HHS-OIG Urges CMS & MA Organziations Increase Efforts to Prevent Durable Medical Equipment Fraud

Each year, millions of taxpayers’ dollars are lost to Medicare and Medicaid fraud, with fraud related to durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) a major problem. In one case alone, the largest ever healthcare fraud loss charged by the Department of Justice, an 11-person, Russia-based transnational network attempted to defraud Medicare out of $10.

6 billion through fraudulent DMEPOS billings. DMEPOS-related healthcare fraud is a longstanding problem for the Original Medicare program; however, HHS-OIG has identified fraud schemes targeting Medicare Advantage and warns that DMEPOS fraud could put the program at risk. Currently, more than half of all Medicare recipients, around 34 million individuals, are enrolled in the Medicare Advantage (MA) program.

The MA program involves the government paying private health insurance companies – MA organizations – to provide coverage to Medicare enrollees. MA organizations may create networks of providers and DMEPOS suppliers, and contract with those organizations. Other suppliers can provide DMEPOS that do not contract with MA organizations – out-of-network suppliers.

The responsibility for preventing fraudulent DMEPOS Medicare Advantage billing by in-network and out-of-network DMEPOS suppliers is shared by the CMS and MA organizations. An HHS-OIG investigation looked at six MA organizations to examine fraud risk and the steps the CMS and MA organizations are taking to prevent DMEPOS-related healthcare fraud. The investigation identified several gaps in screening, which could allow fraudulent suppliers to bill the MA program.

The six MA organizations provide coverage for around two-thirds of all MA enrollees and manage more than 21,000 DMEPOS suppliers. Around 8,000 suppliers billed in-network, and the remaining 13,000 always billed out-of-network. While the Original Medicare program required all suppliers to be enrolled in Medicare, under the MA program, MA organizations can allow some DMEPOS suppliers that are not enrolled in Medicare to bill them.

MA organizations conduct some checks of all in-network suppliers; however, fewer checks are conducted of out-of-network suppliers, and with limited scrutiny of out-of-network DMEPOS suppliers, there is an increased risk of fraudulent billing. Get The FREE HIPAA Compliance Checklist Immediate Delivery of Checklist Link To Your Email Address Please enable JavaScript in your browser to complete this form.

Business Email * Name * First Last Number * Company Name * Get Free Checklist Please Enter Correct Email Address Your Privacy Respected HIPAA Journal Privacy Policy For instance, some checks are required of all in-network DMEPOS suppliers, such as verifying that a supplier has a state license, should one be required; verifying that a supplier has been reviewed and approved by an accrediting body or meets the standards of the MA organization; and confirming that a supplier is not on the CMS Preclusion List and has not been excluded from participation in healthcare programs by HHS-OIG.

Some MA organizations require additional checks on in-network suppliers. The required checks for out-of-network DMEPOS suppliers are far less stringent. While checks must be made to ensure that they are not on the CMS Preclusion List, out-of-network suppliers are not required to be checked to ensure that they meet State licensure requirements or that the suppliers are accredited.

Only three of the six MA organizations said they check to ensure that suppliers have appropriate State licenses. Screening gaps were also identified at the CMS. Unlike Original Medicare, the CMS does not screen all DMEPOS suppliers that bill Medicare Advantage, because not all DMEPOS suppliers are enrolled in Medicare.

In order to enrol in Medicare, screening checks must be successfully completed. Without that screening process, there is an increased risk of fraud. CMS relies on the Preclusion List for preventing fraud; however, HHS-OIG warned that using the Preclusion List is only effective at reactively stopping suppliers from fraudulently billing.

Fraudulent billing can be stopped once it has been identified, but it does not proactively prevent fraudulent billing. Further, CMS was not using the Preclusion List to its full extent. According to HHS-OIG, the average amount billed per enrollee for orthotics by in-network suppliers was $210, whereas the average amount billed by out-of-network non-enrolled suppliers was $1,399 – seven times more than in-network suppliers.

In HHS-OIG interviews with MA organizations, three said DMEPOS fraud schemes impacting their plans often involved out-of-network suppliers, and two said out-of-network suppliers accounted for almost all MA fraud schemes. Further, out-of-network suppliers can rapidly start submitting claims without the required checks involved in enrolling in Medicare. CMS staff reported that “bad actors can incorporate a DMEPOS company and get a National Provider Identifier within a few days, which allows them to start billing MAOs almost immediately.”

In some cases, “suppliers pop up relatively quickly, bill fast, and then exit.” HHS-OIG said the most effective way of combating DMEPOS-related fraud is to prevent bad actors from billing in the first place, and as such, preventative efforts need to be stepped up by both the CMS and MA organizations. HHS-OIG recommends that MA organizations strengthen checks of out-of-network DMEPOS suppliers, and strengthen the use of the Preclusion List to prevent fraudulent DMEPOS suppliers from billing the MA program.

HHS-OIG recommended that the CMS require all DMEPOS suppliers that bill Medicare Advantage to be enrolled in Medicare, and if not permitted under current law, to seek statutory authority to do so. The CMS concurred with all recommendations. The post HHS-OIG Urges CMS & MA Organziations Increase Efforts to Prevent Durable Medical Equipment Fraud appeared first on The HIPAA Journal .