Medicare is doing a poor job in screening suppliers of durable medical equipment, after failing a recent test to identify two fake suppliers set up as a test by a government agency.
In a test of the system earlier this year, the Government Accountability Office set up two fictitious durable medical equipment companies, using fabricated names and bank accounts.
In a report issued this week, the GAO said the companies were approved by the Centers for Medicare & Medicaid Services even though they had no clients or inventory.
The revelations are part of continuing concerns that the massive Medicare program is difficult to manage and ripe for fraud and abuse. The report was done at the request of the permanent subcommittee on investigations for the Committee on Homeland Security and Governmental Affairs of the Senate.
The GAO report said CMS officials initially denied the GAO's applications in part because the companies didn't have inventory, but undercover GAO investigators were able to fabricate contracts with nonexistent wholesale suppliers to convince the agency and its contractor, the National Supplier Clearinghouse, that the companies had access to DME items.
"As a result of simple methods of deception, both fictitious DMEPOS companies obtained Medicare billing numbers," the GAO said. GAO investigators then were able to complete test billing for the Virginia office, although a similar attempt in Maryland failed because CMS had not sent the necessary passwords.
"However, if real fraudsters had been in charge of the fictitious companies, they would have been clear to bill Medicare from the Virginia office for potentially millions of dollars worth of nonexistent supplies," the GAO said.
In the past, the Medicare program has been victimized by criminals who have used fabricated DME companies and stolen or illegally purchased Medicare beneficiary numbers and physician identification numbers to repeatedly submit fictitious claims, which are routinely approved by Medicare.
This past June, the GAO briefed CMS representatives on the results of the investigation, and CMS officials acknowledged that the GAO operation illustrated gaps in oversight that require improvement. CMS officials told the GAO that they would strengthen the entire DMEPOS enrollment process.
Some industry experts suggest that roughly $1 billion of the $10 billion in annual Medicare payments the government makes for medical equipment are later deemed improper.
Have you had problems with the DMEPOS enrollment process or experience with incidents of fraud? E-mail Editor Fred Bazzoli at fred.bazzoli@medtechpublishing.com.