WASHINGTON--Strong words from the Government Accountability Office are again focused on DME fraud--but this time, the blame is not falling solely on providers but rather on CMS and its DMEPOS enrollment contractor.
“Health and Human Services (HHS) has acknowledged Centers for Medicare and Medicaid Services' (CMS) oversight of suppliers of durable medical equipment … is inadequate to prevent fraud and abuse,” the GAO report, released last week, states. "Specifically, weaknesses in the DMEPOS enrollment and inspection process have allowed sham companies to fraudulently bill Medicare for unnecessary or nonexistent supplies.”
In a sting operation to test CMS' oversight, the GAO established two fictitious DME companies--one in Virginia and one in Maryland--and submitted incomplete or false information about those companies. But both companies were approved for Medicare billing privileges “despite having no clients and no inventory," the GAO said.
CMS' National Supplier Clearinghouse, the contractor responsible for verifying that potential suppliers meet Medicare enrollment standards, conducted a "limited verification" of the phony companies and sham contracts, the report said. Despite on-site visits and an initial denial of the applications, the contractor ultimately did not detect that the companies were phony.
"We believe that, had our operation continued successfully, we could have fraudulently billed Medicare for substantial sums--potentially reaching millions of dollars," the GAO said in its report.
CMS recently awarded Palmetto GBA a continuing contract to act as the NSC for one more year with four additional one-year options. Palmetto has held the NSC contract since 1993. (See HomeCare Monday, July 28.)
Michael Reinemer, vice president of communications and policy for the American Association for Homecare, said the GAO's findings should come as no surprise to the HME industry, where stakeholders have complained for years about the lack of government policing in the areas of fraud and abuse.
“Nothing was new. There were no surprises,” Reinemer said of the report. “CMS has obviously not effectively used its ample anti-fraud authority,” he said.
Following the national media attention brought by Associated Press reporter Hope Yen's Aug. 3 story on the GAO report, Reinemer sent Yen a letter emphasizing the relatively small role DMEPOS plays in Medicare spending and decrying CMS' claims that it is doing everything in its power to combat fraud and abuse.
“Our industry of course has zero tolerance for fraud,” Reinemer wrote, noting that of the reported $70 billion in improper Medicare billing every year, $700 million--1 percent--comes from DME.
“Moreover, what is rarely addressed in the news coverage is the fact that criminals allowed into Medicare have tainted the entire durable medical equipment sector, the vast majority of which is law-abiding and provides extremely cost-effective care for seniors and people with disabilities who require medical devices, services, and therapies in their homes,” Reinemer wrote.
According to Rose Schafhauser, executive director of the Midwest Association of Medical Equipment Suppliers--which carried a strong response to the GAO's findings in its newsletter last week--the report “shines a light on the flawed processes” of CMS.
”For years, this industry has provided CMS with comments on how to better detect fraud with one being more accountability of CMS on their site surveys prior to and immediately after awarding a supplier number. Site visits are done by a subcontractor for the NSC, [and] there has been case after case of inexperienced surveyors conducting these visits along with several inconsistencies between surveyors,” said Schafhauser, who also serves on the board of the NSC Advisory Committee.
The GAO investigation was conducted at the request of the Senate Homeland Security and Governmental Affairs Subcommittee on Investigations. Sen. Norm Coleman, R-Minn., the subcommittee's ranking member, told the AP the sting operation "proves that there are gaps in the system and that scam artists can exploit--and are exploiting--those gaps."
Last month, a bipartisan report by the same Senate subcommittee found that suppliers collected as much as $93 million in fraudulent Medicare claims for DME based on prescriptions from dead doctors.
On reviewing the GAO report, CMS acknowledged that the covert tests "illustrate gaps in oversight that still require improvement," the GAO said. CMS has said that mandatory accredition for DMEPOS suppliers, along with revised rules prohibiting the use of cell phones and pagers as primary contact telephone numbers, will aid in reducing fraud.
But the GAO warned that efforts by CMS to address the issue "will only be successful if those tasked with ensuring compliance exercise due diligence when conducting screenings and inspections.
"Our covert tests clearly demonstrate that a simple peperwork review is not sufficient. Unless CMS and its contractors scrutinize suppliers to ensure that they are responsible, legitimate businesses, DMEPOS fraud will continue to cost taxpayers billions of dollars each year."
To view the GAO report, click here.
To report suspected Medicare fraud, contact the Office of Inspector General by calling 800/HHS-TIPS (800/447-8477); emailing HHSTips@oig.hhs.gov; faxing 800/223-8164 (no more than 10 pages) or mailing the Office of Inspector General, HHS TIPS Hotline, P.O. Box 23489, Washington, D.C. 20026.