Medicare kicks out 1 in 5 new medium- and high-risk suppliers

Washington -- More than 20% of new medical suppliers who are deemed at medium or high risk of being fraudulent had their Medicare billing privileges revoked during the first year of enrollment, federal investigators found.

Illicit businesses can bilk the Medicare program for hundreds of thousands of dollars before being discovered, according to a December 2011 report from the Health and Human Services Dept.'s Office of Inspector General. The report found some medium- and high-risk medical equipment suppliers going several months before their first postenrollment site visits, which ensure that a supplier is running a legitimate business. For instance, one supplier had received $800,000 from Medicare before its first site visit seven months after getting approval to participate in Medicare.

The Centers for Medicare & Medicaid Services removed 21% of high- and medium-risk suppliers that were studied in the report, which reviewed claims from 2008 through 2009. The suppliers were paid a total of about $2.8 million before Medicare revoked their billing privileges.

Physicians fall in the low- or limited-risk category of potential health fraud and are not subjected to site visits after signing up for Medicare.

OIG officials urged CMS to monitor newly enrolled equipment providers more closely. The Medicare agency should prioritize new suppliers and conduct site visits within a month from them opening for business, the report said. CMS is using anti-fraud measures created by the 2010 health system reform law to improve program integrity, according to a Nov. 2, 2011, memo from then-Administrator Donald M. Berwick, MD.

The Medicare durable medical equipment and supplies benefit "has historically been vulnerable to abuse," Dr. Berwick said. "As such, CMS is taking additional steps to address potential vulnerabilities in the enrollment and claims payment process for this supplier group."

He concurred with an OIG recommendation that CMS conduct quicker postenrollment site visits for new medical equipment suppliers. The Medicare agency has instructed its contractors to visit suppliers in the high-risk category within 60 days of enrollment.

In 2010, 7,585 observational site visits were conducted.

CMS also concurred with recommendations to apply new investigative tools that identify owners or managers of supply businesses when the information is left off enrollment applications, and to take action against those omitting required information, such as adverse events affecting the credentialed supplier.

During one site visit, a building landlord told a Medicare investigator that the supplier was in prison. A search of an enrollment database noted that the supplier owned or managed five other Medicare-participating businesses and had received $65,000 before the site visit. The supplier's billing privileges were revoked six months after the initial enrollment.