'Nationwide conspiracy': Feds break up a $1.2B Medicare scam peddling braces

Federal agents on Tuesday broke up a $1.2 billion Medicare scam that peddled medically unnecessary orthopedic braces to seniors across the nation. 

Authorities charged two dozen people, including doctors accused of writing fake prescriptions and medical equipment companies that shipped back, shoulder, wrist and knee braces. 

The scheme relied on overseas call centers that obtained Medicare numbers from seniors, the Justice Department said. 

Describing it as one of the largest health care scams in U.S. history, officials said fraudsters spent the profits on high-end cars, yachts and luxury homes.

The Medicare losses were estimated to be more than $1.2 billion. Medicare's anti-fraud unit said the 130 medical equipment companies implicated in the scam had billed $1.7 billion to the program, but not all of it was paid. 

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“The breadth of this nationwide conspiracy should be frightening to all who rely on some form of health care,” IRS criminal investigations chief Don Fort said in a statement. “The conspiracy ... details broad corruption, massive amounts of greed and systemic flaws in our health care system that were exploited by the defendants.”

Officials detected the scam targeting hundreds of thousands of seniors last summer because of complaints to the Medicare fraud hotline. 

In the scheme, telemarketers called seniors offering "free" orthopedic braces, also advertised on television and radio. They directed interested beneficiaries to call centers, including ones in the Philippines and throughout Latin America, to verify their Medicare coverage. 

Telemedicine companies then arranged consultations with doctors who wrote prescriptions for the braces.

From there, call centers collected prescriptions and sold them to medical equipment companies, which shipped braces and billed Medicare. Companies netted $500 to $900 per brace from Medicare and paid kickbacks of nearly $300 per brace.

Officials said the government can recover at least some of the lost money by seizing fraudsters’ assets, accounts and property. Defendants who have been charged reside in California, Florida, New Jersey, Pennsylvania, South Carolina and Texas. 

While seniors who received braces did not pay anything upfront, Cantrell said they may face longer Medicare waiting periods when they do need a brace and are vulnerable to other scams. 

“It can be very attractive to receive equipment,” Cantrell said. “But after giving out your identifying information, it could be compromised to perpetuate additional fraud. There is no fraud without the ID number of a Medicare beneficiary.”

The investigation is ongoing. People familiar with the schemes cooperated with federal agents, Cantrell said.

Contributing: The Associated Press