Suspicion of Medicare Fraud Triggers Most Reimbursement Suspensions

When providers who were overpaid $206 million in Medicare payments were suspended from further reimbursement in 2007 and 2008, the reason was suspicion of fraud rather than simple overpayment in nearly every case, according to a report from the Office of Inspector General.

"The great majority of providers that CMS suspended in 2007 and 2008 exhibited characteristics that suggest fraud," the OIG said. "CMS recommends that providers suspended due to fraud receive no advance notice; in all but three of the suspensions, no such advance notice was given."

The report added that 74% of the suspended providers showed questionable billing patterns and 63% of suspensions were supported by information  provided by beneficiaries or other providers about questionable practices. Such practices included accusations that the providers had billed for services that were never received, were medically unnecessary, or had used other providers' billing numbers to seek payment for items or services that had not been authorized.

Of the 253 suspensions, outpatient providers such as physicians paid under Part B represented 85%. Of those providers suspended, most were in four states or territories, Florida (35%); Puerto Rico (26%); California, (13%) and Michigan (5%). The remaining suspensions amounted to 21% and occurred in 19 states.  In other words, 79% of the provider suspensions occurred in states or territories representing 22% of the nation's population.

The OIG report added that "24% of suspended providers billed Medicare before their suspensions despite having vacant physical locations."