Fraud cost $542 million in 2005, report says

Thursday, August 31, 2006

SACRAMENTO, Calif. - A study from the state's Department of Health Services claims fraud might have cost the Medicaid program $542 million in 2005, but DME represents only a small portion of that.
According to the Medi-Cal Payment Error Study, released in July, 8.4% of claims paid last year had "some indication that they contained a provider error." Of those, 3.23%--valued at $542 million--had characteristics of potential fraud.
DME, however, represented only 0.05% of the provider error rate. That's good and bad, said Bob Achermann, executive director of the California Association of Medical Product Suppliers (CAMPS).
"I was happy to see that DME was only a small contributor to the error rate," Achermann said.
On the other hand, Medi-Cal might see DME's low error rate this way: The state's controversial moratorium on provider numbers, which has been extended like clockwork every six months since 1999, could be keeping DME fraud and abuse in check.
"They're under the gun to make sure their payment system detects and prevents fraud, and they may use this study to show that, when it comes to DME, they're doing their job well," Achermann said.
For DME, provider errors were due to medically unnecessary equipment (56%), insufficient documentation (22%) and no legal prescription (22%).
Pharmacies had the highest provider error rate at 4.05%, followed by physician services at 1.71%.