CMS Boosts Oversight Efforts, Asks for New PAOC Nominations

The Centers for Medicare & Medicaid Services' (CMS) latest attempt to prevent abuse and fraud: Examine DME suppliers whose claim frequencies "are higher than the majority of providers and suppliers in the community," according to an Oct. 6 communique from the agency.

CMS Acting Administrator Kerry Weems said in the memo, "Because Medicare pays for medical services and items without looking behind every claim, the potential for waste, fraud and abuse is high. By enhancing our oversight efforts, we can better ensure that Medicare dollars are being used to pay for equipment or services that beneficiaries actually received while protecting them and the Medicare trust fund from unscrupulous providers and suppliers."

The Oct. 6 memo also said fraud prevention efforts "will be focused on DMEPOS equipment and supplies with high expenditures and high growth rates" including "oxygen supplies and equipment, power mobility devices or power wheelchairs, and diabetic test strips."

Weems indicated in the memo that the new national recovery audit contractors (RAC) would play a key role in the new oversight efforts. The RACs will review Medicare Part A and B claims that have been paid to ensure they "meet Medicare statutory, regulatory and policy requirements and regulations." The RACs can ask suppliers to return overpayments and can request that underpaid claims to suppliers be repaid.

A three-year RAC demonstration program in six states "collected over $900 million in overpayments and nearly $38 million in underpayments returned to health care providers," CMS said.

CMS also indicated that the agency's heightened efforts to prevent Medicare fraud would center on working with beneficiaries "by ensuring they received the durable medical equipment or home health services for which Medicare was billed and that the items or services were medically necessary."

Among the new safeguards to be used, CMS said, would be:

-- Conducting more stringent reviews of new DMEPOS suppliers' applications including background checks to ensure that a principal, owner or managing owner has not been suspended by Medicare;

-- Making unannounced site visits to double check that suppliers are actually in business;

-- Implementing extensive pre- and post-payment review of claims submitted by suppliers and ordering or referring physicians;

-- Validating claims submitted by physicians who order a high number of certain items or services by sending follow-up letters to these physicians;

-- Verifying the relationship between physicians who order a large volume of DMEPOS equipment or supplies and the beneficiaries for whom they ordered these services;

-- Identifying and visiting high-risk beneficiaries to ensure they are appropriately receiving the items and services for which Medicare is being billed.

This summer, the Government Accountability Office (GAO) reported that, as part of a four-month investigation, it had successfully opened two fake DME businesses approved to bill Medicare.

"CMS approved both of our fictitious, easily created DMEPOS storefronts, despite the fact that we had no clients and no inventory," reported Gregory D. Kutz, GAO managing director of forensic audits and special investigations. In detailing the investigation to the Senate Committee on Homeland Security and Governmental Affairs, Kutz said that when he told CMS how easily his staff had opened the phony businesses, "They stated that they are implementing new supplier requirements, including the accreditation process... They also acknowledged that our covert testing illustrates gaps in oversight that will require improvement and stated that they would continue to work to strengthen the entire DMEPOS enrollment program."

In other CMS oversight news, the agency is calling for nominations for new members for the Program Advisory & Oversight Committee (PAOC) that will support the agency during the next phase of its competitive bidding program.

Earlier this month, CMS said it was "ending the term of service" for PAOC members who served during the program's initial phases, which saw the implementation of competitive bidding's first round July 1. The program was halted two weeks later, when the Medicare Improvements for Patients & Providers Act (MIPPA) became law.

The new PAOC, CMS said in a news release, will consist of 10 to 12 members representing consumers/beneficiaries; physicians and other practitioners; suppliers; professional standards organizations; financial standards specialists, such as economists or certified public accountants; and association representatives.

"We're looking for a somewhat different composition of the committee," said CMS spokeswoman Ellen Griffith-Cohen. Griffith-Cohen said past PAOC members are eligible to reapply, but added that "the overall balance of the committee" could be different this second time around.

"For any one member, (the qualifications) may not change," Griffith-Cohen said, "but in terms of overall what we're looking for, particularly because of MIPPA is more advice on working on the issue of the interaction between the supplier and the beneficiary and the Medicare system." She indicated that the focus of the first PAOC was "on the national, overall structure of the program."

This time through, "We're going to be targeting particularly the MIPPA implementation," Griffith-Cohen said.

Multiple members of the first PAOC, established in 2004, have expressed disappointment that CMS did not more actively take advantage of their knowledge, experiences and perspectives as the agency was shaping competitive bidding's first and second rounds.

Nevertheless, Weems said in the news statement, "The Program Advisory and Oversight Committee has provided invaluable assistance to CMS in developing the broad framework for the DMEPOS competitive bidding program. As we move forward and implement the new requirements in the law, we expect the new PAOC members to offer important insight based on their real-world experience."

CMS is accepting PAOC nominations until Nov. 3.

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