Frizzera Letter Addresses Fraud

WASHINGTON — A letter last month from acting CMS
Administrator Charlene Frizzera to House Republicans outlined
Medicare’s anti-fraud measures. The effort is welcome, according to
HME advocates, but it’s years late.

In the 13-page letter, Frizzera pointed out that the top three
sectors for Medicare fraud are DMEPOS, home health agencies and
infusion therapy. She noted that CMS had conducted separate
two-year demonstrations in each of the areas “focusing on
enrollment-related activities and providers in high-risk areas of
the country.

“The demonstrations have enhanced our understanding of these
types of providers and have allowed us to test and compare
different fraud prevention tools that will assist the agency in
eliminating providers that do not meet the requirements of the
Medicare program and who potentially pose health and safety risks
to Medicare beneficiaries,” Frizzera wrote.

She also referenced the Health Care Fraud Prevention and
Enforcement Action Team, or “Project HEAT,” a partnership formed in
May between the Department of Health and Human Services and the
Department of Justice to ID fraud and prosecute criminals through
interagency strike forces. “These strike forces are being
established in areas of the country where organized criminals have
caused spikes in the submission of fraudulent Medicare claims,”
Frizzera said. “Even in the preliminary sage of Project HEAT, our
work has already resulted in charges against 103 defendants
involving more than $100 million in fraud.”

CMS information attached to the letter detailed DMEPOS fraud as
“unscrupulous suppliers who bill for services not rendered for
medical equipment, such as power wheelchairs, scooters, nutritional
products, orthotics, prosthesis and hospital beds; and billing for
services not ‘medically necessary.’” Those were described as
situations where:

• DMEPOS items/supplies are actually delivered but not ordered by
  a physician;

• Upcoding or swapping, where the supplier bills a high-end or
  custom-fitted item but delivers a low-end, off-the-shelf item, or
  the supplier provides a scooter but bills for a more expensive
  power wheelchair;

• Misrepresentation of the patient’s condition where the supplier
  submits a claim with diagnoses that qualify for payment but are not
  documented in the patient’s medical record; and

• Overutilization, where the supplier bills for more supplies than
  the doctor ordered or the patient can use, or the supplier drop
  ships without checking if the patient still needs or uses the
  supplies.

Citing the two-year DMEPOS demonstration completed in September
in South Florida and Southern California, the acting CMS chief said
fraud prevention efforts concentrated on strengthening front-end,
pre-enrollment security as well as investigating existing
enrollees.

As of Jan. 23, 2009, 1,139 suppliers had seen their billing
privileges revoked. The FY 2008 improper payment amount for DMEPOS
was approximately $700 million.

For FY 2008, the improper payment amount for HHAs was
approximately $195 million. CMS is still tallying the amount for
infusion services, but during the nine-month period from November
2007 to July 2008, $228 million of infusion services were denied,
according to the letter.

The demonstrations used several techniques to minimize fraud,
including increased on-site reviews and prepayment claims editing,
which compares new claims to previous claims allowing investigators
to spot fraud trends in real time.

Barton requested the information from Frizzera shortly after
President Obama mentioned “waste” four times in his early September
health care reform
address to a joint session of Congress. “We’ve estimated that
most of this plan can be paid for by finding savings within the
existing health care system, a system that is currently full of
waste and abuse,” Obama said during the nationally televised speech
on Sept. 9. “Reducing the waste and inefficiency in Medicare and
Medicaid will pay for most of this plan.”

Frizzera’s letter, dated Oct. 7, also included statistics on
Medicare and Medicaid errors, revealing that there were $10.4
billion in improper Medicare payments in 2008. Medicaid payment
errors came to $32.7 billion in 2007, with the federal government’s
share at $18.6 billion.

CMS has 110 full-time employees devoted to Medicare program
integrity, and 100 full-time employees working on Medicaid program
integrity. In addition, 23 attorneys within HHS work on Medicare
and Medicaid fraud, the letter said.

“Given the amount of investment and staff committed to these
efforts, it is amazing that the amount of fraud is still so high,”
commented rehab provider Gary Gilberti, president of Chesapeake
Rehab Equipment, Baltimore, who also serves as president of NCART.
“It appears that those who are supposed to identify and stop the
fraud still don’t know where to look or how to tell who a
fraudulent supplier is.”

He and others in the industry would welcome what he termed
“effective efforts” to curb fraud, Gilberti said. “We hope that
future efforts can be carried out in a way that truly roots out
fraudulent providers’ behavior without causing damage to those who
are innocent and who provide quality patient care and positive
outcomes every day.”

“I have said the pay-and-chase mentality has to stop,” added Tom
Ryan, president and CEO of Homecare Concepts, Farmingdale, N.Y.
“The demonstrations in high-risk areas that include the focus on
enrollment of providers should have been in place years ago across
the system. Site visits, prepay audits on new providers and
data-mining for aberrations in billing should be part of any
oversight of the program.

“The fact that organized crime has moved into the DME sector is
outrageous,” said Ryan, who is treasurer of AAHomecare. “As a
taxpayer, I am appalled, and as a legitimate provider painted with
a broad brush about the fraud in our sector, I am appalled. Step up
the oversight and get rid of the crooks.”

Read
Frizzera’s letter on the House Energy and Commerce Web
site.