CMS Reinstates 200+ S. Fla. Providers–After Shutting Them Down for Fraud

WASHINGTON–In a shocking report released last week, HHS’
Office of Inspector General revealed that more than 200 South
Florida HME companies shut down for fraudulent claims were allowed
back in the Medicare program after appealing their
revocations.

In March of 2007, an OIG report detailed 1,581 unannounced site
visits to suppliers in South Florida’s Miami-Dade, Broward and Palm
Beach counties, dubbed by some government officials as Ground Zero
for Medicare fraud. The report showed 491 of those suppliers
didn’t meet even the minimum standards: They either
didn’t have a physical facility or were not open and staffed.
CMS subsequently revoked their billing privileges. (See
HomeCare Monday, April 2, 2007.)

But according to a new report from the OIG, which followed up on
the companies that were shut down, nearly half appealed their
revocations and received hearings–and hearing officers reinstated
the billing privileges for almost all of those that appealed.

“After our prior study, hearing officers conducted hearings
for 243 of the 491 revoked South Florida suppliers. Billing
privileges were reinstated for 91 percent of these suppliers (222
of 243),” according to the OIG tally.

Three hearing officers conducted all of the hearings. One conducted
54 hearings and reinstated all 54 suppliers. Another reinstated 87
of 93 suppliers, and the third reinstated 81 of 96 suppliers.

Since then, however, two-thirds of these same suppliers–148 of the
222–have had their billing privileges revoked or inactivated
again. In addition, some individuals connected to the reinstated
suppliers have been indicted, the OIG discovered.

Between April and September 2007, the U.S. Attorney’s Office
has indicted 18 individuals connected to 15 of the 222 reinstated
suppliers. As of April 2008, 10 of the 18 defendants had been
convicted and were each ordered to pay between $90,000 and $11
million in restitution. These defendants were also sentenced to
jail terms ranging from one to four years.

The OIG blames the problem on criteria regarding the types of
evidence necessary to reinstate supplier billing privileges: There
aren’t any, according to the report.

Although CMS has developed procedural guidelines for hearings,
it has not provided hearing officers with criteria about the types
of evidence revoked suppliers must submit to have their billing
privileges reinstated. So, the hearing officers gave back billing
privileges to the revoked companies based on evidence such as
photographs, licenses and permits, employee affidavits, vendor
invoices, utility bills and leases.

“According to CMS, hearing officers generally accept all
documentation submitted by suppliers as legitimate, unless they
have reason to believe otherwise,” Inspector General Daniel
R. Levinson wrote in the report. He suggested that CMS strengthen
its appeals process and that “a more critical review of the
types of evidence submitted by suppliers is warranted to ensure
that fraudulent suppliers are not reinstated.”

In a letter responding to the report, CMS Acting Administrator
Kerry Weems pointed out that all suppliers will need to become
accredited by Oct. 1, 2009, “which will allow CMS to ensure
that only legitimate suppliers serve Medicare beneficiaries.”
But he also agreed that CMS should consider establishing guidelines
for the evaluation of evidence that a hearing officer will
review.

For a PDF of the complete OIG report, click here.