Medicare's claim about reducing fraud appears misleading
21 08 08 - 21:01
Report Rejects Medicare Boast of Paring Fraud
By CHARLES DUHIGG
Medicare’s top officials said in 2006 that they had reduced the number of fraudulent and improper claims paid by the agency, keeping billions of dollars out of the hands of people trying to game the system.
But according to a confidential draft of a federal inspector general’s report, those claims of success, which earned Medicare wide praise from lawmakers, were misleading.
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.
Some lawmakers and Congressional staff members say the irregularities that the inspector general found were tantamount to corruption and raise broader questions about the credibility of other Medicare figures.
“This is outrageous,” said Senator Charles E. Grassley of Iowa, the top-ranking Republican on the Senate Finance Committee, who has repeatedly credited the Centers for Medicare and Medicaid Services with reducing improper expenditures. “If heads don’t roll, you can’t change the culture of this organization,” he added.
Senator Grassley had not yet received the full report from the inspector general but had been briefed on its contents.
The report — a draft of which was obtained by The New York Times — will probably be made public within the next week, according to federal officials. The inspector general may change or edit the findings of the report before it is officially released. Congressional staff said the Centers for Medicare and Medicaid Services — the agency overseeing Medicare — was lobbying the inspector to play down the report’s conclusions.
A spokesman for Medicare said that the agency agreed with the inspector general that the agency’s reported level of improper billing for durable medical equipment, or D.M.E., should have been higher. But Medicare says the $2.8 billion figure is unsupported.
“Allegations of manipulation of this error rate are preposterous,” said the spokesman, Jeff Nelligan. “The agency has aggressively targeted fraud and improper payments in the D.M.E. program. We have a history of working closely with the inspector general and will continue to do so.”
A representative of the Office of Inspector General that created the report — part of Medicare’s parent, the Department of Health and Human Services — said it did not comment on draft reports.
Fraudulent and improper payments have long bedeviled Medicare, a $466 billion program. In particular, payments for durable medical equipment, like power wheelchairs and diabetic test kits, are ripe for fraud.
Equipment sellers have submitted counterfeit documents, forged doctors’ signatures and filed claims on behalf of patients who were dead or had never been seen by the prescribing physician, according to many reports by government oversight agencies.
For example, a Florida businessman was sentenced last year to 37 months in prison for submitting more than $5.5 million of fake claims to Medicare. The businessman operated for months, despite giving the agency an address that was actually a utility closet.
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.
Senator Grassley said Congress might push for an investigation into the private company that was hired to fulfill Medicare’s auditing program, the AdvanceMed Corporation, a division of the Computer Sciences Corporation. The report mentions AdvanceMed by name.
Representatives of AdvanceMed did not return calls. The company has received contracts worth more than $34 million from the Centers for Medicare and Medicaid Services since 2005.
“This report doesn’t surprise me,” said Representative Pete Stark, Democrat of California and a senior member of the Ways and Means Committee. He has pushed to cut improper Medicare spending. “To look better to the public, you cook the books,” he said. “This agency is incompetent.”
The Office of Inspector General’s report details scrutiny of a program known as Comprehensive Error Rate Testing, or CERT, that audits a sample of Medicare claims submitted by sellers of durable medical equipment. That program is supposed to randomly choose claims and review the medical records and other documents supporting submitted claims to determine whether payment is justified.
According to the inspector general’s report, officials at Medicare instructed AdvanceMed to disregard those policies. Instead, AdvanceMed was told to examine only the documents submitted by the companies selling the medical equipment, rather than verify those documents against physicians’ records.
Medicare reported to Congress that, for the fiscal year of 2006, AdvanceMed’s investigations had found that only 7.5 percent of claims paid by Medicare were not supported by appropriate documentation. But the inspector general’s review indicated that the actual error rate was closer to 31.5 percent.
For instance, according to the report, the Office of Inspector General examined a claim for an electric wheelchair that AdvanceMed had said was appropriate. The inspector general’s investigation revealed that the physician who was listed as having prescribed the wheelchair had no knowledge of the prescription.
The person who received the wheelchair said that he had never met with the physician, that he did not need a wheelchair and that he had never used it, according to the report. His wife had also received a wheelchair that she had not asked for and never used.
Equipment sellers can pocket more than $2,500 every time they send a powered wheelchair to a patient and bill Medicare.
“This is like letting the fox guard the henhouse,” said Malcolm Sparrow, a Harvard University professor who focuses on health care fraud. “The supplier has an incentive to supply fabricated documents or to imply that medical records support a purchase when they don’t. If you don’t ask the physician or ask for medical records, you can’t really verify anything.”
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