CHICAGO (CBS) — This is the story of another in a long series of Medicare scams that continue to cost tax-payers millions of dollars every year.

As CBS 2 Investigator Pam Zekman reported Friday, this time, the crooks are making the Medicare patients their unwitting accomplices.

“It just sounded like fun,” said Medicare patient Marge Lyons. “And it was free.”

So Marge Lyons and her friend Florence McCauley went to a health fair in Oak Forest last year and ended up signing up for genetic testing.

“We thought they were legitimate; that this was something that could benefit me,” McCauley said.

The company they signed up with was True Med Test, which also markets its services at nursing homes and online.

The CBS 2 Investigators went undercover at the most recent Oak Forest health fair, and found a different genetic testing company using a similar pitch.

We came across a company called Genexe. They offered to screen for whether you have a gene mutation that links to cancer or adverse reactions to certain prescription drugs.

A woman behind the table explained the billing process.

“We don’t charge anyone,” she said. “Medicare is going to cover it as long as you pre-qualify.”

Three weeks later, we went to another senior health fair in Skokie. We found different companies using the same pitch.

One company representative said, “It’s at no cost to you if you have Medicare.” And another said, “It’s at no cost to people who qualify.”

But here’s the rub: Medicare regulations require that genetic tests must be medically necessary, and ordered by a patient’s treating doctor, in order for Medicare to cover them – coverage that costs taxpayers hundreds of millions of dollars a year.

At one booth, there was a man in a lab coat conducting the tests.

“Are you a doctor?” we asked.

“I’m a doctor of pharmacy,” he replied.

That doesn’t cut it under the federal regulations. And yet, there are many companies offering these tests with an on-site cheek swab, billing Medicare thousands of dollars without the approval of the patient’s treating physician.

Travis Trumitch is with a Medicare watchdog group called Age Options.

“Medicare is losing millions of dollars, potentially, with this scam,” Trumitch said. “It’s a huge problem. It’s a huge nationwide problem.”

Records we obtained under the Freedom of Information Act show that in 2018, Medicare paid more than $260 million dollars for genetic testing.

Medicare Spending 2018

And now both Medicare and the Food and Drug Administration have issued fraud alerts for this scam.

“This is brand new, so we’re trying to get ahead of it right now,” added Trumitch.

How The Scam Works

Here’s how it works. Clients like Florence and Marge have to provide their Medicare information and health history to get the testing. Then, their swab is sent to a lab that bills Medicare. And the results are supposed to be sent to the patient or their doctor.

But it turns out it wasn’t exactly free.

“Medicare got billed, and they paid thousands of dollars between the both of us, and neither one of us got any results,” Marge Lyons said.

Pam Zekman: “Did a doctor who was treating you order the tests?”

Florence McCauley: “No.”

Pam Zekman: “Were the tests in some way medically necessary according to your doctor?”

Florence McCauley: “My doctor had nothing to do with this.”

Pam Zekman: “Do you feel like you were used to accomplish a fraud?”

Florence McCauley: “It certainly sounds that way.”

Lyons agreed, saying, “I think it’s a scam is what I think it is.”

True Med Test lists a small home in Grand Rapids, Michigan as its principal office. We went there to get some answers.

The owner, Eric Wendlandt didn’t answer the door there, nor at another larger home where a woman who answered the door confirmed he lives.

“He travels all the time, so he’s hardly ever here – but I can have him give you a call,” she said.

He never called. Instead, a True Med spokesperson said it’s a marketing firm for the laboratories that do the testing and those labs are responsible for sending out the test results. True Med provided no comment on whether the company is violating any Medicare regulations.

Records show Eric Wendlandt has violated federal regulations before. In 2011 he pleaded guilty to defrauding the Department Of Housing and Urban Development by falsifying loan documents for unqualified applicants. He was sentenced to 42 months in prison.

“I’m shocked,” said Robert Hall.

“I’m flabbergasted,” added Sue Hall. “I just can’t believe it.”

Sue and Robert Hall said they also can’t believe what Medicare paid after Wendlandt talked them into signing up for genetic testing last year.

“About $20,000,” said Sue Hall. “Never in a million years did I think they were going to charge such an exorbitant amount.”

Their lab bills were paid, even though records show the ordering doctor was a nurse.

“It’s supposed to be a treating doctor?” asked Robert Hall. “The workers who are approving these things – are they not trained to spot this?”

After constant calls, the Halls finally got their lab results from two different companies.

But the Halls say they couldn’t understand the reports.

What Genetic Tests Can And Can’t Detect

So we took their lab reports to a genetics expert at the University of Chicago Medical Center — Dr. Peter H. O’Donnell. He specializes in genetic testing linked to prescription drug reactions. He reviewed their reports.

“This is like the Wild West, where a number of companies have sprung up very rapidly that are claiming to be able to do this for far too many medications, right now, than have evidence,” Dr. O’Donnell said

So, what’s the potential risk to patients?

“The risk is that they might go stop a medicine,” Dr. O’Donnell said, “when actually this medicine is working really well.”

And a certified genetics counselor found serious problems when she reviewed Hall’s lab reports on genetic mutations linked to certain diseases.

“Only three out of the 12 genes they have associated with pancreatic cancer, are actually associated with pancreatic cancer,” said Jessica Stoll of the University of Chicago Medical Center. “They’re missing close to a dozen genes that are associated with pancreatic cancer.”

For other diseases, she found similar errors in the reports.

“I would consider them useless for a patient,” added Stoll.

What Diseases Genetic Screening Can Help With

Information On Genetic Screening And Drug Interactions

“We’re worried about Medicare, always, that they’re going to run out of money,” Marge Lyons said.

“That’s right, for things that people really need,” added Florence McCauley.

After our interview, Marge decided to call Medicare to report they never got the test results that Medicare paid for.

She had this frustrating conversation with the Medicare recorded operator:

Automated Operator: “Welcome to Medicare…we’re currently experiencing longer than normal hold times.”

Marge: “Gee, surprise.”

Automated Operator: “Okay in a few words briefly tell me the reason for your call.”

Marge: “I’m reporting what I think is a scam.”

Automated Operator: “Thank- you, your response will help us make improvements in our system.”

Twice, the recording asked for her birth date, and twice, she gave it. Each time, the recording said,
“I didn’t get that.”

Marge: “What the heck is wrong with you?”

Automated Operator: “Your estimated wait time is ten minutes.”

Marge: “Ten minutes? No, all right, I’m done. ”

Now a Medicare spokeswoman says the agency will call her. Meanwhile, as a result of our inquiries, they recently got the reports from their genetic tests – but say they don’t understand them. The labs that did the testing did not answer our questions about their testing.

Federal agencies recommend that you don’t agree to genetic tests at events like health fairs. You should ask your treating doctor to order the tests if the doctor thinks it will be helpful in diagnosing or treating diseases.

WEB EXTRA: Pam Zekman Takes You Into The Story

To watch previous stories where Pam Zekman uncovered more Medicare fraud, click the links below:
At $1.2 Billion, Massive Medicare Fraud Case May Just Be Tip Of Iceberg
Medical Supply Phone Scam Targets Seniors, Costs Medicare Millions
24 Charged In Medical Supply Phone Scam Costing Medicare $1.2 Billion

Other Helpful Links:
To find a genetic counselor who can answer patient’s questions:
FindAGeneticCounselor.com
AboutGeneticCounselors.com