U.S. Markets closed

Medicare fraud preyed on seniors and genetic testing trend

Jason Schott

On Friday, federal agents took down a possible Medicare scam that was meant to exploit seniors' curiosity about genetic medicine by convincing them to get their cheeks swabbed for unnecessary DNA tests.

Medicare was billed $2.1 billion for the alleged fraud - which was called "Operation Double Helix” – and thirty-five people, including nine doctors, as well as owners of telemedicine companies and testing labs, around the country, have been charged.

No single organization was behind the fraud, and Friday's operation targeted defendants in Florida, Georgia, Louisiana, and Texas, the Justice Department said.

The crackdown was a joint effort by the Justice Department, the FBI, U.S. attorneys' offices, and the Health and Human Services inspector general.

Those charged, according to the Justice Department, were "associated with dozens of telemedicine companies and cancer genetic testing laboratories (CGx) for their alleged participation in one of the largest health care fraud schemes ever charged...In addition, the Centers for Medicare & Medicaid Services, Center for Program Integrity (CMS/CPI), announced today that it took adverse administrative action against cancer genetic  testing companies and medical professionals who submitted more than $1.7 billion in claims to the Medicare program."

The alleged fraud was able to take place at this particular time because of the growing trend of people getting their DNA tested - through biotechnology companies like 23 and Me - to trace their family’s heritage.

Fraudsters also preyed on another recent trend of people wanting to find out if they harbor genetic markers for cancer. However, genetic testing is not routinely used to screen for cancer.

"A decade ago, it would have given Medicare beneficiaries pause if someone wanted to get a swab from their cheek of their saliva," said Shimon Richmond, who heads the inspector general's investigative division. "Today people know and recognize what (genetic testing) is, and they think 'I can get that done, and I can get it done for free and find out if I have health issues that I need to address.'"

Richmond also called it a bad decision because it put the patient's Medicare ID in the hands of fraudsters who can then keep reselling it for illicit purposes, but it can potentially compromise unique details of an individual's make-up.

Another downside is that Medicare might deny future coverage for genetic testing when it is actually needed since the patient's record would show such an analysis was already done.

"Often, the test results were not provided to the beneficiaries or were worthless to their actual doctors," the Justice Department stated. "Some of the defendants allegedly controlled a telemarketing network that lured hundreds of thousands of elderly and/or disabled patients into a criminal scheme that affected victims nationwide.  The defendants allegedly paid doctors to prescribe CGx testing, either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen."

Officials said that patients should only have genetic testing if their own doctor orders it, officials said, while also cautioning that health fairs, church events, and senior centers are like magnets for the fraudsters.

The alleged scheme was put into motion when a telemarketing or in-person "recruiter" would convince a Medicare enrollee to take a genetic test - assuring them that the full cost was covered by the program. Then, the patient would provide their Medicare information. A doctor - who was working with the fraudsters - would approve the test, and collect a kickback from the recruiter company. A lab, that also was a participant in the scheme, would run the test, bill Medicare, and share payments collected from the government with the recruiter.

Medicare enrollee Linda Morris, a retired high school math and journalism teacher from Parker City, Indiana, said she was lured in while attending a conference on aging well. Morris got her cheek swabbed at the event by one of the many health vendors that were there.

"Their ploy was, 'Get a mouth swab and we can analyze how well your system synthesizes the drugs you are taking,'" she said. "It never crossed my mind there was anything wrong with this."

Morris’ Medicare statements started coming in, and they were showing charges as high as $33,000, of which the program paid almost $10,000.

Morris said she was never billed, and as a result, was never sent results. When she looked up the address for the test vendor, it was "a house on a back road," and she added, "I feel stupid, and in the meantime, I'm furious.”

Bills to Medicare connected with the scam mostly ranged from $7,000 to $12,000, Richmond said, with some going much higher. In many cases the patient never got a report back, or the results provided were incomprehensible. Medicare paid out hundreds of millions of dollars before authorities detected the fraud and moved in.

Government-backed anti-fraud organizations - known as the Senior Medicare Patrol - have been trying to spread the word about genetic testing scams. Retired federal investigator Jennifer Trussell, who serves as a consultant to the groups, said the fear of cancer is the most effective tool for scam artists. "These are bad actors trying to take advantage of good medicine," Trussell said.

Dennie Krivokapich of Farmington, New Mexico, said he almost sent in his cheek swab following a telemarketing pitch. The retired accountant is a three-time cancer survivor and concerned about his future risk. The company sent him a kit, but the paperwork that came with it made him suspicious.

"The physician who requested it was not my physician," said Krivokapich. The marketing company kept calling him, until he blocked the number.

Fraud against government health care programs is a pervasive problem that costs taxpayers tens of billions of dollars a year, and the true extent is unknown. Experts say part of the problem is that Medicare is required to pay medical bills promptly. This can lead to money often going out before potential frauds get flagged, something investigators call "pay and chase."

CLICK HERE TO READ MORE ON FOX BUSINESS

In recent years, Medicare has tried to adapt techniques used by credit card companies to head  off fraud. Law enforcement coordination has grown, with strike forces of federal prosecutors and agents, along with state counterparts, specializing in health care investigations.

The Associated Press contributed to this report. 

Related Articles