Stopping power

Under new regulations, the CMS has the authority to temporarily stop providers from enrolling in Medicare when the risk of fraud is high. The agency so far has not used the power, even now that its watchdog is recommending it, because of the burden of explaining the action.

HHS' inspector general's office last week urged the CMS to impose a moratorium on new Medicare enrollments of independent diagnostic testing facilities in Los Angeles after a citywide inspection found more than one-third of the 132 facilities were not open during the day or not operating from listed addresses.

Regulations unveiled in February under the Patient Protection and Affordable Care Act allow the CMS to impose moratoriums in geographic areas or in specific categories of providers that are deemed at high risk of fraud.

The inspector general's report noted that such independent testing facilities have a history of fraud, including a 1997 audit that found 20% of them were not located at the addresses provided to the CMS. Independent diagnostic testing facilities are a type of free-standing center allowed to perform tests such as X-rays, MRIs, ultrasounds and sleep studies outside of traditional hospitals and physicians' offices.

Although the CMS did agree with a recommendation that it periodically make unannounced site visits to the LA facilities, agency officials declined the inspector general's suggestion to impose a moratorium on new enrollments.

CMS spokesman Brian Cook confirmed that the agency has not used the power.

In a response to the report, CMS Administrator Dr. Donald Berwick wrote that the agency “is considering appropriate criteria” for moratoriums in LA and elsewhere, noting that doing so requires publication of a detailed rationale in the Federal Register. He added that the CMS would be willing to work with the inspector general's office to develop the necessary data.

A parallel investigation in Miami found that nearly a third of the 92 facilities there broke the same rules. Yet when the CMS moved to boot three noncompliant centers from participation, it took about 17 weeks to complete the paperwork—during which time Medicare approved another $146,000 in claims for the three.

Investigators visited each facility in the two cities last year. They turned up numerous instances of signs saying the locations were actually different businesses or facilities having no sign at all. Eleven of the Miami and LA addresses were for private residences, and seven facilities listed nonexistent street addresses.

The 73 noncompliant facilities between the two cities billed Medicare for a total of $8.8 million in 2010, including $4.1 million sent in after the inspection dates.