OIG disputes Medicare's fraud figures

Sunday, August 24, 2008

WASHINGTON - Medicare asked outside auditors to play fast and loose in 2006 to make it appear that the agency was decreasing fraud in the HME industry, the Office of Inspector General (OIG) charges in a forthcoming report.

The report, outlined in The New York Times last week, could both help and hurt the HME industry. Like a recent report that details the Government Accountability Office's (GAO's) success in getting two sham HME providers approved for billing privileges, it shows Medicare doesn't have its act together, not even close, sources say.

But the report also shows Medicare's claims that it decreased improper payments for HME to $700 million in 2006 may have been nothing but hot air, sources say.

"These reports are only going to raise the visibility of the fraud and abuse issue, which will likely lead to congressional action in some form," said Walt Gorski, vice president of government affairs for AAHomecare.

The OIG report, which could be released this week, charges that Medicare instructed AdvanceMed to review claims but not randomly review supporting documentation, including medical records. Had AdvanceMed done a complete review, it would have found more than one-third of spending on HME was improper in 2006, according to the OIG.

While industry sources lauded the Times for writing about the OIG report, they were disappointed that the paper confused two separate issues: fraud and national competitive bidding. The Times wrote: "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."

"Wrapping fraud and abuse and competitive bidding in the same cloth hides the fundamental problems that resulted in the delay," including unfairly disqualified bidders, Gorski said.

Additionally, industry sources were irked that, once again, the HME industry was at the center of another government and media fraud investigation.

"If there's $70 billion in Medicare fraud and HME represents less than 1% of that, where's the other 69%?" said Wayne Stanfield, president of the National Association of Independent Medical Equipment Suppliers (NAIMES). "Why don't the powers that be go after the perpetrators of the largest piece of this fraud?"