A report by the Office of Inspector General (OIG) at the U.S. Health and Human Services Department relating to Medicare overpayments isn’t good news for U.S. taxpayers. The report says Medicare has recovered just a small portion of as much as $70 million in overpayments to suppliers of durable medical equipment. A mandate exists that requires such companies to obtain bonds to guarantee taxpayers can recoup excessive reimbursement. As of July, less than $265,000 had been “clawed back” from suppliers in the Durable Medical Equipment (DME) industry. It was said that the industry has been a source of rampant fraud.
The report found that of the $70 million in overpayments, $50 million could be attributed to companies that acquired a surety bond in which a third party agrees to compensate the federal government if an overpayment isn’t returned by the company. The remaining $20 million came from businesses that didn’t comply with a 2009 regulatory mandate that suppliers obtain a $50,000 bond for each of their locations.
The Centers for Medicare and Medicaid Services (CMS) disputed OIG’s $50 million figure. It said that bonded suppliers were liable for only $32 million in overpayments. But even if the lower figure is accurate, it’s “cold comfort,” the report suggested. “While the OIG and CMS total debt calculations differ, it is clear that tens of millions of dollars in debt remain uncollected from suppliers,” the report said. It’s not clear why CMS has been slow to make claims on surety bonds, which are triggered if a supplier fails to return money within 101 days after an overpayment notice goes out. But even if the agency were more diligent, the bonds would provide only modest relief because of the $50,000 cap.
As much as $42 million of the $50 million owed by bonded suppliers would remain uncollected, according to the OIG report. As a result, CMS could take advantage of a provision in the Affordable Care Act, allowing the agency to require suppliers with larger billing volumes to obtain bonds of greater value. CMS, in a written response to the report, said it concurred with the recommendation. The agency also said that it is exploring the idea of requiring home health agencies and “certain other provider and supplier types” to acquire bonds.
The OIG report also criticizes the quality of CMS’ data, saying the agency initially handed over information on about 55,000 suppliers, and that when OIG questioned whether it was comprehensive, CMS realized it had omitted nearly 28,000 additional companies. Also, while suppliers with multiple locations can acquire a single bond with $50,000 in coverage for each site, the report found that CMS’ data is so spotty that it’s not always clear what money could be recovered from each company. It should be noted that according to the nonprofit National Insurance Crime Bureau, annual spending on DME approached $40 billion in 2010, with anywhere from 3 percent to 10 percent representing fraudulent billing. The overpayments went to about 1,400 suppliers, of which about 300 lacked bonds, according to the report. Lawyers at Beasley Allen handle cases related to Medicare and Medicaid fraud. To discuss a potential case, contact Archie Grubb or Andrew Brashier at 800-898-2034 or by email at Archie.Grubb@BeasleyAllen.com or Andrew.Brashier@BeasleyAllen.com. For more information, please visit our website at http://www.beasleyallen.com/practice/employment-law/whistleblower-claims/health-care-medicaid-and-medicare-fraud/.
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