Senators ask Medicare to use bonds to recoup overpayments

Millions of dollars in Medicare overpayments to suppliers of medical equipment have triggered a Senate inquiry into recovering debts using surety bonds.

A bipartisan group of senators asked federal health officials to ensure that all available anti-fraud measures are being used to collect overpayments made to businesses filling medical equipment orders.

The lawmakers, led by Sens. Orrin Hatch (R, Utah) and Tom Carper (D, Del.), sent a May 9 letter questioning how the Dept. of Health and Human Services and the Centers for Medicare & Medicaid Services have implemented safeguards to protect a section of Medicare known to be susceptible to fraud. The letter was in response to a March HHS Office of Inspector General report that found the Medicare agency did not have accurate information for suppliers with surety bonds, had failed to recover millions of dollars in debt owed by suppliers and had more than $20 million in surety bonds from suppliers outstanding.

“These findings demonstrate opportunities for improvement by CMS to use an important tool that is available to fight fraud and abuse in the Medicare program, and also raises the question of whether the scope of the surety bond program should be expanded to aid recovery of overpayments,” the letter stated.

The OIG reviewed outstanding overpayments between October 2009 and April 2011. Surety bond information was missing for 27,000 suppliers. More than 1,400 suppliers had debts amounting to $70 million, the watchdog agency said.

In response to the report, CMS officials stated that they had finalized guidelines for collections of supplier debts in January 2012 and had collected $263,000 from surety companies by July 2012. In addition, there were instances in which suppliers directly repaid money owed after they had become aware of overpayments, the Medicare agency said.

“The CMS understands the importance of surety bonds as a program integrity tool,” acting CMS Administrator Marilyn Tavenner wrote in a March 4 memo. “CMS is exploring multiple avenues to strengthen this important tool.”