"Medical Equipment Fraud: Almost 1 Billion in Medicare Overpayments for Wheelchairs, Oxygen Supplies etc.?"

Medical Equipment Fraud: Almost 1 Billion in Medicare Overpayments for Wheelchairs, Oxygen Supplies etc.?

In a September 2005 report issued by the Government Accounting Account (GAO) to Senator Charles Grassley, Chairman of the Senate Finance Committee, the GAO has revealed the shocking statistic that, out of total payments of $8.8 billion dollars in Medicare funds in 2004 for Durable Medical Equipment such as wheelchairs, prosthetic devices, portable oxygen tanks, orthotics, implants and related services, there were $900 million in overpayments, approximately 10% of the total, much if not all due to fraud.

To deter fraud, the Centers for Medicare and Medicaid Services (CMS) contracts with the National Supplier Clearinghouse (NSC) to verify that suppliers meet 21 standards before they can bill Medicare. These standards include, among other things, the mandate that the supplier must hold a current license as required by state law, that suppliers not initiate contact with potential beneficiaries by telephone and that suppliers advise beneficiaries of alternative, less expensive methods of obtaining the equipment, including rentals. Among other things, a supplier must maintain a physical facility at an appropriate site, i.e., accessible to beneficiaries, and must keep adequate records of complaints from beneficiaries.

Deficiencies found by the GAO were due to various problems with the NSC, including, by way of example, reliance upon self-reporting by the suppliers to provide licensing information and, according to the GAO report, an inadequate ability by the National Supplier Clearinghouse to conduct competent on-site inspections.

Moreover, the "21 standards" themselves may be insufficient. The GAO pointed out that the "weakened standards" permit schemes such as the fraudulent obtaining of billing numbers which enabled one person to open a fraudulent office with just a $3000 investment, obtain a billing number and bill hundreds of thousands of dollars in false claims paid by Medicare. The GAO also reported that the NSC failed to conduct over 600 site visits and that millions of dollars in Medicare funds had been paid to unlicensed suppliers.

In sworn testimony before the Senate Committee on Finance in April 2004, a witness who pleaded guilty to fraud explained her part in a $25 million fraud scheme that she and a group of 19 others committed against the Medicare program: she told the committee how she was able to set up a sham company with $3,000 and obtain a Medicare billing number, even though she had no prior experience, expertise, or discernible resources for providing Durable Medical Equipment items or services. From September 2000 to December 2001, when its billing number was revoked, this bogus medical supply company billed Medicare over a million dollars.

Because the procedures in place for monitoring Medicare payments are - at least according to the GAO - so obviously inadequate, it is vital that reputable individuals in the Durable Medical Equipment business who are involved in supplying wheelchairs, orthotics, oxygen, prosthetics and similar devices and who have knowledge of fraud be willing to step forward. The False Claims Act provides such individuals an avenue to aid the government in recouping stolen funds.