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13 WTHR Indianapolis | Indianapolis Local News & Weather

Seniors and doctors still targeted by medical device scam - and you're still paying for it

13 Investigates helped expose the growing scheme more than three years ago, when victims first contacted WTHR to complain about aggressive phone calls from medical supply companies.

MUNCIE, Indiana (WTHR) - Janeise Hendee says the harassing phone calls come so frequently, at times she doesn’t want to answer her phone.

“Sometimes I get up to ten calls a day,” the Muncie great grandmother told WTHR. “They just want to talk to me about the back brace and arm braces and stuff I had ordered. And I said ‘I hadn't ordered anything like that.’”

Janeise Hendree received several braces she never ordered.

But the telemarketers send the medical equipment anyway – lots of it: several wrist splints, hand splint extensions, an arm abduction system, a shoulder immobilizer and two back braces. Hendee points out she has only one back, questioning why she’d receive two braces. looking at a large box full of medical braces she doesn’t know how to use, Hendee says she doesn’t want or need any of them.

“My doorbell rang and I open the door and it was a young guy – a kid really – and he says ‘Oh, I brought your back braces for you.’ And I said ‘What back braces? I didn’t order any back braces.’ He said ‘Well, somebody did,’’ Hendee explained, shrugging her shoulders. “ I just don’t know what’s going on. I don’t understand any of it.”

What’s going on is a nationwide scam that impacts millions of seniors. Telemarketers contact the elderly, offering up “free” durable medical equipment (DME) that will be “covered by insurance with no cost to you.” According to whistleblowers who spoke with WTHR, the telemarketing companies obtain the names of victims through online or mailed solicitations and by partnering with legitimate healthcare companies that share or sell their medical information.

But the scam isn’t really free. It costs American taxpayers tens of millions of dollars every year for unnecessary medical equipment peddled to unsuspecting seniors. And you are paying the cost.

“Wear them down”

13 Investigates helped expose the growing scheme more than three years ago, when victims first contacted WTHR to complain about aggressive phone calls from medical supply companies.

“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,” explained Janet Myers, a grandmother from Parke County who had received harassing phone calls for months.

That's exactly what some of the medical supply companies are hoping for, according to a whistleblower who met with WTHR during a face-to-face meeting in Tennessee in late 2014.

“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,” said the whistleblower, discussing the disturbing complaints he heard from seniors on a daily basis.

“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. “There were situations where we're sending out ankle braces and knee braces, and the patient doesn't have ankles or legs. 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.”

After WTHR’s 2014 investigation, the U.S. Department of Health and Human Services Office of Inspector General launched an investigation, and Congress held several hearings to discuss the problem. But years later, seniors are still enduring the harassing calls and receiving unwanted medical supplies.

“It has not gone away, unfortunately,” said Nancy Gilmer Moore, director of Indiana’s Senior Medicare Patrol program, who receives routine phone calls from seniors about DME fraud. “The scammers are very persistent. These people are con artists.”

If you think those con artists won’t target your elderly parents or grandparents, think again. They just targeted mine.

Scam hits close to home

Bob Segall's own mother was victimized by the scam.

This fall, as my mother lay in a hospital bed recovering from a stroke, a box arrived on her front porch. It contained two knee braces and a back brace. Some DME healthcare company decided to send knee braces to a woman who hadn’t walked in nearly a decade. And just for good measure, a telemarketer threw in a back brace for my dear mother who can barely lift her arms, let alone a heavy object.

A few weeks later, when my mom regained her ability to speak, she told me what I had suspected: she did not want or need the braces – and she certainly did not ask for them.

So I set out to find who’s responsible.

I called the Brooklyn-area company that shipped the medical equipment to ask what they were thinking.

A woman named Anna looked up my mother’s name and birthdate and said she had a prescription from my mom’s family doctor.

“He asked us to send this equipment to her. We have his prescription signed by him,” she explained. After requesting to see that paperwork for several weeks, I eventually received two prescriptions for the knee braces. (The company has yet to produce a prescription for the back brace.)

Skeptical, I contacted my mother’s longtime physician to see if he had actually ordered the medical equipment. He did not. But to my surprise, he had signed the prescriptions.

“Every morning I get a big file with faxes that need my signature,” explained Dr. Douglas Lakin. “When I get orders like this for medical equipment, I know it’s a bit of a scam and I’ll just throw them in the trash.”

But because of my mom’s history of arthritis and orthopedic problems, Lakin thought there might be a chance that another doctor had ordered the braces for her. And the order forms looked like actual prescriptions – not solicitations from a medical equipment company. He was duped.

“I guess I was obviously suckered in,” he said. “Absolutely, I didn’t order these things. I was misled. It’s definitely a scam.”

So if my mom’s doctor did not originate the order, who did? I called the New York company once again to ask more questions.

This time, my call was forwarded to a call processing center in Houston. A supervisor named Zach told me my mother probably completed an online survey (she has not been online in several years), and that probably triggered a phone call from a sales associate, who probably called my mother to ask her permission to send her the “free” braces, which she probably agreed to. He said another option was my mother’s doctor – he mentioned Dr. Lakin by name – might have ordered the equipment for her. When I explained both my mom and her doctor insist they did not initiate the order and that I was collecting information for a possible news report, Zach changed his theory.

“This could be a big misunderstanding,” he said. “I think this must have been a big mistake.”

How much it really costs

The mistake is costly.

Medicare got a $4,798.23 bill for the unwanted medical equipment sent to my mom. Each knee brace cost $1,276.05. The back brace cost $1,936.11. And a couple of “suspension sleeves” meant to keep the knee braces from slipping tacked on an additional $310.02 each.

The good news: my mom doesn’t have to pay a cent for any of it.

The bad news: you and I do.

Medicare approved and paid $2,393.01 for all of those unnecessary braces, which are still sitting in their shipping box because my mother doesn’t need any of them. (We’ve requested that the company accept the items for return and refund taxpayers’ money to Medicare.)

Dr. Douglas Lakin

To understand just how big this ripoff really is, consider I found the exact same knee braces online for $160.10. The back brace retails online for $90.00. And those $155.01 suspension sleeves are available for $9.95 on Amazon.com with free shipping. Even if my mother did need these medical supplies, they are worth roughly $430 – not $4,798. Medicare was billed more than ten times that amount and, despite placing caps on its reimbursement rates, the government still paid more than five times what the equipment is worth.

“Oh my god, that’s actually frightening. How scary,” Lakin said, as he reviewed the charges on my mother’s Medicare claim summary. “$4,800? Are you kidding me? That’s completely illogical. It’s criminal.”

And keep in mind: that is just one box of medical braces sent to one senior. Thousands of seniors are targeted every day in a lucrative DME industry that is estimated to cost taxpayers hundreds of millions of dollars each year. A whistleblower told WTHR only a small fraction of the braces marketed by phone to seniors are legitimate.

“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.”

According to recent statistics, fraud and improper payments through Medicare cost taxpayers an estimated $60 billion annually.

It is difficult to estimate how much of that is for unnecessary medical equipment. 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.

Only a small fraction of Medicare claims -- about three percent -- are reviewed by a live person before they are paid. Medicare receives over one billion claims per year.

Comfortland Medical, the North Carolina company that manufactures the medical equipment sent to both my mom and Janeise Hendee, seemed surprised to hear its products are being sent to seniors who feel harassed and taken advantage of.

“We are a DME manufacturer that sells to medical supply companies,” said Comfortland Medical customer service manager Will Beaty. “The patient outreach and sales side of things does not come from us.”

Asked if the company monitors its supply chain to ensure that its products are not being sold by unscrupulous telemarketers and distributors, Beaty said “I can’t say for sure on that.”

The Hendee family would like to see more regulation to protect seniors and taxpayers.

“It is a scam. That’s all it is,” said Kim Hendee, looking at the braces dumped on his mother’s living room floor. “This is fraud, and it’s an ongoing event.”

The elderly are being scammed. Doctors are being scammed. Taxpayers are being scammed.

So what are regulators doing about it?

A broken program

In 2013, 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.

At the same time, Medicare slashed the amount of money it would pay for the most common medical supplies such as diabetic testing supplies such as test strips, lancets and batteries for blood glucose test meters. DME suppliers 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.

Some DME suppliers told WTHR they needed to find other sources of revenue simply to survive. That’s when they 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 was on.

“We began asking our customers ‘Do you have any other aches and pains that we can provide you something?'” said the owner of a DME supply company. “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 and outsourced their customer service operations. Aggressive and overambitious telemarketers looking to earn sales commissions were financially rewarded for sending out products – whether they were needed or not.

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.

Elizabeth Schinderle, a spokeswoman for the Centers for Medicare & Medicaid Services, told 13 Investigates Medicare has implemented a quality standards program intended to control pricing and reduce fraud, waste and abuse involving durable medical equipment. It is not clear how effectively the program is working and how much fraud and waste it has eliminated. Among the efforts by Medicare, an initiative implemented last year the requires pre-approval for some of the highest-priced DME items such as electric wheelchairs. No such program currently exists for medical braces and other DME items commonly marketed to seniors through phone solicitations.

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.

“For seniors, the phone is not your friend,” said Moore. “Screen calls and only answer calls when you know the number.”

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

Seniors can also reduce the number of unwanted or fraudulent calls by signing up for the Indiana Do Not Call List through the Indiana Attorney General's Office.

One of the whistleblowers who met with WTHR said 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.