Medicare, Medicaid Anti-fraud Provisions Set to Expand

The heat is being turned up on Medicare and Medicaid fraud this week with the release of new federal rules designed to detect fraud earlier and the introduction of proposed legislation that would strengthen the authority of the Department of Health and Human Services (HHS) to ban corporate executives from doing business with Medicare if they are convicted of fraud.

The new regulations, which will appear in the Sept. 23 Federal Register, would  subject certain service providers and suppliers to fingerprinting, criminal background checks, unscheduled or unannounced visits, and stopped payments if credible fraud allegations are detected.

According to the new rules, service providers refer to healthcare entities that furnish services primarily payable under Medicare Part A, such as hospitals, home health agencies (including home health agencies providing services under Part B), hospices, and skilled nursing facilities. Suppliers include entities that furnish services primarily payable under Medicare Part B, such as independent diagnostic testing facilities, and durable medical equipment, prosthetics, and orthotics.

The new screening procedures would apply to newly enrolling providers and suppliers, including eligible professionals, beginning on March 23, 2011. The specific screenings would be performed based on the providers' or suppliers' level of risk--limited, moderate, or high. Limited refers to physician or non-physician practitioners and medical groups or clinics; moderate includes outpatient rehabilitation facilities and hospices; and high includes newly enrolling home health agencies or durable medical equipment suppliers. 

The rules, which were proposed under the new healthcare reform law, are designed to reduce the estimated $55 billion in fraudulent or improper payments made annually by Medicare and Medicaid programs, according to administration officials.

In addition, House Ways and Means Health Subcommittee Chair Pete Stark (D-CA) and Rep. Wally Herger (R-CA), the panel's ranking member, introduced last week HR 6130, the Strengthening Medicare Anti-Fraud Measures Act.  They were joined by 17 of their colleagues. The legislation expands the authority of the HHS' Office of Inspector General (OIG) to allow it to ban corporate executives from doing business with Medicare if their companies were convicted of fraud.

The measure also gives the OIG the ability to exclude from Medicare parent companies that may be committing fraud through shell companies. At a hearing on Medicare fraud in June, the chief counsel for the OIG asked members of the Ways and Means Committee for these changes.

"This legislation gives the Office of Inspector General the authority to go after crooked executives and corporations that continue to bilk Medicare," Stark said in a statement.  Stopping these individuals "will save taxpayer money and protect Medicare beneficiaries," he said.