The ‘Business’ of Fighting Fraud

ATLANTA — “Who’s watching the DMEPOS industry?” was one of the big questions at a Medtrade session Tuesday called “Inside the Beltway.” Short answer: everyone.

Attorneys from King & Spalding updated show attendees on the activities of federal agencies, inter-agency cooperative efforts and federal and state initiatives, all keeping their eyes keenly focused on home care providers.

“Suppliers need to focus on what their [compliance] processes are, and where the documentation is,” said Seth H. Lundy, partner, King & Spalding. “In the event of a site survey, if you are organized and have your documents at hand, it affects greatly how agencies look at you.”

“The federal government has invested $100 million,” said Lundy. “Keep in mind that this is a business for the government. They are looking for a return on that investment.”

The $100 million includes more than $50 million appropriated in the 2009 Omnibus Appropriations Act and another $58 million in funding from the economic stimulus bill, both aimed at addressing Medicare fraud and abuse.

The funds will help the government “chase bad actors and also good actors who have made mistakes,” said Lundy, and will target high-value fraud cases. Overall, he said, the feds are looking to recover $2.3 to $3 billion in Medicare fraud (although not all in the DME industry).

The government believes a lot of fraud comes from its inability to effectively track some 175,000 DME suppliers, said Lundy, and they would prefer to deal with only one-half to one-third of that number.

Government entities watching the industry include the Department of Justice, HHS’ Office of Inspector General, CMS (including Medicare and Medicaid integrity programs), Medicaid fraud control units, state attorneys general and the Drug Enforcement Agency.

Attendees were also warned about the possible expanding role of RACs (Recovery Audit Contractors), “hired guns” or “bounty hunters” who target claims and are paid based on how much money they recoup (typically 8 to 12 percent of the proceeds). A change as the program goes national is a requirement that RACs pay back any money they receive if an appeal is successful at any level, which could make them less aggressive.

“The focus in on recouping funds to pay for an ever-increasing Medicare fund,” said the law firm’s Scott Strickland. “What does it mean to you? Increased risk.”

The attorneys noted that it is easier for the government to go after the DME industry because it is less unified, and because it represents a smaller benefit that fewer people will complain about losing.