Learn how improper marketing techniques can lead to Medicare Fraud involving Durable Medical Equipment.
Participants will be able to:
Understand certain practices within the medical device sales industry.
Describe how having a compliance program in place is necessary but not sufficient to protect the company from legal jeopardy.
Explain the importance of following the detailed procedures required for the sale of medications and medical devices.
Identify ways in which a company might take greater precautions to avoid lawsuits and investigations.
People who work in any type of business environment, particularly those engaging in sales directly to consumers.
Durable Medical Equipment, Medicare, Medical Devices, Compliance, Medicare, Medical Necessity
The aging of baby boomers and ever extending life expectancy rate of American’s has led to a growing number of older people with special medical needs related to aging. This includes people dealing with issues such as high blood pressure, diabetes, arthritis and enduring pain from past injuries or as a result of the aging process. Many companies exist to help ameliorate these problems and use various marketing techniques to make consumers aware of their products and services. Some companies rely on more aggressive techniques that can lead to investigations and legal problems.
Government investigators have become aware of these more aggressive techniques and have placed greater emphasis on rooting out companies employing these kinds of marketing strategies. Sometimes these companies have been accused of taking advantage of older people and the Medicare process by suggesting individuals sign up for medications and devices they may not require. These companies will even go so far as to make the prescription process easier by offering up their own network of doctors to provide proof of medical necessity. Prosecutors appear to be committing greater resources to discovering and prosecuting these companies and the individuals involved in their operations, seeking reimbursement for Medicare fraud and to dissuade other companies from doing likewise.
Patrick Wolfe from the state of Florida owned and operated a company called Wilmington Island Medical, Inc. Wilmington specialized in providing medical devices to patients insured by Medicare. Wilmington acquired the leads from these sales from lead generation companies located outside of the United States.
These lead generation companies often purchase what can be termed as soft leads from other providers. The soft lead providers often obtain lists of elderly people on Medicare and cold contact them without regard to the United States’ laws regarding the Do Not Call list. The Do Not Call list, among other things, requires that anyone being contacted for the sale of medication or medical devices have opted in prior to contact.
These soft leads will then be passed along to the lead generation companies that obtain detailed information from the patient potentially interested in receiving medication or a medical device. This information will include such details as their age, home address, current primary doctor and a brief description of medical history and current ailments. These patients will then be encouraged to authorize the request of a prescription so that the patient may receive the medication or medical device being offered by end-providers in the United States, such as Wilmington.
The lead generation company then forwards the request for a prescription, along with all the information collected to a doctor unassociated with the patient, who briefly calls the patient to confirm the information. The doctor then returns the prescription to the lead generation company which then forwards this “solid lead” to a company like Wilmington that provides the devices (or medication, as the case may be). In many instances, such patients would not have made the request had they not been contacted to begin with.
Patrick Wolfe and Wilmington became ensnared in a government investigation. Prosecutors accused Wolfe of Medicare fraud and deceiving the government by promoting the unnecessary and unrequired sale of medical devices to Medicare recipients. Wolfe received a sentence of 24 months and court order restitution of almost $550,000. Further, Wolfe’s plea agreement requires cooperation into ongoing investigations, ensuring that the companies which provided leads to Wolfe might also be facing prosecution at some point in the future. Wolfe received a relatively lenient sentence due to his cooperation with authorities.
Many companies have been involved in lead generation and sales related to medical devices for a long time. State and federal governments lacked the tools, resources and initiatives to pursue these companies as they focused on other priorities. That, however, all changed in an instant as the Southern District of Georgia has now charged 31 individuals and companies as part of the nationwide crackdown on fraudulent genetic testing, and prescribing of orthotic braces and pain creams, identifying more than $1.5 billion in losses to Medicare and Medicaid for defendants charged int the Southern District of Georgia alone. Many other United States Attorney’s offices have made this a priority as well. Wolfe may have taken comfort in the lack of past prosecutions in this area. He may also have felt secure in knowing that while his company mostly followed the letter of the law by obtaining prescriptions. However, merely breaking the spirit of the law, nonetheless, qualifies as fraud, since many of the devices may not have met the requirement of “medical necessity” for the end user-patient.
Small companies and individual entrepreneurs frequently find themselves struggling to discover a successful business model. It may take time to find what clicks and start generating revenue. Failure to include robust compliance as part of a business model may lead to short term gain but it can also lead to long-term pain. With more than 4,500 laws on the books and millions of pages of regulations, the federal government has many options for pursuing prosecutions. The best way to avoid an investigation and to mitigate the damage should one ensue is to demonstrate a good faith effort towards operating a business in a compliant manner. Having a third-party specialist review and analyze your company remains a good first step toward meeting that objection.