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GAO: Lax oversight plaguing Medicare

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Associated Press / August 4, 2008

WASHINGTON - The government is putting millions of Medicare dollars at risk by authorizing fictitious sellers of wheelchairs, prosthetics, and other medical supplies to submit reimbursement claims with only limited review, congressional investigators say.

The study by the Government Accountability Office sought to follow up on oversight gaps that have plagued the Centers for Medicare and Medicaid Services since at least 2005. Roughly $1 billion of the $10 billion in annual Medicare payments the government makes for medical equipment are later deemed improper.

The investigation found that CMS approved two companies in the past year for Medicare billing privileges that the GAO had set up as sham businesses. The companies did not have clients or medical inventory to supply prospective Medicare patients.

These fictitious suppliers, based in Maryland and Virginia, won privileges even though GAO investigators deliberately provided the government with sketchy information and false documents that offered little assurances the companies were legitimate.

"This sting operation proves that there are gaps in the system and that scam artists can exploit - and are exploiting - those gaps," said Senator Norm Coleman of Minnesota, the top Republican on the Senate Homeland Security and Governmental Affairs subcommittee, which requested the report.

In response to the findings, the center agreed there were problems with its enrollment procedures. The agency said it recently put in place new standards that require medical suppliers to be certified. The goal is to help ensure that the suppliers meet quality standards before they receive Medicare billing privileges.

Among other changes are:

  • Requiring that suppliers keep supporting paperwork from doctors.

  • Limiting use of cellphones and pagers as a supplier's primary business number.

  • Setting up a new competitive bidding process for medical equipment.

    But investigators noted that CMS had made promises since at least 2005 to fix problems in its supply program and achieved only limited success.

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