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"$299 Scam" Exploits Medicare Drug Plan Confusion

March 23, 2006
It’s called the "$299 Scam," named for the amount of money high-pressure scammers talk seniors, the disabled and immigrants into withdrawing from their checking accounts to pay for a non-existent prescription drug plan. Authorities in California say it's the latest scam to take advantage of the confusion surrounding the Medicare Part D drug benefit that took effect January 1.

Complaints have been lodged against several companies, but authorities believe the same people are simply operating under a number of corporate fronts.

The "M-O" is usually the same: scammers try to talk Medicare beneficiaries into revealing their Medicare number and other sensitive information. They are then charged $299 as a "one time fee" to maintain the phony coverage. In some variations of the scheme, victims are offered advice on making drug plan decisions for an additional fee.

Authorities caution consumers to be alert when dealing with any company offering Medicare drug coverage, and say there are some red flags that usually signal the pitch is a scam:

• Legitimate Medicare drug plans will not ask for payment over the telephone or the Internet;

• No Medicare drug plan can ask a person with Medicare for bank account or other personal information over the telephone;

• Legitimate drug plans won't offer "free" physical exams or try to sell you medical appliances or equipment.

The California Health Advocates' Senior Medical Patrol Project says the scheme targets many non-English speaking seniors in parking lots, bus stops and senior centers. Others are approached by telemarketers. The agency reminds seniors they can call 1-800-MEDICARE if they are unsure whether any drug plan offer is legitimate.

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