Busted: The top fraud schemes of Q2 2024

As we move through 2024, fraud, waste, and abuse (FWA) continue to be sign­­­­ificant issues within healthcare. Perpetrators of fraud often use tactics such as kickbacks, fraudulent claims, and exploiting vulnerable populations to deceive health plans, often taking advantage of vulnerable patients in the process. Here’s a rundown of notable FWA cases from April to June 2024.

Nationwide healthcare fraud bust: $2.75 billion

193 people have been charged in a nationwide crackdown on healthcare fraud schemes involving false claims exceeding $2.7 billion, according to the Justice Department. The charges involve several medical professionals and schemes across the U.S., including a significant $900 million fraud scheme in Arizona targeting terminally ill patients. The Arizona case involved two owners of wound care companies who allegedly accepted kickbacks for fraudulently billing Medicare for unnecessary amniotic wound grafts, pressuring nurse practitioners to apply these grafts to elderly and hospice patients—some of whom died shortly after receiving them.

Pharmacy Medi-Cal fraud scheme: $300 million

A California pharmacist has been charged with submitting over $300 million in fraudulent claims for unnecessary prescription medications to Medi-Cal, the state’s Medicaid program. The medications were often not provided to patients and were obtained through illegal kickbacks. The pharmacist faces two counts of healthcare fraud. From May 2022 to March 2023, the pharmacist supposedly exploited Medi-Cal's temporary suspension of prior authorization requirements by billing tens of millions per month for high-reimbursement generic drugs.

Telemarketer fraud: $174 million

A Missouri man and a man from New Orleans have been indicted on conspiracy to commit healthcare fraud and other charges. Prosecutors allege that from November 2018 to July 2020, they ran several labs that paid kickbacks to telemarketers for Medicare beneficiary information. The telemarketers purportedly then convinced beneficiaries to agree to genetic testing through aggressive campaigns.

Physical therapy fraud: $80 million

Three people were arrested for attempting to defraud a healthcare benefit program involving physical therapy, according to federal documents. These co-conspirators operated multiple clinics under a wellness center name and allegedly defrauded a federal worker’s compensation program. One of those arrested is accused of submitting around $80 million in false claims to a federal agency, including exaggerated claims for physical therapy services.

Durable medical equipment fraud: $70 million

A Mississippi man has been charged in connection with a $70 million durable medical equipment (DME) fraud scheme. He allegedly managed several DME firms without disclosing his involvement to Medicare. He and his co-conspirators are accused of using these companies to bill Medicare fraudulently for orthotic braces that were not medically necessary, not provided as billed, or ineligible for reimbursement, using doctors' orders obtained through kickbacks and bribes.

COVID-19 testing fraud: $36 million

Three people have been indicted for their alleged involvement in a healthcare fraud, wire fraud, and money laundering scheme related to false COVID-19 claims. They allegedly submitted fraudulent claims to healthcare programs, including Medicare and the Health Resources and Services Administration (HRSA) COVID-19 Uninsured Program. The scheme is believed to have included paying illegal kickbacks to patient recruiters for test referrals and billing for unauthorized tests.

Genomic testing fraud: $25 million

A man from Florida is facing potential imprisonment for his alleged involvement in submitting fraudulent Medicare claims. The charges he faces are related to claims made between late 2018 and 2019 involving a supposed scheme for cancer genomic testing. The man and his co-conspirators allegedly acquired thousands of test samples from Medicare beneficiaries through targeted campaigns and sent them to a medical center that lacked proper equipment for testing. According to the court, the samples were then sent to a third-party lab where telemedicine doctors who were not qualified to interpret the results provided prescriptions to justify reimbursement.

Fraudulent hospice Medicare claims: $15 million

Federal officials have arrested five people in Los Angeles for allegedly defrauding Medicare through fraudulent hospice services. Three of those arrested were believed to be operating fake hospice companies, submitting claims for patients who were not terminally ill and had not received the purported care. They allegedly used doctors' identities without authorization to validate the false claims, and used the identities of Russian and Ukrainian citizens to open bank accounts and leases, falsely presenting them as the hospice company owners.

Genetic testing fraud: $12 million

A nurse from New Orleans was indicted on six counts of healthcare fraud related to alleged fraudulent Medicare claims. The indictment states that for a year, she accepted bribes from a Utah company to submit claims for cancer genetic testing, which Medicare does not typically cover unless ordered by a physician. The tests were marketed as low-cost to participants, and the nurse allegedly had minimal interaction with them before submitting the claims. The indictment claims these orders were induced by kickbacks and were not medically necessary.

Non-covered services fraud: $1.9 million

Two co-owners of a holistic healthcare center have been charged with defrauding federal and private healthcare insurance providers. The two allegedly submitted fraudulent claims for treatments not provided or not covered. The center, with offices in various locations, allegedly billed for non-covered services like massages, used incorrect billing codes to avoid denials, and claimed high complexity office visits without providing such services.