Federal auditors say regulators at the CMS are failing to use yet another tool in their arsenal to fight healthcare fraud—the requirement that sellers of durable medical equipment must post surety bonds, including enhanced fees for high-risk providers.
Inspector general presses CMS on use of surety-bond system
A Sept. 12 memo from HHS Deputy Inspector General Stuart Wright says the CMS has failed since 1997 to implement a congressionally mandated system that would force equipment distributors to post bonds that could be collected in cases when equipment distributors won’t or can’t repay proceeds of fraud or improper payments.
Wright’s memo to CMS Administrator Dr. Donald Berwick notes that the Medicare bureaucracy even implemented final rulemaking for the surety bond requirement that became effective in October 2009, and yet no action has been taken. No refunds through surety bonds have been collected, and the CMS has yet to finalize the procedure for doing so, the memo said.
Under the 2009 rules, all sellers of durable medical equipment, prosthetics, orthotics and supplies for Medicare patients must post $50,000 bonds that can be collected in cases of overpayment. The bond jumps to $100,000 if suppliers’ billing privileges have been suspended in the past 10 years.
Wright’s staff intends to issue a final report on the matter later that will estimate how much money the CMS may have lost by not implementing the surety bond requirement faster. A May 2010 report found that CMS would have recovered an additional $15 million in overpayments just from South Florida equipment suppliers in 2007 if the requirement had been in place then.
CMS reported to Wright’s auditors that the implementation of the bond-collections procedure has been delayed by “significant personnel changes” in its staff.
Last July, Peter Budetti, CMS deputy administrator and director of program integrity, was called to task by a congressional committee over CMS’ failure to fully implement two fraud-fighting systems—the Integrated Data Repository and the One Program Integrity system. The programs have cost a combined $161 million so far, but have been only partially implemented.
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