Judge Criticizes DMERC for Not Catching Fraud Earlier

MIAMI–A U.S. district judge rebuked a Medicare contractor last
week for paying out $122 million for prosthetic limbs over a
four-month period in South Florida.

Palmetto GBA, which handles Region C claims, paid for 21,000
artificial legs and arms in the Miami-Dade County area last year, a
number that shouldn’t have escaped Palmetto’s notice, according to
U.S. District Judge Cecilia M. Altonaga. “Common sense dictates
this is an impossibility,” she wrote in a May 10 decision, the
Miami Herald reported.

Federal prosecutors have yet to file criminal charges, but have
filed a civil suit against 48 suppliers and a billing agency for
allegedly submitting false Medicare claims. Columbia, S.C.-based
Palmetto GBA was not included in the lawsuit, but Altonaga had
sharp words for the DMERC: “It is unclear why Palmetto GBA is not a
subject of the government’s investigation into criminal
wrongdoing.”

According to the Herald, billings for artificial limbs
rose from $2,000 to more than $200,000 a month, and critics say the
sharp increase should have raised red flags.

But spokeswoman Elizabeth Hammond said that catching the
behavior at four months was early. “In addition to identifying this
issue and actively supporting law enforcement investigation of this
case, Palmetto GBA’s scrutiny of orthotics and prosthetic billing
in South Florida has resulted in hundreds of millions in program
savings,” she told HomeCare Monday.

Another problem is that the government does not fund or require
Medicare contractors to perform pre-certification like private
insurance does, Hammond said. Instead, Medicare relies on
post-payment data analysis to spot payment trends. “Palmetto GBA
does not have the authority to suspend payments without CMS
permission,” she said. “To obtain that permission, Palmetto has to
gather data based on billings records for claims that are already
paid.”

Jeffrey Baird, a health attorney with Brown & Fortunato,
Amarillo, Texas, also noted that it takes time for Medicare
contractors to notice unusual billing patterns. “Any time you have
a group of individuals or a company intent on gaming the system or
intent on committing fraud, there’s going to be some lag time
before the DMERC catches on,” he said.

“In a perfect world, Palmetto should have caught the fraud
instantaneously, but if it took four to five months to catch on to
the act, that’s pretty quick,” said Baird, who added that it
typically takes a year to detect Medicare scams.

Funding is also an issue, according to Hammond–Palmetto GBA is
only funded to review records on about 0.6 percent of claims that
the company handles. Furthermore, she said the claims processor
receives about one percent of benefit payments, much less than
private insurance companies. Palmetto handles about 40 percent of
all Medicare claims for DME in the country, according to Hammond,
handling 28.1 million Medicare claims in the Southeast in 2004.

While better payment from CMS could help Palmetto put more
people out in the field to investigate and uncover wrongdoing more
quickly, Baird said, “it’s still not going to allow Palmetto to
discover fraud instantly.”