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Suspicion of Medicare Fraud Triggers Most Reimbursement Suspensions

 |  By cclark@healthleadersmedia.com  
   November 03, 2010

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." 

It is unclear from the OIG report how many of these providers were eventually found to have committed fraud. However, the billing patterns included "aberrantly high amounts of services provided within a short timeframe and spikes in billing as a result of multiple claims submitted for the same beneficiary."

Additionally, "the contractors' analyses also showed that some of the suspended providers billed Medicare using stolen identities" and used ID numbers "that were known to have been compromised."

Other providers "aberrantly billed for medical equipment, submitting claims that listed neurosurgeons, pediatricians, and pathologists as the ordering physicians. Those specialties do not typically order such equipment."

The OIG also concluded that CMS current policy "provides inconsistent guidance on payment suspensions, particularly in specifying the types of information that its contractors should submit with a request for a suspension, as well as in describing to contractors and law enforcement the circumstances in which an extension is permitted."

For example, CMS' Program Integrity Manual requires contractors requesting suspension for providers to submit "other supportive information but the manual does not specify what type of information is needed.

Also, it's unclear from CMS documents whether the authority to approve suspensions rests with CMS' central office or with regional offices, and CMS lacks standardized model suspension notices that include all required information, to avoid potential delays in the suspension process.

The OIG's conclusions are significant in light of the fact that the Affordable Care Act requires new standards by which fraud suspicion may result in payment suspension or delay, and requires CMS to review with the OIG "in determining whether a credible allegation of fraud exists."

Proposed rules were issued on Sept. 23 and published in the Federal Register. (75 Fed. Reg. 58204, 58239)

The OIG report also gave details on which types of payments were suspended. While payment suspensions in both years were concentrated in Part B, there was some shifting between 2007 and 2008.

For example, payment for services not considered durable medical equipment amounted to 80% in 2007 but only 22% in 2008. Part A suspended payments, generally for inpatient hospital care, went from 6% of the total suspended payments in 2007 to 32% of total suspended payments in 2008.

Under current rules, CMS can suspend payments to a Medicare provider under three circumstances: 1) fraud or willful misrepresentation, 2) when an overpayment exists but the amount has been determined and 3) when payments made or to be made may be incorrect.

Other findings from the report include:

  • Of the requests from Medicare contractors that a provider be suspended from receiving payment, nearly one-fourth were approved the same day, but 27% took between three and seven days and 29% took longer, as many as 92 days.
  • Of the 253 suspended providers, only 41 submitted rebuttals. The suspensions can not be appealed, but CMS removed suspensions for three.
  • For those suspensions that have been lifted, the average length was 267 days but for Part A providers it was 179 days and for Part B providers, 341.

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