HHS Introduces Demonstration Project to Target Fraudulent DMEPOS Suppliers

Health and Human Services Secretary Mike Leavitt announced in July a 2-year effort designed to further protect Medicare beneficiaries from fraudulent suppliers of durable medical equipment, prosthetics and orthotics supplies (DMEPOS). The initiative is focused on preventing deceptive companies from operating in South Florida and Southern California.

“Eliminating fraudulent suppliers in Medicare protects America’s seniors and enhances their quality of care,” Leavitt said in a press release. “This initiative is aimed at doing just that – stopping durable medical equipment fraud before it happens.”

Miami and Los Angeles have been identified as high-risk areas when it comes to fraudulent billing by DMEPOS suppliers. HHS, working with the Department of Justice, formed a Medicare Fraud Strike Force to combat fraud through the use of real-time analysis of Medicare billing data. Based on the results of the project, it could be expanded nationwide.

In 3 months, 56 individuals have been charged in the Southern District of Florida with fraudulently billing Medicare for more than $258 million. The strike force is made up of federal, state and local investigators.

Number of DMEPOS Revocations
*As of April 2, 2007; Source: www.hhs.gov/news/facts/medicarefraud/index.html

In December 2006, federal officials contracted with the National Supplier Clearinghouse to conduct visits to 1,472 South Florida DMEPOS suppliers. Through onsite investigations, 634 supplier billing numbers were revoked, saving Medicare a projected $317 million. Examples of products that are being billed at higher than normal rates are motorized wheelchairs, nebulizers and aerosol medications, prostheses and wound therapy treatments. A similar initiative happened in the Los Angeles area last year. Investigations of 2,000 DMEPOS suppliers resulted in 770 having their billing privileges revoked.

Like South Florida, Los Angeles has been a hotbed of fraudulent activity, according to the press release.

Under the initiative, the Centers for Medicare and Medicaid Services (CMS) will implement a demonstration project requiring DMEPOS suppliers in South Florida and Southern California to reapply for participation in Medicare in order to maintain their billing privileges.

Letters will be sent to suppliers asking that they resubmit applications to be a qualified Medicare DMEPOS supplier. Those who fail to reapply within 30 days of receiving a letter from CMS, those who fail to report a change in ownership or address or fail to report having owners, partners, directors or managing employees who have committed a felony within the past 10 years will have their billing privileges revoked.

“The concept is straight forward and will be effective,” CMS acting administrator Leslie Norwalk said. “Enhancing our review of these suppliers will go a long way to ferret out those who do not meet the needs of beneficiaries and the promises of Medicare. CMS hopes to expand this effort nationwide.”

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