Home Health & Hospice Week

More than 90 percent of revoked suppliers were reinstated upon appeal.

Medicare may be doing a better job of chasing fraudulent suppliers out of the program, but it has not been as good at keeping them out.

The HHS Office of Inspector General wants the Centers for Medicare & Medicaid Services to toughen appeals by implementing a standardized list of evidence that hearing officers should require for reinstatements, the OIG says in a new report.

In 2007, the OIG and CMS made unannounced site visits to 1,581 suppliers in South Florida. The OIG found that 491 of them didn't have a physical facility and weren't open and staffed. CMS then revoked the suppliers' billing privileges.

Two hundred forty three of the ousted suppliers appealed, and CMS reinstated a whopping 222 (91 percent) of them, the OIG reveals in its report, "South Florida Durable Medical Equipment Suppliers: Results of Appeals" (OEI-03-07-00540).

The problem: Hearing officers reinstated the suppliers based on inadequate criteria. For example, showing proof of a lease or cell phone bills shouldn't have been evidence that a supplier had a physical location that was open and operating during business hours, the OIG chastises.

In fact, two-thirds of the reinstated suppliers had their billing privileges revoked or inactivated again later, the OIG notes. And the U.S. Attorney's Office indicted 18 individuals who were connected to 15 of the reinstated suppliers. Ten of those have already been convicted and have received millions in fines and years in jail time, the OIG points out.

The solution: "A more critical review of the types of evidence submitted by suppliers is warranted to ensure that fraudulent suppliers are not reinstated," the OIG says. CMS should "strengthen the appeal process by developing criteria regarding the types of evidence required for hearing officers to reinstate suppliers' billing privileges."

CMS response: Accreditation, which Medicare will require of suppliers in October 2009, will take care of a lot of these problems, CMS says in response to the report. And no requirements should restrict what a supplier can submit or impinge on a hearing officer's ability to make independent judgment, the agency adds.

Note: The report is online at http://www.oig.hhs.gov/oei/reports/oei-03-07-00540.pdf.