Fraud: The plot thickens

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08/21/2008

When the Government Accountability Office (GAO) released a report earlier this month that detailed how it was able to get two sham HME companies approved for Medicare billing privileges, the industry cheered. See, they said, CMS is partly to blame for fraud and abuse. For once, the industry was pointing fingers, instead of the other way around.

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A forthcoming report from the Office of Inspector General (OIG) could thicken the plot. Charles Duhigg of the New York Times, who obtained a draft of the report, wrote yesterday that Medicare had AdvanceMed Corp., the contractor in charge of its auditing program, "cook the books" in 2006 to make it appear that it had reduced the number of fraudulent and improper claims.

Here's how it happened, according to Duhigg:

"In calculating the agency’s rate of improper payments, Medicare officials told outside auditors to ignore government policies that would have accurately measured fraud, according to the report. For example, auditors were told not to compare invoices from salespeople against doctors’ records, as required by law, to make sure that medical equipment went to actual patients.

As a result, Medicare did not detect that more than one-third of spending for wheelchairs, oxygen supplies and other medical equipment in its 2006 fiscal year was improper, according to the report. Based on data in other Medicare reports, that would be about $2.8 billion in improper spending.

That same year, Medicare officials told Congress that they had succeeded in driving down the cost of fraud in medical equipment to $700 million."

The Descent trailer This report could both help and hurt the industry. Like the GAO report, it shows that CMS doesn't have its act together, not even close. But it also shows that any beliefs members of Congress had that fraud and abuse was on the decline may have been hot air. Now members of Congress like Sen. Charles Grassley, R-Iowa, and Rep. Pete Stark, D-Calif., are hopping mad.

The report will likely be made public next week.

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