There is a giant piggy bank stuffed full of money that is just sitting there waiting to be spent. It is the Medicare program and it is enormous. In 2024 it spent over $1.1 trillion on medical care for its beneficiaries. This was 14% of all of the money spent by the federal government in that year. Given what we know about human nature, we should not be surprised that unscrupulous people in the medical profession see this program as an opportunity to get rich and I mean really rich.
While there are many ways for thieves, crooked doctors and scammers to steal from Medicare, one of the recent schemes has involved the use of skin substitutes for wound care. Wound care can be difficult. As the population of the United States ages, more and more of us become bedridden or diabetic or both. These conditions are ripe breeding grounds for pressure sores, places where the lack of movement and the lack of good circulation cause the death of the skin and the tissue beneath it at pressure points along the patient’s back, feet and legs. These wounds are notoriously hard to treat once they develop. One of the recent medical advances is skin substitutes that can cover these wounds and help them heal. A skin substitute used to cover an open wound is called an allograft.
The manufacturers of skin substitutes set very high prices for their products, sometimes over $1,000 per square inch. Medicare recognized the usefulness of these skin substitutes in wound care and agreed to cover their use in medically necessary situations. The availability of Medicare reimbursement at these rates attracted unscrupulous medical care providers, who swarmed into the program like locusts. Doctors, nurses, home health people – anyone who could apply a bandage got in on the action. Illegal kickbacks from manufacturers and distributors kept reimbursement levels high while the provider receiving the kickbacks kept Medicare in the dark about the true cost of the product and put the kickback amounts in their pockets.
Providers looked for any Medicare beneficiary with a wound that might be able to be covered by the skin substitute. Some terminally ill patients, with complex wounds, received multiple allografts for which Medicare was charged millions of dollars. Abuses became common.
Some of the methods used to defraud Medicare included the following:
- Kickbacks which kept reimbursements unnecessarily high by misrepresenting the true cost of the allograft material.
- Failing to attempt conservative treatment measures, as required by Medicare regulations, before resorting to the placement of an allograft.
- Falsifying records to document attempts at conservative measures that were never attempted.
- Applying a larger graft than necessary, resulting in a far larger charge for the procedure.
- Applying grafts to areas which were not actual open wounds.
- Falsifying records to make it appear that an allograft was medically necessary when it was not.
- Falsifying records to claim a larger allograft was used when in fact it was a smaller one.
- Falsifying billings to disguise the true cost of allograft materials.
It is hard to grasp the amount of money these fraudulent schemes stole from Medicare but federal indictments of some of the alleged participants claim they were individually taking in hundreds of millions of dollars. One is even alleged to have filed fraudulent claims in excess of $1 billion. According to the indictments, the fraudulent proceeds went to purchase beachfront properties, $800,000 necklaces, $500,000 automobiles, gold bars, mansions and to generally support lavish lifestyles. With the federal indictments, some chickens are coming home to roost but there is no way that even the most rigorous enforcement program can catch all of the fraudsters or recover the money they have already spent.
If, like me, you are a Medicare beneficiary, these fraudulent schemes cost you twice. They cost you once as a taxpayer whose taxes go in part to support the program. They cost you a second time when the premiums Medicare charges you each year have to be increased to cover increases in the cost of the program due to fraudulent claims.
If the medical profession spent half as much time and energy policing itself and rooting out fraud as it does complaining about medical malpractice suits, the public would almost certainly be better off.
