Home Health & Hospice Week

Suppliers frustrated by getting a bad rap from scam artists Medicare lets into the program are finally receiving some support from a federal watchdog agency.

In a newly released report, the Government Accountability Office says procedures in place at the Centers for Medicare & Medicaid Services and the National Supplier Clearinghouse don't keep fraudsters out of the Medicare billing program.

From February 2007 to June 2008, the GAO set up an undercover operation to open two phony durable medical equipment suppliers in two different Medicare zones. GAO investigators obtained necessary licenses and information, applied for Medicare enrollment and then submitted fake contracts in support of the applications, according to the report (GAO-08-955).

The NSC initially denied the phony suppliers' applications for not showing that they had in-ventory, the report notes. But the GAO investigators submitted false wholesale company contracts with a phone number that rang to the GAO. In one case, the NSC called the number once. In the other case, it didn't call at all. In both cases, the NSC approved the corrected application.

While the undercover suppliers didn't actually bill Medicare, they got all the numbers to do so. "We believe ... we could have fraudulently billed Medicare for substantial sums -- potentially reaching millions of dollars," the GAO says.

"Our covert tests clearly demonstrate that a simple paperwork review is not sufficient," the GAO says of the current enrollment process. "Unless CMS and its contractors scrutinize suppliers to ensure that they are responsible, legitimate businesses, DMEPOS fraud will continue to cost taxpayers billions of dollars each year."

The GAO cited a laundry list of cases where real fraudsters bilked Medicare of hundreds of thousands of dollars in similar scams. "Once criminals have created fraudulent DMEPOS companies, they typically steal or buy Medicare beneficiary numbers and physician identification numbers in order to repeatedly submit claims," the GAO notes.

CMS pointed out that competitive bidding and upcoming accreditation requirements will combat such fraudulent enrollees. "However, these actions will only be successful if those tasked with ensuring compliance exercise due diligence when conducting screenings and inspections," the GAO warns.

Note: The report is online at http://www.gao.gov/new.items/d08955.pdf.