STOP Act Aims to Curb Medicare Fraud

WASHINGTON–In a Senate conference on Monday, Sens. Mel
Martinez, R-Fla., and John Cornyn, R-Texas, discussed the need for
the federal government to shift its policies regarding Medicare
fraud.

In June, the senators introduced the Seniors and Taxpayers
Obligation Protection Act of 2008 (S.3164), or STOP Act, which they
said will give federal agencies the tools they need to crack down
on fraud before it occurs.

“Our bill will give agencies the tools to stop fraud at
the front end rather than having the Department of Justice get
involved at the back end after the fraud has occurred,” said
Martinez. “Instead of continuing the current practice of pay
and chase, the federal government needs to shift to a policy of
detect and prevent.”

The bill would help to improve HHS’ detection methods and place
billing statements under increased scrutiny, the senators said.

While HME stakeholders said the proposal could be promising in
curbing Medicare fraud in general, some worried that the senators’
frontal attack might focus only on DME. (See “Combating Fraud
and Abuse” in this issue.) A statement from Martinez about
the legislation singled out the sector, noting that “items
such as durable medical equipment are notoriously known to be
falsely billed at taxpayer expense–often to fake companies with
nothing more than a P.O. Box.”

Under the measure, HHS would identify the 50 counties most
vulnerable to fraud based on the degree of county-specific
reimbursement and analysis of payment trends. These counties would
be designated as “high-risk areas.”

In addition, the legislation would:

–Require monthly verification of the accuracy of charges for
Part B claims from physicians in high-risk areas. At the end of
each month, HHS would provide physicians and group practices with a
detailed list of claims that were submitted to review and
verify.

–Require HHS to implement prepayment fraud detection methods in
high-risk areas, including:

• Pre-enrollment site visits for providers with “the
  highest probability” of committing fraud;
• Data analysis to establish prepayment claim edits to target
  claims for items or services that “are most likely to be
  fraudulent;” and
• Prepayment benefit integrity reviews for claims for items or
  services that are suspended as a result of such edits.

–Require HHS to conduct a study on the use of technology
(similar to that used in the analysis of credit card charging
patterns) to provide real-time data analysis of claims to identify
and investigate unusual billing or order practices that could
indicate fraud or abuse. The study would address whether such
technology could be used to identify unusual billing or order
practices by an individual supplier or for a certain HCPCS code in
a particular area without alerting potentially fraudulent providers
and allowing them to escape. The study would also look at how such
technology could provide for the timely review of claim logs.

–Require HHS to require carriers, prior to paying a DMEPOS
claim, to confirm with the National Supplier Clearinghouse that the
Medicare identification number of the supplier is active. HHS would
establish an online database similar to that used for the National
Provider Identifier “to enable providers of services,
accreditors, carriers and the NSC to view information on
specialties and the types of items and services each supplier has
indicated on the CMS-855S Medicare enrollment application submitted
by the supplier.”

–Require that HHS establish a tracking system for certain DME
with the label of such equipment to bear a unique identifier, or
serial number. After issuing an item to a supplier, manufacturers
(or wholesalers) would develop a product description for the item
including its unique identifier, HCPCS code, the name of the
supplier the item was shipped to and the supplier’s Medicare
identification number. HHS would set up and maintain a database
with these unique product identifiers, and manufacturers would
submit the product descriptions they developed to HHS for storage
in the database.

–Direct HHS to put the surety bond requirement for suppliers
enacted under the Balanced Budget Act of 1997 in place within six
months of the enactment of S. 3164.

In February, Martinez, Cornyn and several other senators
proposed upping a surety bond requirement for DMEPOS providers to
$500,000. But after an outcry from industry groups saying the
measure would cause undue hardships on small providers, the
senators quickly said they would reconsider.

A section of the BBA requires a $50,000 surety bond for DME
providers as a deterrent to fraud and abuse. However, the
government never implemented the requirement, and in July of last
year, CMS proposed a $65,000 bond be required. The agency said that
amount was an inflation-adjusted figure from the $50,000 amount
included in the 1997 law. (See HomeCare Monday, Feb. 25.)

The STOP Act also requires HHS to change the current system of
using Social Security numbers as the Medicare Beneficiary
Identifier used on Medicare cards.

“This will lead to less fraud and greatly reduce identity
theft among our seniors,” said Martinez. “It will also
allow seniors and the government to easily take a Medicare
recipient’s number out of circulation when fraud is
detected.”

“Our bill represents a first step in fighting Medicare
fraud, and will put us on the right track to saving taxpayer money
and protecting our seniors,” Cornyn said. “I hope that
everyone will notice the urgency of this issue and make it a top
priority. Our seniors, our providers and our taxpayers deserve
better accountability from Medicare.”

The bill has been referred to the Senate Finance Committee,
which oversees Medicare.

For the full text of the Seniors and Taxpayers Obligation
Protection Act of 2008, go to http://thomas.loc.gov and enter “S.
3164” in the search bar.