WASHINGTON - Senator Chuck Grassley is asking the Centers for Medicare and Medicaid Services for a full accounting of how the agency provided inaccurate estimates of improper and fraudulent Medicare payments.
Grassley said the findings of a new Inspector General report require the agency to be forthcoming about the policies and procedures that were used.
"I'm asking questions to try to get to the bottom of why Congress and, in turn, the public was misled about the rate of improper payments by Medicare," Grassley said. "It's unacceptable, and there needs to be accountability along with the reforms that are under way and the additional reforms that need to happen based on what we now know, thanks to the Inspector General, about how extensively the error and fraud rates were underestimated by the federal agency."
August 25, 2008
Kerry Weems
Acting Administrator
Centers for Medicare and Medicaid Services
U.S. Department of Health and Human Services
200 Independence Avenue, SW
Washington, DC 20201
Dear Acting Administrator Weems and Inspector General Levinson:
I am in receipt of the final report prepared by the Office of the Inspector General (OIG) of the Department of Health and Human Resources (HHS) entitled: "Medical Review of Claims for Fiscal Year 2006 Comprehensive Error Rate Testing Program" (Report). That Report was conducted to:
1) Determine the adequacy of the Comprehensive Error Rate Testing Program (CERT) contractor's 2006 medical review of Durable Medical Equipment (DME) claims; and
2) Assess the impact of reviewing additional medical records on the 2006 DME error rate.
To begin, I am deeply disturbed by the findings of the OIG Report and by the failures of the Centers for Medicare and Medicaid Services (CMS) and its contractor, AdvanceMed.
Although you were not the Administrator of CMS at the time that the original 2006 error rate was reported to me, Mr. Weems, I look to your leadership to address the serious concerns arising out of the OIG Report.
In its Report the OIG determined that the 2006 DME error rate is not 7.5% as originally reported to Congress, but instead is closer to 30%--more that four times as high as CMS reported to Congress. What is even more alarming is that it appears that CMS may have deliberately instructed the contractor to take the unusual step of undertaking a limited review of the available data so as to make the error rate calculation far smaller than it was in reality.
According to the OIG Report, CMS orally instructed the CERT contractor to "deviate from written policies by making determinations based primarily on the limited medical records available from suppliers…, not the full medical records available from physicians and by applying clinical inference when reviewing supplier medical records to reasonably infer that the DME provided was medically necessary." See page 2 of Report.
This is unconscionable and an affront to every American taxpayer who is footing the bill, especially because we are not talking about millions of dollars. Instead, we are talking billions of dollars lost to fraud, waste and/or abuse in 2006.
Equally important is whether or not the 2007 DME error rate reported to Congress is as inaccurate as the 2006 DME error rate reported to Congress. Accordingly, I am requesting through this letter that the HHS OIG:
1) Examine the methodology being used to determine the CMS 2007 DME error rate; and
2) Investigate who at CMS directed AdvanceMed to deviate from established policies and use clinical inference.
Additionally, I am interested in learning more about the CERT contractor, AdvanceMed. In particular Mr. Weems, I would appreciate receiving a copy of the contract(s) executed between CMS/HHS and AdvanceMed for the past five years. In addition, I would appreciate receiving any and all reviews, assessments, evaluations or the like conducted of AdvanceMed and its contract performance. Next, I would like to know to what extent AdvanceMed was merely following the contract with CMS or, if not, what action CMS will take with regard to AdvanceMed for its inadequate review of available documentation leading to an inaccurate DME error rate being reported to Congress.
Thank you in advance for your attention to this important matter and I look forward to receiving your responses and the material I requested as soon as possible.
Sincerely,
Chuck Grassley
United States Senator
Ranking Member of the Committee on Finance
The New York Times
August 21, 2008
Page 1
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."
Report Faults Medicare Audits
Agency Missed Many Payment Errors, HHS Review Finds
By Christopher Lee
Washington Post Staff Writer
Tuesday, August 26, 2008; Page A03
The rate of improper payments, including fraud, in Medicare's purchases of wheelchairs and other home medical equipment is significantly higher than the government has estimated, according to a federal audit released yesterday.
The report by Inspector General Daniel R. Levinson at the Department of Health and Human Services found an "error rate" of almost 29 percent in a sample of claims paid in 2006 under Medicare's multibillion-dollar durable medical equipment program. The Centers for Medicare and Medicaid Services had estimated a rate of 7.5 percent, or about $700 million in improper payments.
Investigators reviewed a sample of 363 claims to determine whether the Medicare contractor that routinely checks such claims had found all of the improper payments. Such payments include not only fraudulent claims, but also those without sufficient documentation and those for goods deemed not medically necessary. The new review found 20 payment errors that the contractor identified and 73 that it had not.
"We attributed these review discrepancies to the . . . contractor's reliance on clinical inference rather than additional medical records available from health care providers, CMS's inconsistent policies regarding proof-of-delivery documentation, physicians' lack of understanding of documentation requirements and CMS's lack of procedures for obtaining information on high risk DME [durable medical equipment] items from beneficiaries," Levinson wrote in a cover letter for the report.
Levinson recommended that Medicare auditors check a broader range of records underlying the claims, including physicians' records and other medical documents showing the necessity of the equipment. He also recommended requiring the contractor to contact beneficiaries who allegedly got power scooters and other devices, which are considered at high risk for improper payments, to confirm that they were received and to determine whether they were medically necessary.
Timothy B. Hill, CMS chief financial officer, said reviewing claims is one way the agency detects fraud. He said the agency implemented changes last year to help reduce the error rate, including a requirement of more documentation from doctors who prescribe wheelchairs for patients.
The inspector general's report "did point out some gaps in the program, some of which had already been addressed," Hill said.
Hundreds of millions of dollars are at stake in reducing payment errors. The durable medical equipment program, which costs more than $8 billion annually and pays for power wheelchairs, hospital beds, oxygen supplies and other equipment for home use, has long been considered vulnerable to waste, fraud and abuse.
A July report by the Government Accountability Office, for instance, found that Medicare has paid as much as $92 million since 2000 to suppliers who billed the government for equipment purportedly prescribed by doctors who were dead.
Michael Reinemer, a spokesman for the American Association for Homecare, a trade group for suppliers, said: "The association believes that any amount of fraud is unacceptable and that better controls at the front end of the process are needed to keep criminals out of the Medicare program in the first place."