August 21, 2014

Anatomy of a Medicare Fraud Scam – Power Wheelchairs

By Gordon Schnell

It may not be the biggest scam contributing to the estimated $50 billion annual price tag for Medicare fraud and abuse.  But according to a recent Washington Post report, it could be one of the simplest and most lucrative ones.  It is the power wheelchair scam.  According to the Post, “criminals disguised themselves as medical-supply companies.  They ginned up bogus bills, saying they’d provided expensive wheelchairs to Medicare patients who, in reality, didn’t need wheelchairs at all.  Then the scammers asked Medicare to pay them back, so they could pocket the huge markup that the government paid on each chair.”

And it caught on to the tune of more than $8 billion worth of Medicare payments for 2.7 million wheelchairs and scooters since 1999.  What is worse, apparently the government was aware of the scam since 1998 but did not take any action to curb it until fifteen years later.  Here’s how it worked:

  • Step One — Find eligible patient.  A patient recruiter or “capper” trolled the local senior hot spots for Medicare enrollees willing to accept a free power wheelchair.  The recruiter provided the patient’s name and Medicare ID to the wheelchair supply company involved in the scam.  The supplier confirmed with Medicare that it had not previously paid for a power wheelchair for the patient.
  • Step Two — Secure fraudulent prescription.  The recruiter or supplier made an appointment for the patient with a doctor involved in the scam.  The doctor wrote a prescription for a power wheelchair or scooter when there was no medical need for the equipment.
  • Step Three — Deliver wheelchair to patient.  Delivering the chairs was part of the deal for many patients and also lessened the likelihood that the government would find out about the fraud.
  • Step Four — Overbill Medicare.  The medical supplier billed Medicare for substantially more than the wheelchair’s actual cost (up to six times more).

Much of this came out of a Los Angeles courtroom earlier this summer at the trial of Olufunke Fadojutimi for allegedly running one of these scams.  One of her “customers” testified as to how he got embroiled in the scheme.  A patient recruiter came to his home; confirmed he was on Medicare; pressured him into accepting a free power chair; took him in a van filled with other seniors to a doctor’s office; and gave him a medical exam where, according to authorities, the doctor was paid to reach the same diagnosis every time:

The patient was too weak to use a cane.  Or a walker.  Or even a non-motorized wheelchair.  Only a motorized wheelchair would do.  Instead of making lame men walk, the doctor’s job was to make walking men lame — at least on paper.

And of course, Medicare picked up the tab for a wheelchair that this particular patient — and hundreds of thousands more just like him — did not really want, did not need and did not use.

What made this particular Medicare fraud scam so easy was that the perpetrators did not need to be licensed doctors or health care professionals or even work in a hospital or doctor’s office.  All they had to do was set up a “medical equipment” company, get access to the Medicare system through duping or corrupting this very vulnerable segment of the population, and buy off a doctor or two to share in the illicit gains.  And unlike other forms of medical equipment like orthopedic braces, oxygen tanks or prosthetic limbs, power wheelchairs are big-ticket items that do not arouse suspicion if billed in large numbers.  With a huge profit margin to boot — up to several thousand dollars.

The government was not blind to what was going on.  As early as 1998, Medicare had issued a national “fraud alert” on the wheelchair scam.  And according to the Post report, the percentage of Medicare beneficiaries receiving power chairs or scooters skyrocketed from only 1 in 9,000 in 1994 to 1 in 242 by 2002.  But because of the overloaded system — Medicare receives almost 5 million claims a day — it took years for the government to take any meaningful action.

The government seems to have finally caught up with the scam with its high-profile takedown last year of the Scooter Store, the company famous for its ever-present TV commercials peddling these products on the senior population.  A government audit found the company received up to $87 million dollars in Medicare overpayments for causing doctors to write prescriptions for power chairs that were not medically necessary.  See Scooter Store Caught Cheating the Government Out of Millions.  It was only a few years earlier that the company had been caught doing the exact same thing.  The government had finally seen enough and served Scooter Store with the ultimate “death-sentence” — no more Medicare funding.  The company closed its doors shortly thereafter.

So with the power chair swindle on the decline, what will replace it as the next great Medicare fraud scam?  The Post posits it might be shoe inserts where Medicare pays $500 for custom-made orthotics while the patient gets a $30 Dr. Scholl’s.  Or perhaps something a bit more sophisticated.  Who knows.  With billions of dollars at the ready, it is bound to be something.  The fraudsters are not going away.  Hopefully, in finally getting ahead of the whole wheelchair scam, the government will be better served to take on whatever is the next big Medicare fraud that comes our way.

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