Physicians can become entangled in DME fraud

Federal investigators are cracking down on Medicare supply schemes.

By David Glendinning — Posted March 17, 2008

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Despite federal efforts to curtail it, fraud involving durable medical equipment, prosthetics, orthotics and supplies is still a big problem for Medicare, says the Centers for Medicare & Medicaid Services. The agency recently announced it will expand a competitive bidding program for equipment suppliers. It also will require that suppliers be accredited before they can bill Medicare.

Meanwhile, investigators continue to crack down on suppliers and physicians who commit Medicare fraud. AMNews spoke with Staci Spector, an investigative assistant in CMS' Los Angeles field office, about what doctors need to know about DME fraud.

AMNews: What are some of the DME fraud schemes that involve physicians?

Spector: The common scheme we're seeing is that these fraudulent DME clinics or suppliers are recruiting physicians to act as referring physicians. We've done about 40 interviews with referring physicians that have led to administrative actions against hundreds of DME suppliers. What we're finding is these physicians are being recruited and not really knowing why.

Usually these DME suppliers will put an ad in the newspaper that says [they] need someone as an attending physician. [Doctors] are told to come into the clinic and sign off on medical charts. Usually once they get to the clinic, there are no patients and the medical charts are fake. So they're just signing off on fake charts.

AMNews: How do these schemes work?

Spector: I can give you one example. We'll just call him Physician X. This was in downtown LA. The clinic owners offered him a position as an attending physician and told him to come in twice a week for a few hours at a time and just sign off on medical charts. So the physician agreed.

He admitted that he didn't read the medical charts at all. He just signed his name, and he never saw any patients at the clinic. So basically he was providing unrendered services.

AMNews: Who gets involved?

Spector: I concentrate mostly on physicians who are older -- at or near retirement age. They're particularly vulnerable because a lot of them are not in the most secure financial situation. So they see this as an extra source of income on the side. Or a lot of them don't really speak English that well, or they're not born here, they're not familiar with the culture here. So they think it's an easy job.

AMNews: How much fraud was committed in the Physician X case?

Spector: Over three years, 84 suppliers submitted $1.4 million to Medicare. The kicker is that this physician had no idea. That's the common thing we're seeing. They're recruited as attending physicians but they don't know that their UPIN is being abused and being used to refer DME. With this physician, a lot of the claims were for power wheelchairs. Power wheelchairs are a high-value product that's generating the most money.

AMNews: Are there cases in which physicians are aware of the fraud?

Spector: With this physician, I think he was there for a few months. After a few weeks, he started to know. But they usually get a pretty hefty monthly salary, and it's a kickback. It's easy money. Obviously they know, but it's better to keep quiet and make money.

AMNews: How many doctors are going in knowing this is illegal?

Spector: They don't admit it, so this is our general assessment. I would say that most of them don't know. Or they say, "I did have a funny feeling about it, but I was scared to leave."

What we tell them is that ultimately you're responsible for your UPIN. If you answer an ad in the newspaper, even if you become the victim of identity theft or UPIN abuse, you're still responsible for the millions of dollars submitted under your UPIN. I would say most of them are innocent initially, but that's no excuse.

AMNews: Do you take actions against the physicians or the suppliers?

Spector: Both. With physicians we put them on prepayment review, postpayment review, deactivation. We try to revoke them. Under a new initiative, we're working with the [Office of Inspector General] to impose a civil monetary penalty to try to recoup all that money.

AMNews: So you're going after the physicians for the money?

Spector: Yes. Our thinking is that even if you don't know, you're still ultimately responsible for everything that's occurring under your UPIN. So yes, the DME supplier is using your number without your knowledge, but you have to guard your number like your Social Security number.

AMNews: How much are you going to try to recoup from Physician X?

Spector: It's usually three times the amount that was taken fraudulently, so it's $1.4 million times three. We referred the suppliers for administrative actions, and we shut them down.

AMNews: What are some red flags that physicians should watch for?

Spector: We like to tell physicians to guard your UPIN like it's your most treasured possession. They just so willingly give up their numbers. They go into the clinic and the clinic owners will tell them, "We need to establish a joint banking account with you. This is how you're going to get paid. Give me your number." If you go into a clinic and the owners are telling you, "I'm going to pay you $10,000 a month," that's a big warning sign, because that's a kickback.

We try to tell them to be aware. I'm not going to say that every newspaper ad looking for an attending physician is fraudulent. But if you answer something like that, be aware. If you go into a clinic and there are no patients, that's another red flag. Or when you sign off on medical charts and you notice the same beneficiary is receiving a wheelchair each week. Obviously, the records are fake so they use the same beneficiaries over and over.

AMNews: What about the scams in which beneficiaries receive equipment billed to Medicare that they don't need?

Spector: That is the majority of DME fraud, the kind involving beneficiaries. The wheelchair will just show up at the door -- or two wheelchairs a month. And they're like, "Hey, I don't need a wheelchair. I can walk." Or they'll look at their [Medicare summary], and all these orthotics will be billed under their name, and they say, "I never saw a doctor about this."

AMNews: How do the suppliers get a doctor's ID in these cases?

Spector: These doctors are probably being shared among DME suppliers, so if one supplier uses this doctor, then he's being shared among something like 84 different suppliers. It's ID theft, basically.

AMNews: So the fraud that doesn't involve actual patients or supplies is more of a potential moneymaker?

Spector: Yes, and that's more blatant fraud, too. But that's the minority of cases. Most fraudulent suppliers make their money off the margins on DME.

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