A podiatrist and nail salon crew sweep through senior homes offering free pedicures while billing Medicare for diabetic foot procedures. Physicians casually sign medical necessity forms for thousands of patients to get free home health care.  

Equipment suppliers hand out free knee braces while billing Medicare for more elaborate and expensive ones.

These are just a few examples of how fraud, waste and abuse seep through America’s medical bills, ranging annually from 3 percent to 10 percent of total health care spending, or $93 billion to $310 billion, law enforcement officials say.

Many of these schemes offer consumers something that will not cost them anything, because their insurance will pay for it. Insurers, meanwhile, have to pay the claims within 30 days, which sometimes means a careful scrutiny won’t happen until the money is already out the door.

Last summer, a company advertised for a free session involving DNA testing for prescription medicines at the Carrollton Senior Center. The company said technicians would do cheek swabs and send the results to people’s physicians. It asked attendees to bring their Medicare ID cards.

Marilyn Hoss saw the center calendar item and thought it sounded just fine. She was one of about 20 seniors who showed up. But she soon began to wonder.

“There was a long table by the door. You gave them your information — your Medicare card, your driver’s license, and any ID for other insurance,” she recalled. “You signed a paper. They swabbed the inside of your mouth, and they gave out ice cream bars.”

The company’s consultant invited everyone to take a seat. He explained that Medicare was spending $136 billion a year on seniors hospitalized because they’d taken drugs that reacted badly with other medications.

Genetic testing could identify how well someone would metabolize these drugs, helping prescribers avoid those bad reactions, he said.

Hoss said the man claimed that Medicare was paying him to run these tests because they would save the federal agency money. But when Hoss showed the results to her cardiologist, he was surprised.

“Where did you get this? Do you know this doctor who signed it?” he asked.

No, she replied, she didn’t know him.

“A doctor cannot do this unless they have treated you and they have a specific reason for doing it,” her cardiologist said.

The paperwork for Hoss’ test made it through the computers that scan 4.4 million Medicare bills a day. The federal government paid the lab that did the genetic testing $1,187.48 for Hoss’ DNA analysis.

Mike Fields, the senior federal agent in Dallas for the U.S. Department of Health and Human Services’ Office of Inspector General, said he was aware of the DNA testing seminars. He said his own physician urged him to get tested.

“You do know what I do for a living, don’t you?” Fields responded.

His doctor told him one day he’d need his genetic code deciphered.

“That isn’t good enough. It doesn’t make it medically necessary,” Fields said. “That’s only going to get worse as they find more and more diseases with genetic predispositions. And I hope Medicare is on top of it.”

Often, dubious providers get paid before Medicare has a chance to sniff out a scam. “As long as all the blanks are filled out and all the boxes are checked, no human ever sees it; it goes right through. They’ll pay it,” Fields said.

Medicare’s fraud and abuse

Fields, who is scheduled to retire in July 2015, said Medicare’s fraud and abuse woes in the Dallas area are concentrated in home health care, hospice care and durable medical equipment.

A special strike force of FBI, Office of Inspector General and state investigators was placed in Dallas in 2010 because of the high amount of fraud. It has cracked open illegal schemes that billed Medicare for more than half a billion dollars (though recovering only a little over $50.4 million).

So far, the investigations have resulted in 63 indictments and 43 convictions.

A common feature running through these cases is a sense that they are “victimless” crimes. The government pays, and the patient gets something free. The victim is the taxpayer.

Volunteers trained in the basics of health care fraud, known as the Texas Senior Medicare Patrol, brief older people about the sorts of deceptive practices in use.

Neil Thomas, a former employee benefits manager in Dallas, is one of those volunteers. He spoke at the Carrollton Senior Center last year.

“The amount they charge you for Medicare premiums has to be increased when $100 billion has been taken away from Medicare by fraud,” Thomas explained. “So it’s in your interest to keep your Medicare costs lower by reporting this stuff.”

After his speech, Marilyn Hoss came up. She told him about the DNA testing. “Once I heard her explain it, I knew something was wrong,” Thomas said. “I’d never heard of this before. But I thought, they’ve just found a new crack in the wall.”

Medicare’s rules for genetic testing vary. A doctor has to determine that the test is medically necessary.

Novitas Solutions, the contractor that handles Medicare claims in Texas, spells out the rules for coverage in a 10-page overview that went into effect on December 5, 2013. Genetic tests to determine a hereditary risk of certain types of breast cancer are covered. So are tests that identify genes that can predispose someone to certain blood clots and the risk of embolisms.

For “pharmacogenomics,” the term for DNA testing for medication reactions, Novitas’ overview is not encouraging.

The overview warns “there is scant evidence of general clinical uptake of pharmacogenomic diagnostic testing to guide patient management, which continues to lack sufficient evidence of decision impact, despite emerging technical research.”

Free services

The rules are more direct for home health care. Medicare will pay only for homebound patients rehabilitating after a hospital inpatient stay.

Hospice care is available only for patients where a doctor has determined they have less than six months to live.

Medical equipment like power wheelchairs and knee braces require a physician’s order.

Yet seniors are often approached by firms offering all of these services, at no cost to them, if they’ll simply provide their Medicare cards.

“When you get down to trying to prove these things, you get to a U.S. attorney and the first thing they ask is, ‘Did they get the service?’ More than likely, they did get it,” Fields said.

“So they’ll ask, ‘Did they need it?’ We’ll say no, a doctor signed it, but it’s not according to the rules. They’ll say, ‘Well, that’s a medical determination, we don’t want to take that case.’ You can explain till you’re blue in the face that they don’t need it, because we’re out there in their homes and we’re seeing it.”

In some cases, seniors got free home health care visits under these ruses for “seven or eight years,” Fields said.

Republicans and Democrats have strengthened federal agencies investigating and prosecuting health care fraud.

In the 2008 presidential campaign, when Barack Obama and John McCain offered competing health plans for covering most of the uninsured, each candidate promised that cracking down on fraud, waste and abuse would help pay the cost.

Last year, the government says, it recovered $3.3 billion of Medicare funds. More than $27.8 billion has been returned to the Medicare trust funds since 1997.

Suspicious claims

In 2010, Congress approved $100 million in funding to give the Centers for Medicare and Medicaid Services predictive analytics software. These computer programs identify suspicious claims and patterns so the government can check them out before paying. In 2014, the software was credited with halting fraudulent payments worth $210.7 million.

A law enacted earlier this year [2015] requires Medicare to quit printing Social Security numbers on Medicare cards to curb the risk of identity theft and fraud. It also requires home health agencies to post a $50,000 surety bond before they can do business with Medicare.

If these steps are taking a bite out of health care fraud, however, it’s a small one. Fields said home health care fraud is “just out of control” in four Texas counties along the Rio Grande.

Private insurers have plenty of their own fraud problems to contend with. A Carrollton chiropractor, a local union representative and a group of co-workers were convicted last summer for stealing millions of dollars from Blue Cross Blue Shield of Texas between 2003 and 2009 through phony treatments.

Already this year, hackers broke into the claims files of the insurers Anthem, Inc., and Premera Blue Cross, compromising medical identities of more than 90 million people, including more than 50,000 employees and dependents insured with AT&T.

Law enforcement officials say medical identities sell for far more on the black market than credit card numbers. And once a person’s insurance information gets out, it can be used repeatedly to submit bogus claims.

Eva Velasquez, president and CEO of the Identity Theft Resource Center in San Diego, said the nationwide push to digitize medical records is creating new horizons for fraud.

“I don’t think they’ve figured out how to get the most money out of them,” she said. “When they do, it will explode.”