple fraud cases involving DME, including a $7.8 million scam involving a telemedicine nurse practitioner who fraudulently processed numerous claims for urinary catheters that were medically unnecessary.

Reporting scams

Accurate reporting is crucial in the fight against medical device and equipment scams. Suspected scams should be promptly reported to Medicare at 800-633-4227 or the fraud hotline of the U.S. Department of Health and Human Services (HHS) at their dedicated line (1-800-HHS-TIPS). These reporting channels are essential for the authorities to gather information, investigate incidents, and take action against fraudulent activities.

The Social Security Administration (SSA) also plays a significant role in combating fraud through its Office of the Inspector General. To report fraud against Social Security, individuals can submit reports online at oig.ssa.gov or call the OIG’s fraud hotline at 1-800-269-0271.

Tips to avoid scams

Implementing practical strategies can help individuals avoid becoming victims of medical device and equipment scams:

1. Verify the legitimacy: Always try to verify the legitimacy of the caller or organization by cross-referencing contact information with official sources. Do not rely solely on caller ID, as numbers can be spoofed.
2. Do not share personal information: Avoid providing personal details such as Social Security numbers, bank account information, or health insurance details over the phone unless you have verified the caller’s identity.
3. Check Your explanation of benefits: Regularly review your health plan’s Explanation of Benefits or Medicare Summary Notices to ensure no unauthorized equipment or services are billed.
4. Beware of high-pressure tactics: Be cautious of unsolicited calls or messages urging immediate action or purchases. Legitimate organizations won’t pressure you into making hasty decisions.
5. Secure personal information: Do not carry your Social Security card routinely and never say your Social Security number aloud in public. Be alert for phishing scams that attempt to trick you into revealing personal information through emails, phone calls, or internet links.

For more comprehensive details, the Federal Trade Commission (FTC) offers an identity theft hotline at 1-877-IDTHEFT (1-877-438-4338) and an online resource at their website that provides further guidance on protecting personal information and reporting identity theft.

Legal implications and enforcement

Legal consequences

The legal consequences of engaging in medical device fraud are severe. Under the False Claims Act (FCA), individuals who knowingly submit false claims to Medicare or Medicaid can face fines up to three times the amount of the program’s loss plus $11,000 per false claim filed. The Anti-Kickback Statute (AKS) further criminalizes the offer or receipt of remuneration to induce referrals for services reimbursed by federal healthcare programs.

Physicians violating the AKS can face jail terms, steep financial penalties, and exclusion from federal health care programs. The Stark Law prohibits physicians from referring patients for designated health services payable by Medicare or Medicaid to entities where they or their family have a financial interest unless specific exemptions apply, with violations leading to hefty fines and program exclusion.

Measuring the impact

Financial and personal consequences

Medicare and Medicaid programs are frequent targets of these scams, leading to significant financial losses. For instance, in 2021, a kickback conspiracy involving two Texas DME companies cost Medicare $27 million. This case was part of a larger federal crackdown that recovered more than $1.2 billion in Medicare losses. These costs are inevitably passed on to taxpayers who fund Medicare.

Beyond financial repercussions, the personal impact on victims is substantial. Scams can cause anxiety, especially among seniors who might already be dealing with health issues. Falling prey to a scam can lead to a loss of trust and an increased sense of vulnerability. According to a Gallup poll, financial scams are among the crimes inducing the most anxiety among Americans, second only to identity theft.

Addressing medical device and equipment scams requires concerted efforts from both individuals and the broader healthcare infrastructure. With fraudsters employing ever-more sophisticated tactics, it is critical for all stakeholders—patients, healthcare providers, and policymakers—to stay vigilant. By recognizing red flags such as high-pressure tactics and unauthorized billing, individuals can safeguard their personal information and finances.

For more information on how to protect yourself and report scams, visit the AARP’s website and the FTC’s identity theft resource.