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."