Insurance Fraud NEWS
Tennessee clinic steals $65M selling fake scar cream
February 10, 2019, Cleveland, TN
A tube of Mederma scar cream costs around $30 on Amazon, but for the military, a tube of scar cream runs $14k and doesn’t actually treat scars.
According to USA Today, a clinic in Tennessee, along with a shady pharmacy, managed to dupe the U.S. military out of $65 million by prescribing scar cream with a price tag of $14, 500 a tube to Marines who didn’t even need it and giving the soldiers who filled the prescriptions a cut of the profits.
Here’s how the scam worked: a clinic in Cleveland, Tennessee called Choice MD would remotely prescribe the exorbitantly-priced cream to Marines in California. Then, a pharmacy in Utah would fill those prescriptions and bill Tricare, a military insurance program, for millions. A former Marine has also been charged with recruiting active-duty Marines to receive the prescriptions.
As someone who is covered in scars, my first question was “Does the cream work?” No. The reason that pharmacy could charge so much is because the cream was something called a compounded medication, which is a gray area for medical treatments that isn’t overseen by anyone but is fully covered by Tricare:
Compounding is a practice in which a pharmacist mixes several medicines into one to create a treatment tailored for a specific patient. Because every mix is unique, compounded medicines are not reviewed by the Food and Drug Administration and often cost much more than standard medicine. As of 2015, Tricare covered the full cost of compounded medicine for active-duty troops.
This scam isn’t the only one of the sort. According to a report by CBS News, the compounded medicine insurance loophole could end up costing billions:
“We’re on track this year to spend over $2 billion unless we get our hands around this,” said Maj. Gen. Richard Thomas, then-head of Tricare, in the 2015 CBS report. “It’s just been astronomical, an explosion of the charges in a relatively short period of time.”
Right now, there are ongoing investigations into similar scams in California, Tennessee, and Mississippi.