Covert tests conducted on behalf of the Government Accountability Office have exposed weaknesses in the CMS screening process for durable medical-equipment suppliers. In a report, the watchdog agency described how its investigators set up two phony providers of durable medical equipment, prosthetics, orthotics and supplies, or DMEPOS, using undercover names and bank accounts. The two firms were approved for Medicare billing privileges despite having no clients or inventory.
Although the GAOs applications were initially denied partly on the basis that the companies lacked inventory, undercover investigators were able to convince the CMS and its contractor, the National Supplier Clearinghouse, that the companies had access to DMEPOS items by fabricating contracts with nonexistent wholesale suppliers, the report stated.
GAO investigators were able to successfully complete Medicares test-billing process for a fictitious supplier in Virginia. If real fraudsters had been in charge of the fictitious companies, they would have been clear to bill Medicare from the Virginia office for potentially millions of dollars worth of nonexistent supplies, according to the report.
The CMS, in reviewing the investigation, conceded that the covert tests illustrated gaps in oversight and said that it would make additional efforts to strengthen the DMEPOS enrollment process. The agency estimates that Medicare improperly paid $1 billion for DMEPOS supplies from April 2006 through March 2007, in part because of supplier fraud. -- by Jennifer Lubell