New York Breaks Up $28 Million Medicaid Diagnostics Mill

Case: One of the biggest Medicaid diagnostics fraud schemes in recent memory has resulted in multiple convictions, including two doctors and two corporate presidents. According to New York prosecutors, the key defendants, including the owner of a pair of diagnostic clinics, the head of medical management firm and a complicit physician—used street recruiters to offer patients cash payments of between $20 to $50 to go to the defendant’s clinics for a battery of unnecessary tests. By the time it was done, the massive medical mill had billed $28 million worth of tests to Medicaid and Medicaid MCOs, proceeds the defendants divvied up among themselves under a secret revenue sharing plan. 

Significance: This scheme, which required undercover agents and a stream of warrants to discover, wasn’t just sordid but elaborate. In an attempt to give the mill the face of legitimacy, an unlicensed individual was hired to pose as a physician to order tests in the name of physicians involved in the scheme. Even the test technicians were involved as the tests ordered for a particular patient were based on which technician happened to be on duty that day.

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