‘Broad Brush of Fraud’ Tars Legitimate Providers

WASHINGTON — In three separate House and Senate hearings
on health care fraud and abuse Wednesday, legislators got an earful
from representatives of the Office of Inspector General, who said
they were making headway in the fight to get rid of it.

Committee members also heard how easy it was to game the system
from a man convicted of Medicare fraud.

In testimony to the House Ways and Means Subcommittee on
Oversight and Investigations, Aghaegbuna “Ike” Odelugo, a native of
Nigeria, said he cheated the Medicare system out of $10 million
with a sham DME company.

According to Odelugo’s testimony, it was “incredibly easy.”
All he needed were data-entry skills and a few “marketers” to
recruit patients, because claims can be submitted based on forged
prescriptions, multiple billing codes for similar items make it
possible to avoid Medicare’s red flags and unique physician
identifier numbers are available to the public online.

“One of the easier things to acquire in the DME fraud arena is a
Medicare provider number,” Odelugo said.

OIG representatives, on the other hand, said they were closing
loopholes and making significant strides in reducing fraud
throughout the health care system.

“Over the past fiscal year, OIG has opened more than 1,700
health care fraud investigations,” said Inspector General Daniel R.
Levinson, speaking before the Senate Finance Committee.
“Additionally, our enforcement efforts have resulted in more than
900 criminal and civil actions and more than $3 billion in expected
investigative recoveries in fiscal year 2010.” Those recoveries, he
added, include more than $1 billion in audit receivables.

Levinson was one of four OIG representatives testifying before
the congressional committees: Lewis Morris, chief counsel to the
Inspector General, appeared before the House Subcommittee on
Oversight and Investigations; and Gerald Roy, deputy inspector
general for investigations, and Omar Perez, special agent with the
OIG, both testified before the House Energy and Commerce Committee
on Waste, Fraud and Abuse.

As industry-watchers had predicted, in each testimony
legislators heard about the prevalence of DME fraud.

Levinson applauded the success of Medicare Strike Force efforts
targeting DME providers in Los Angeles, Miami, Detroit, Houston,
Brooklyn, Baton Rouge, Tampa, Dallas and Chicago.

Roy illustrated his testimony with an example of a California
crook who established multiple DME companies by paying gang members
$5,000 to set up bank accounts and fill out Medicare enrollment
paperwork, then submit claims for power wheelchairs and orthotic
devices.

“Not only is this investigation an example of one of the more
prevalent fraud schemes that OIG is seeing, but it also highlights
the increasing number of violent criminals entering the health care
fraud arena,” he said.

Perez told committee members about unscrupulous DME operators in
South Florida. “Some of these companies started out as legitimate
operations with a Medicare billing number; however, they were
unsuccessful as the market was saturated with illegitimate DME
companies. As a result, these companies were sold and all too
often, their new owners had one idea in mind: steal from
Medicare.”

The new owners obtained lists of stolen Medicare beneficiary
information and stolen UPINs, he said. With those two key pieces of
information, they were able to submit fraudulent claims for
equipment that “ranged from nebulizers and corresponding
medications to incontinence supplies to motorized wheelchairs.”

Once CMS paid the claims, the money was withdrawn from the
company’s bank account, the company would change ownership and then
bill Medicare again for millions of dollars, Perez said.

There are 10 Strike Force teams investigating Medicare fraud in
Miami alone, he said.

While pointing out the OIG’s successes, Morris said the problem
still exists. “Those intent on breaking the law are becoming more
sophisticated and the schemes are becoming more difficult to
detect,” he said. “Some fraud schemes are viral, i.e., schemes are
replicated rapidly within geographic and ethic communities. To
combat this fraud, the government’s response must be swift, agile
and well-organized.”

It also may require the help of providers. Speakers acknowledged
that the preponderance of providers were not involved in fraud and
abuse. In fact, said Levinson, the OIG wants to work with
them.   

“We recognize that the vast majority of health care providers
and suppliers are honest and well-intentioned,” Levinson told the
Senate committee. “Health care providers and suppliers are valuable
partners in ensuring the integrity of federal health care programs
and preventing fraud and abuse. OIG seeks to collaborate with
health care industry stakeholders to foster voluntary
compliance.”

We’ve Been Telling You, Industry Says

The American Association for Homecare would like nothing better,
pointing to the HME sector’s “long history of advocating better
fraud prevention” in a statement distributed at all three
hearings.

But AAHomecare also cautioned against placing “unreasonable
burdens” on legitimate providers.

The association statement reads in part:

“As we have stated, our Association and members have zero
tolerance for fraud and will continue to work with federal
officials to prevent fraud. In fact, in 2009, the American
Association for Homecare proposed to Congress an aggressive
13-point
Medicare Anti-Fraud Legislative Action Plan that includes
tougher penalties for fraud, more site visits, and real-time claims
audits to prevent fraud at the front-end of the process rather than
relying on the ineffective pay-and-chase system.

“The majority of the Association’s recommendations have been
adopted by Congress and the Centers for Medicare and Medicaid
Services (CMS). However, we encourage Congress to adopt all of our
proposals to ensure a comprehensive approach that directly shuts
down avenues for Medicare fraud.

“A number of important new anti-fraud measures are now in
place, which were long overdue. But Congress, CMS, and the Office
of Inspector General (OIG) should not impose unreasonable burdens
on the existing, accredited home medical equipment
providers.

“It’s important to point out that providers of home medical
equipment must now be accredited by a deemed accrediting
organization and they must also post a surety bond. These two
requirements took effect in October 2009, and fraud associated with
the home medical equipment sector has likely declined since then.
We encourage federal officials to assess and report the rate of
fraud since these requirements took effect.”

Read AAHomecare’s entire statement.

These Are Criminals, Not DME Suppliers

Wayne Stanfield, president and CEO of the National Association
of Independent Medical Equipment Suppliers, said he was “very
disappointed” in the way the hearings turned out.

“There was no opportunity for the industry to respond,”
Stanfield said, noting that government witnesses citing examples of
DME fraud “didn’t bother to mention all of the things that are now
in place to prevent it.”

The situation “is discouraging, and it’s frustrating,” Stanfield
said, “especially right before the industry is headed to Washington
in two weeks [to lobby for a repeal of competitive bidding].”

In a commentary on fraud last week, the NAIMES president said
most fraudsters “are not DME suppliers, but are people out to make
easy money on the backs of seniors and legitimate suppliers.”

With the critical fight against competitive bidding on their
hands, Stanfield urged providers to make the distinction to
lawmakers.

“When you talk to your legislators, tell them holding CMS and
its contractors accountable is the only way to stop these bad
actors from stealing from Medicare,” he said.

“Not one of these so-called suppliers billed one dime to
Medicare without first getting a supplier number from the NSC, a
CMS contractor. They billed Medicare and got paid because the DME
MACs did nothing to identify aberrant billing patterns of claims
submitted by these individuals.

“The DME industry wants these bad elements gone just as much as
the government,” Stanfield said. “Government is killing this
honorable industry with the broad brush of fraud rather than
addressing the root of the problem.”