Doctors: Medicare-funded program exposes seniors to harassment & potential fraud

Myrtle Harper holds a back brace she doesn't need, but was pressured into taking.
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A federal program designed to crack down on Medicare waste and fraud may be backfiring, triggering unintended consequences for seniors nationwide. As doctors, seniors and whistleblowers speak out, 13 Investigates shows how the elderly are being targeted, and how you are paying for it.

While Parke County, Indiana, is famous for its scenic covered bridges – some built more than a century ago – not all of the county's landmarks are quite that old.

“I'm 84,” says Myrtle Harper, while watching a baseball game on her living room television. “I'm an old timer. I've got an old name.”

The retired factory worker has lived in Parke County her whole life – so long that children at the local grocery store gave her a nickname.

“When I walk in, they say ‘here comes the mayor,' Myrtle says, unable to hold back a grandmotherly giggle. She likes the honorary title, and she likes going into town.

“I feel like I'm doing real good for my age, and I don't have to have any help to walk. I just go around here all day long,” she added.

But Myrtle's doctor is concerned.

He says someone is trying to create a much different picture of Myrtle – a picture of a frail widow who suffers from terrible pain and who can barely walk at all.

“I don't like it,” said Dr. Dan Dwyer, pointing to a stack of papers in Myrtle's medical chart. “I think it's a plan to rip us off.”

13 Investigates has discovered what's happening to Myrtle is happening across the country.

As doctors and patients raise allegations of harassment and fraud, whistleblowers are stepping forward to help WTHR expose how senior citizens are becoming victims of a federal program intended to help them.

And the price tag could be staggering.

Seniors targeted

It all starts with a phone call.

Myrtle says she's been getting up to four calls a week from companies offering to send her medical supplies.

“They say things like ‘I hear you need a brace' and ‘You need this and you need that.' I said ‘No, I don't need a brace.'”

But even though Myrtle said “no,” within a few days, her doctor received a faxed order, asking him to approve a knee brace and a home electrotherapy machine that would be billed to Medicare.

The order forms come from Medicare-approved companies that sell a wide variety of medical supplies – Medicare refers to the items as durable medical equipment or DME – and the documents sent to Dr. Dwyer state Myrtle requested the ordered supplies.

“I know that's not true because she says she declined it each time. She doesn't want it,” Dwyer said.

Myrtle says it happens all the time. In fact, in the past three months alone, her doctor's office has received eight separate orders for knee braces and electrotherapy machines that she supposedly asked for.

“No way at all!” she said, when asked about ordering all of the medical devices. “And I don't know how many times I've told them ‘no.' They just keep calling, and Dr. Dwyer says he keeps on getting those orders.”

Myrtle is not alone. A few miles away in Bloomingdale, Donald Newlin has been getting repeated phone calls about a back brace.

“I kept telling them I didn't want it or need it,” he tells WTHR.

And in nearby Montezuma, Joe and Janet Myers were pressured to accept a back brace, too. They received ten solicitation calls within one month.

“They said 'Yeah, you need that back brace.' And I said 'No, we don't need it,'” Janet explained.

Order forms for knee braces showed up on Dr. Dwyer's fax machine anyway.

All of the seniors say they have been constantly harassed by companies selling medical supplies – so much, that sometimes their “no” turns into a “yes.”

“They talk you into a lot of this stuff, and you might agree to something you don't even know what you have agreed to,” Janet Myers said.

Elderly people “just being used”

That's exactly what some of the medical supply companies are hoping for, according to a whistleblower who has seen the DME industry up close.

“With older people, you know, after you call them so many times, you start to wear them down, and they'll pretty much do whatever you say,” he told 13 Investigates earlier this week during a face-to-face meeting in Tennessee.

Eyewitness News has agreed not to identify the whistleblower because he fears retaliation from the medical supply company where he used to work. He says he recently quit his job at the company's call center headquarters because of disturbing complaints he heard from seniors every day.

“All the time I'd hear “I didn't request this. I don't need this. Why do you keep calling [and] harassing me?” he said, adding that some of the phone calls “made me wonder ‘What in the world am I doing here?'”

“There were situations where we're sending out ankle braces and knee braces, and the patient doesn't have ankles or legs,” he said. “We sent out a prescription to a doctor's office for a patient to get two ankle braces and their legs were amputated at the knees probably 20 years ago.”

Another whistleblower who worked as a customer service representative and data processor at a large DME provider told WTHR her company submitted unusual order requests, as well.

“We had orders for women to get erectile dysfunction pumps and amputees listed for diabetic shoes,” the insider told 13 Investigates during a phone conversation. “In the office, we'd look at each other and say ‘You won't believe what just happened on this call,' and things like that happened every day. It didn't feel right having so many complaints that didn't match up. It felt like the elderly people were just being used. I wouldn't want my grandparents to go through that.”

The whistleblower who met with WTHR in Tennessee said seniors who turned down medical supplies would remain on a contact list to be called again and again -- until they finally gave in.

“They were basically just saying ‘yes' at some point to discontinue the harassing phone calls,” he said, adding that call center employees were instructed to be as “aggressive and assertive” as needed to secure an order. “The end game is to get these products out – at any cost – whether they need it or not.”

Doctors say it's a scam

Each time that happens, an order form is sent to a doctor's office for approval. If a doctor signs the form, stating that the equipment is medically necessary, Medicare gets the bill.

“Most physicians are going to go ahead and sign that because they feel, 'Ah, the patient must have requested it,'” Dwyer said. “In reality, they don't want it.”

The longtime doctor is frustrated because he's received more than 1,000 orders for back braces, knee braces, ankle braces, heating pads, electrotherapy devices, erectile dysfunction pumps and other medical equipment in less than two years. After growing suspicious, he began calling his patients to confirm whether they actually ordered and wanted the medical equipment. He says he hasn't found a single case in which the ordered DME supplies were needed, and very few instances in which patients agreed to the order.

“I now send angry responses – don't send this again, patient refuses – and it means nothing to them,” Dwyer said. “I feel it's a scam because the patient says ‘no,' I tell them ‘no,' and they continue to send the forms.”

What Dwyer is describing is happening all over the country. 13 Investigates found similar complaints from doctors and patients nationwide, claiming seniors are being targeted by Medicare-approved companies that aggressively market medical supplies the elderly don't really want or need.

The Better Business Bureaus of Southeast Florida and West Florida have received dozens of complaints against Arriva Medical and All American Medical, two of the nation's largest DME suppliers.

From coast to coast, doctors have submitted recent complaints accusing the companies of engaging in marketing practices ranging from “irresponsible” and “obnoxious” to “harassing” and “blatantly fraudulent.”

Both companies still get A ratings from the Better Business Bureau, in part because they responded to the complaints filed by consumers and answered questions from the BBB.

They did not, however, answer questions from WTHR.

13 Investigates called Arriva Medical to discuss complaints in Indiana and elsewhere. The calls were transferred four separate times. WTHR eventually left a message with a customer service agent but did not get a return call. A separate phone call to Arriva's parent company, Alere, was directed to a corporate communications representative who said she would call back with information and answers. She did not.

Several messages left with All American Medical were not returned either.

Other DME companies simply hung up when contacted by Eyewitness News, while others offered a “no comment.”

A1 Diabetes took a very different approach. The company responded to WTHR with multiple phone calls and e-mails. A1's compliance officer and chairman spent hours answering questions, defending their corporate policies, and painting a grim picture of massive upheaval within an industry bogged down by government intervention, uncertainty and a history of fraud.

A badly broken system

When contacted about WTHR's investigation, the chairman of A1 Diabetes responded with a surprising introduction.

“I'm glad you called because it's a huge story. I've been surprised no one else has called us,” chairman Michael Hennessy told senior investigative reporter Bob Segall. “This is something that's been overwhelming our company for the past two years.”

Hennessy's company is very familiar with Myrtle, responsible for the six of the DME orders she's received in the past few months. But he said to understand the orders, one first needs to understand how the federal government has – in his words – destroyed the durable medical equipment system in America.

He points to early 2013, when Medicare introduced a competitive bidding program mandated by Congress to reduce both costs and rampant fraud plaguing Medicare – especially in the medical supply industry. Medicare's plan was to streamline DME for the government and consumers by selecting just a handful of pre-screened, qualified companies that Medicare would reimburse for providing certain medical supplies. Thousands of companies scrambled to win those coveted Medicare contracts. Many DME companies that were not selected went out of business. Those that did win competitive bidding contracts saw their customer base jump overnight.

“It's been a mad scramble,” Hennessy said. “When we started getting calls, we got more new patients in one day than in an entire year.”

The mail order diabetes supply company grew from 2,000 customers to 12,000 customers in just a few months, and the company says it quickly outsourced several of its operations – order taking, shipping and processing doctor orders – to accommodate the growth. At the same time, A1 and other Medicare-approved DME suppliers were dealing with a harsh reality as the impact of Medicare's competitive bidding program set in: Medicare slashed the amount of money it would pay for the most common medical supplies.

Companies like A1 Diabetic, that built their reputation and financial security on Medicare reimbursement for diabetic testing supplies like test strips, lancets and batteries for blood glucose test meters found their revenue slashed by up to 70%. Instead of reimbursing DME suppliers $36 for a box of 50 diabetic test strips, Medicare cut that reimbursement to $10.42.

“Medicare has destroyed the diabetes business … and the whole industry,” Hennessy said. “We started scrambling to see if we could survive.”

That meant finding another source of revenue. DME providers discovered back braces, knee braces, heating pads, electrotherapy units, erectile dysfunction pumps and other supplies provided untapped potential since Medicare had not reduced reimbursement for those items under their competitive bidding contracts. The frenzy to sign up patients for these devices began last summer, as the competitive bidding program was fully implemented.

“So we began asking our customers ‘Do you have any other aches and pains that we can provide you something?'” Hennessy explained. “We tried to expand our product offerings as quickly as possible to match the big boys.”

Companies not positioned to sell those items quickly snapped up other companies that did. A1 Diabetic purchased Orthotics of America and Atlantic Medical. They all share a call center.

Hennessy admits his company has had some trouble with its outsourced customer service operations. Told about the aggressive sales tactics reported by some industry whistleblowers, A1's chairman was not surprised.

“We have caught people doing things similar to what you're describing that are not in compliance and not kosher, and we've had to lay them off. We're just learning about this stuff,” he said. “We caught one guy not even talking to people, just putting in orders without even talking to the customers. He was sitting there eating his lunch and entering orders for people. We eliminate these things as quickly as we can.”

A1 is now trying to bring all of its call center workers back in-house -- a process that could be completed by the end of the year – to improve the quality and oversight of its customer service and patient outreach.

But the company insists it has a rigorous quality control program, follows Medicare regulations, and does not target seniors with unsolicited, harassing phone calls. A1 officials say their call center agents only contacts patients who have asked for information about the company's products.

Medicare rules prohibit companies from cold-calling seniors to solicit products. But if a Medicare-approved DME company has provided at least one item to a customer within the past 15 months, Medicare rules allow that company to contact the customer again (and again and again) to offer other medical equipment, too.

Therefore, patients who receive diabetic testing supplies – and there are millions of them – are likely on a call list maintained by DME suppliers. Those companies also aggressively market free products and consultations to seniors through advertisements in magazines and other media. Once your grandmother responds to one of those ads, she is fair game for marketing calls from DME suppliers, who can then legally contact her about any products they offer.

Which brings us back to Myrtle. This summer, she received calls from A1 Diabetic and both of its newly acquired partner companies in an effort to provide her with knee braces and electrotherapy machines.

The Myrtle recordings

According to A1, Myrtle contacted one of its partner companies by computer (Myrtle does not have a computer) to request help for her arthritis, and she said she would accept a knee brace and an electrotherapy device.

Asked about Myrtle's insistence that she did not want or need the equipment, compliance officer Lucas Matheny said A1 followed all protocols.

“A lot of times, an 84-year-old forgets that they ordered something,” he said. “We track everything… and I am very confident in our quality controls.”

Matheny told 13 Investigates that A1 Diabetes keeps documentation and phone calls to prove customers requested the products that trigger order forms to their doctors, but he said due to healthcare privacy laws, the company could not provide any documentation or recordings unless it received permission from the customer.

Last week, Myrtle Harper signed a release form drafted by A1 Diabetes, granting the company legal permission to provide WTHR all documentation and recordings involving her orders for medical equipment. A1 then informed WTHR most recordings involving Myrtle had been deleted two weeks after the original phone conversations, which Matheny says is standard policy. He told Eyewitness News that the company still has one recording of Myrtle that was not erased and, according to A1, it contains audio of Myrtle asking for the equipment. But despite having a signed a release form from its customer, A1 officials changed their minds about releasing the recording to WTHR.

“I can't allow the phone call to be released,” Matheny said. “We think it's proprietary and competitively sensitive.”

Matheny said he did, however, call Myrtle to play the recording for her. “She heard that and she said she did remember placing the orders… she said her doctor just didn't want to approve it.”

Myrtle tells a different story.

“He called me but he never played nothing, and I never told him anything like that,” she said. “Even if I did say I might take one once, I told ‘em ‘no' a whole bunch of times and I didn't need it. He's trying to make it all like he wants it.”

75% unnecessary = millions in waste

A customer service whistleblower says the he-said-she-said exchange highlights a major flaw of the government's DME competitive bidding program: Medicare requires companies to maintain documents for regular audits, but does not focus on the most telling evidence.

“We passed all our audits with flying colors because we had everything in a row, and all of our prescriptions were signed by a doctor,” he said. “But [auditors] never listened to phone calls to see how we'd wear the customer down. That was the name of the game, and that doesn't show up on a piece of paper.”

And consumer watchdog groups say seniors are easy prey for aggressive sales pitches.

“Elderly people grew up in a generation where it wasn't polite to hang up the phone, and they get taken advantage of for that,” said Tim Maniscalo, president of the Central Indiana BBB. “They are attractive targets, and companies know that.”

Myrtle says she feels DME companies are trying to take advantage of her.

Last year she reluctantly accepted a back brace after she says a medical supply company talked her into it, explaining it would be billed to Medicare and provided “at no cost” to her.

“That's pretty much how every call would go,” the whistleblower told WTHR. He said a very small percentage of the DME pedaled to seniors is “medically necessary,” a threshold required by Medicare for items to be covered and reimbursement to be sent to suppliers.

“Probably 25% of the supplies are medically needed,” he said. “The rest, they were just sent out just to carry out the business … and it would get billed to Medicare anyway. The harm is the taxpayers of America -- you and I -- we're footing the bill.”

He's right. You paid for the back brace Myrtle didn't really need.

Last year alone, fraud and improper payments through Medicare cost taxpayers an estimated $60 billion.

How much of that is for unnecessary medical equipment? No one knows for sure because Medicare doesn't have enough time, staff or money to adequately monitor the problem. But the annual price tag for unnecessary DME could be hundreds of millions of dollars, according to the United States Government Accountability Office.

Medicare officials tell WTHR only a small fraction of Medicare claims -- about three percent -- are reviewed by a live person before they are paid. Medicare receives 3 million claims daily – or 1.2 billion claims per year.

Taking action

Dr. Dwyer's office called Medicare several times this year to report companies that, he believes, are fraudulently submitting orders for DME that his patients do not want.

“We didn't get very far,” he said. “They really weren't interested in what we had to say.”

Nancy Stone wants to change that.

“We have to speak out. This is important and it impacts a lot of people,” she said.

Stone runs Indiana's Senior Medicare Patrol program, which is designed to catch and report incidents of Medicare waste and fraud. She wants to crack down on companies that try to talk seniors into medical supplies they don't need. The Senior Medicare Patrol says that's fraud that doctors and patients can report directly to their state office.

“We would document everything and then send that onto the office of the Inspector General at the federal level,” Stone said. “That would help stop these people.”

Stone also believes Medicare should change the rules for companies marketing DME.

“Technically, they may be within the guidelines but the marketing practices you're showing us just aren't right,” she said. “They need to tighten the marketing regulations for DME. It is very wide open.”

Following this 13 Investigates report, Indiana's Senior Medicare Patrol program is now collecting complaints, documents and information to help launch an Inspector General investigation.

That is welcome news to Myrtle and other seniors, who say they are tired of all the high-pressure phone calls.

“I just get so sick of it. I don't need a knee brace!,” she said.

“For every one Myrtle, there's a thousand or tens of thousands that are out there that are going through the exact same thing that she is going through,” a whistleblower told WTHR. “This just needs to stop.”

Advice for seniors

Indiana's Senior Medicare Patrol program offers an information sheet about DME fraud, and it advises seniors to not answer their phones when an incoming call originates from a toll free or unrecognized number.

“It's really sad it's come to that, but it's the best way to prevent seniors from becoming victims of scams and sales pitches,” Stone said.

If a phone call is answered and the caller is soliciting a product, Stone says seniors should simply hang up as quickly as possible.

The Central Indiana BBB recommends reducing unwanted or fraudulent calls by signing up for the Indiana Do Not Call List through the Indiana Attorney General's Office at 317-232-6201.

The whistleblowers who met with WTHR says some medical supply companies maintain their own Do Not Call Lists for seniors who demand not to be contacted again.

“If you use the magical words – I'm going to report you for Medicare fraud – that will usually work to get you removed from their call list,” he said.

And the BBB says consumers should never disclose personal information such as social security numbers, checking/bank account information, Medicare numbers or credit card numbers to an unknown party.

Filing a complaint

If you are a patient, a caregiver or a medical worker in Indiana who would like to file a complaint regarding harassing phone calls for durable medical equipment and other medical supplies, you can contact Nancy Stone, Indiana's Senior Medicare Patrol officer:

Call: 317-205-9201 x207

800-986-3505

Email: nstone@iaaaa.org

Medicare beneficiaries and physicians who receive unsolicited phone calls and/or faxes for DME can also report complaints directly to the US Department of Health & Human Services, Office of Inspector General.

Call:

1-800-HHS-TIPS (1-800-447-8477)

TTY 1-800-377-4950

Online

Mail:
Office of Inspector General U.S. Department of Health & Human Services
ATTN: HOTLINE
PO Box 23489
Washington, DC 20026

Fax:
1-800-223-8164


Tell us more


If you've had an experience with a company that sells medical products over the phone or if you work (or recently worked) for one of these companies, we'd like to hear from you. You can contact investigative reporter Bob Segall at bsegall@wthr.com or 317-655-5768.