Medicare Compliance & Reimbursement

Suppliers can expect even more scrutiny from Medicare thanks to a new scandal about CMS' CERT program.

In a new report, the HHS Office of Inspector General chastises the Centers for Medicare & Medicaid Services and its Comprehensive Error Rate Testing (CERT) contractor AdvanceMed for calculating misleading durable medical equipment payment error rates.

CMS gave AdvanceMed oral directions to use less stringent review criteria for DME claims when calculating the 2006 CERT rate, says the OIG's report (A-01-07-00508). Those instructions led to a 7.5 percent error rate for DME claims when it really should have been 28.9 percent, according to a claims sample examined by OIG investigators.

The OIG report says CMS told the CERT reviewers to:

• make determinations based primarily on the limited medical records available from suppliers, not the full medical records available from physicians;

• apply clinical inference when reviewing supplier medical records to reasonably infer that the DME provided was medically necessary; and

• not count lack of proof of delivery as an error if that was the only issue with a claim.

Word of the OIG's report leaked in a New York Times story before the agency officially issued it. "This is outrageous," said Senate Finance Committee ranking member Chuck Grassley (R-IA).

"This report doesn't surprise me," House Ways & Means Comm-ittee Chair Pete Stark (D-CA) told the paper. "To look better to the public, you cook the books," he said. "This agency is incompetent."

CMS response: "Allegations of manipulation of this error rate are preposterous," said CMS spokesperson Jeff Nelligan. "The agency has aggressively targeted fraud and improper payments in the DME program."

"When you find such a big discrepancy, you can't help but be mad and feel you've been misled," Grassley said in a statement released after the OIG issued the official final report. "I gave CMS credit for doing a good job in 2006, and now we find out the numbers are bogus."

Reps. Ileana Ros-Lehtinen (R-FL) and Lincoln Diaz-Balart (R-FL) say they have asked House Oversight and Government Reform Committee Chair Henry Waxman (D-CA) to hold hearings on the issue in the fall, according to press reports.

The controversy is likely to result in more scrutiny for Medicare DME claims, experts predict. CMS has already signaled a willingness to follow the OIG's suggestions on toughening up the CERT program review.

But it also may throw up a roadblock to suppliers' efforts to get rid of competitive bidding once and for all.

The New York Times article pointed out that "on July 1, Medicare instituted a new competitive bidding system that officials said would reduce both fraud and costs for medical equipment. On July 15, however, Congress suspended the program, after equipment manufacturers and sellers began an aggressive lobbying campaign."

Industry response: "The action by Congress in July to delay and fix the deeply flawed bidding program will not reduce or delay efforts to combat fraud," American Association for Homecare's Tyler Wilson said in a letter to the Times. "The exact opposite is true. Congress strengthened the accreditation requirements in the new Medicare law and closed a loophole that would have allowed non-accredited providers to serve Medicare beneficiaries," he maintained.

CMS and regulators should focus on keeping bad actors out of the program in the first place, AAHomecare insisted. "Our industry has favored accreditation as a fraud deterrent for decades," Wilson said in the letter.

And the National Association of Independent Medical Suppliers exhorts the feds to keep the problem in perspective. "Once again the industry is being branded even though the fraud in DME is less than 0.005 percent of Medicare expenditures," NAIMES notes in a message to members. "Stop and look at the fraud statistics and see how ridiculous it is to slam the DME industry when 99 percent of the admitted fraud and billing errors ... comes from the rest of Medicare providers, not DME."

Note: You can access the OIG rate report, online at http://www.oig.hhs.gov/oas/reports/region1/10700508.pdf.