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Stronger measures needed to curb fraud by medical device suppliers

Even though the Centers for Medicare & Medicaid Services has taken steps to curtail fraud and abuse from Medicare suppliers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS), it needs to do more says a recently released report from the Office of Inspector General.

OIG’s report on program integrity problems with newly enrolled Medicare equipment suppliers found that gaps existing in the oversight of high-risk suppliers heighten the risk of fraud.

OIG sought to find out how many newly enrolled suppliers of DMEPOS had their billing privileges revoked or were placed on prepayment claims review and how many left out information on their Medicare applications.

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[See also: CMS expands competitive bidding program despite controversy.]

In its examination, OIG found that 26 percent of high- and medium-risk suppliers and two percent of low- or limited-risk suppliers had their billing privileges revoked or were placed on prepayment claims review. Thirteen percent of high- and medium-risk suppliers and four percent of low- or limited-risk suppliers left out ownership or management information on their applications and four percent of high- or medium-risk suppliers left out information about criminal histories or adverse legal actions.

In the process of its examination, OIG also found that although the contractor responsible for enrollment of new DMEPOS suppliers conducted post-enrollment visits to new enrollees within the time required by CMS, suppliers had already received Medicare payments – in some cases, significant payments. In its summary of its examination, OIG cites as an example one supplier who received nearly $800,000 from Medicare before the contractor made its first post-enrollment site visit.

In order to close gaps that allow new suppliers to receive reimbursement before an initial site visit, OIG recommended to CMS that post-enrollment site visits be conducted earlier. The organization also recommended that appropriate action be taken in situations in which suppliers omit information on their applications.

CMS agreed with OIG’s recommendations and in its response to OIG said it has already directed its contractor to step up site visits and that it is in the process of implementing measures to handle application omissions.

Follow HFN associate editor Stephanie Bouchard on Twitter @SBouchardHFN.