HHS Inspector General Report Urges CMS To Toughen Evidence Standard For Medical Equipment Provider Appeals

Main Category: Medicare / Medicaid / SCHIP
Also Included In: Medical Devices / Diagnostics;  Litigation / Medical Malpractice
Article Date: 03 Nov 2008 - 5:00 PDT

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HHS Inspector General Daniel Levinson in a report released Friday called for stronger evaluation standards and a tougher appeals process for medical equipment providers after more than 200 South Florida-based providers that were shut down in 2007 by CMS for fraudulent Medicare claims were permitted to reopen, the Miami Herald reports. Levinson wrote, "Our findings suggest that a more critical review of the types of evidence submitted by suppliers is warranted to ensure that fraudulent suppliers are not reinstated" (Weaver, Miami Herald, 10/30).

Last year, U.S. Attorney for the Southern District of Florida R. Alexander Acosta and the U.S. Department of Justice established the Medicare Fraud Strike Force in Miami, consisting of federal agents and prosecutors, to bring 120 criminal and civil cases against more than 200 defendants in South Florida. The defendants were charged with more than $638 million in fraud cases that involved billing Medicare for medical equipment and prescriptions that beneficiaries did not need, billing Medicare for services never provided, and stealing information from physicians and hospitals and submitting false claims to Medicare (Kaiser Daily Health Policy Report, 5/29).

According to the Herald, federal investigators in late 2006 during an unannounced visit to more than 1,500 South Florida medical equipment companies found that about one-third, or 491 companies, did not have offices or employees operating the businesses. About half of the businesses appealed for reinstatement.

In the report, Levinson said that 90% of the companies that appealed -- or 222 -- were allowed to reopen because Medicare's hearing officials used "no criteria" for evidence used during the appeals process for reinstatement of billing privileges. The officials allowed the companies to submit photographs, licenses, permits, leases or utility bills as evidence, while some also provided only sworn statements that stated that their businesses had been open during the duration of the 2006 inspections. The report, after reviewing an internal Medicare study of the appeals process, found that most of the companies should not have been reinstated. According to the Herald, most of the reinstated companies have since had their Medicare billing numbers revoked again because they were not genuine businesses.

"Hearing officers generally accept all documentation submitted by suppliers as legitimate, unless they have reason to believe otherwise," Levinson said. The report said that Medicare needs to fortify the appeals process by developing standards for evidence obtained from the medical equipment provider.

In a letter to Levinson, acting CMS Administrator Kerry Weems said Medicare "should consider establishing guidelines" for evidence during appeals and asked Levinson to provide "specific suggestions" for such guidelines (Miami Herald, 10/30).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

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