Recent healthcare billing fraud cases show similar conduct moving across bill coding, DME, telemedicine, and product billing. Read the provider-level analysis….by Reginald Hislop, III
Earlier this week I wrote about CMS barring eleven medical equipment suppliers from Medicare Advantage and Part D payment after more than $3.4 billion in suspected fraudulent billing. The list that Becker’s (https://www.beckershospitalreview.com/legal-regulatory-issues/healthcare-billing-fraud-10-recent-cases-44/) has compiled since mid-August makes clear that the DME action was not an isolated event. It is one entry in a run of enforcement that now spans diagnosis coding, orthotics, skin substitutes, COVID testing, and Medicaid kickbacks — with the common thread being payment that follows the claim rather than the service.
The DME case I covered (https://rhislop3.com/cms-cracks-down-on-3-4b-dme-fraud/) is on the list, and it remains the largest displacement of the pattern. Eleven suppliers, barred from Original Medicare, moved into Medicare Advantage and Part D and generated the same billing the revocation had stopped elsewhere. The Preclusion List, not revocation, is what now keeps them out. That mechanism, and the data analytics CMS credited with catching the scheme before payment, is the story’s durable development.
The diagnosis-code cases run on the same incentive
Two entries return to the conduct that has produced the largest MA settlements this year. The Villages Health agreed to pay $541.5 million over improper Medicare Advantage diagnosis codes (Medicare Advantage Fraud: Villages and Kaiser – Reg’s Blog). Monogram Health, a Tennessee in-home care provider, agreed to pay $2.4 million over false diagnosis codes submitted to boost MA payments. Both sit in the same space as the phantom-diagnosis schemes I wrote about more than a year ago: unsupported conditions added to the record to raise the risk-adjusted payment.
The difference is the size. A $541.5 million settlement and a $2.4 million settlement describe the same conduct at different scale. The government’s theory does not change with the dollar figure. A diagnosis added without support in the encounter is a false claim whether the provider is a Florida group shutting a large number of codes or an in-home care company working a narrower book.
The equipment cases broaden the exposure, and now reach the telemedicine channel
The DME and orthotic cases widen the conduct beyond diagnosis coding. Two Florida men were sentenced to prison in a $34.8 million scheme involving medically unnecessary orthotic braces. A Georgian national was indicted on a money laundering conspiracy charge tied to a $1.3 billion DME fraud scheme. Combined with the $3.4 billion supplier action, the equipment channel is now producing both nine-figure conduct and individual criminal exposure.
The telemedicine entry closes a loop that predates the current roundup (District of Massachusetts | Former Owner of Telemedicine Companies Sentenced to Two Years in Prison for $110 Million Medicare Fraud Scheme | United States Department of Justice). Steven Richardson, the former owner of telemedicine companies, was sentenced to two years in prison for his role in a $110 million Medicare fraud conspiracy. The scheme involved orthotic braces and durable medical equipment that were medically unnecessary, billed through telemedicine companies that widened the reach of the fraudulent prescriptions.
What connects the braces, the billings, and the telemedicine scripts is the same mechanic as the diagnoses. Whether the bill is for a brace the beneficiary did not need, or equipment procured through a telemedicine visit, or a diagnosis the record does not support, the claim is paid on submission and verified later. The enforcement is catching up, but it is catching up after the billing model created the incentive.
The rest of the list fills out the continuum
Heuser Health in Louisville agreed to pay $2.6 million over alleged overbilling of Medicare and Tricare for skin substitute products. Aymancare PLLC in Dallas agreed to pay $7.5 million over alleged overbilling for COVID-19 testing. A federal jury convicted three defendants in an $11 million Medicaid fraud and kickback scheme run through a Virginia mental health agency.
Two facts stand out across these. First, the conduct reaches product-based billing — skin substitutes, COVID tests, orthotics, DME — not just service and diagnosis coding. Second, the enforcement is happening through every available vehicle: False Claims Act settlements, criminal convictions, money laundering indictments, and the administrative Preclusion List. There is no single enforcement lane. The government is using all of them at once.
What this means for providers and plans
The roundup confirms the migration I described. As CMS hardens one channel, the conduct surfaces in another, and the enforcement follows it there. The diagnosis-code space now carries nine-figure settlement risk. The equipment space now carries both administrative barring and individual criminal exposure. The product-billing space is the next to fill in. The telemedicine space, dormant since its last enforcement wave, is back in the crosshairs.
For a provider or a plan, the practical consequence is that the compliance obligation is no longer channel-specific. Screening against the Preclusion List, auditing the support for added diagnoses, and verifying the medical necessity of product billings are now the same exercise run against different revenue lines. The organization that treats these as separate problems will be the one that finds the exposure it did not screen for
