Risky HME providers slipping through NSC application process, OIG reports

Too many risky providers of DMEPOS are slipping inside Medicare’s purchasing system and operating for long periods of time without submitting proper documentation, according to a report last week from the Department of Health and Human Services Office of the Inspector General (OIG).

The report focused on a contractor for the Centers for Medicare & Medicaid Services, the National Supplier Clearinghouse (NSC), which reviews supplier enrollment applications, conducts site visits and assigns new suppliers a fraud risk rating based on assessment.

OIG officials looked at a national sample of 229 suppliers enrolled through NCS during October-December 2008, and identified problems during their first year in Medicare. The OIG also identified suppliers that failed to properly list on applications information regarding ownership, management, criminal histories and adverse legal actions.

They found that 13 percent of high- and medium-risk suppliers and 4 percent of low/limited-risk suppliers omitted ownership or management information from applications. Many of these suppliers remained active in Medicare through December 2010, indicating that information omitted from applications could remain undetected for more than a year despite NSC oversight, the OIG reported.

Also, 4 percent of high- and medium-risk suppliers omitted from applications information regarding criminal histories or adverse legal actions involving managers or owners, the OIG reported.

Moreover, during their first year of enrollment in Medicare, 26 percent of high- and medium-risk suppliers and 2 percent of low/limited-risk suppliers required enforcement actions, such as revocation of billing privileges or placement on prepayment claims review.

Some suppliers received significant Medicare reimbursement before enforcement action was taken. Medicare reimbursed high-risk suppliers $2.8 million and medium-risk suppliers $70,582 prior to the revocations of their billing privileges.

The OIG said the review demonstrates the need for further scrutiny of the riskiest applicants.

“We recommended that CMS conduct post-enrollment site visits earlier for new suppliers that receive the most money from Medicare, apply investigative techniques and tools to identify any owners or managers of suppliers who are not reported on supplier applications as required and take appropriate action regarding suppliers that omit information from applications,’’ the report said.