No estimate on amount of money lost to fraud in Medicare: CMS

The CMS has no estimate of how much federal money is lost to fraud in the Medicare program most plagued with improper payments, and the agency's top integrity official was unable to tell lawmakers when they might see such a number.

The first healthcare fraud hearing in this Congress by the Finance Committee's Financial and Contracting Oversight Subcommittee focused on durable medical equipment because the CMS reported in February that two-thirds of the roughly $10 billion Medicare spent on the program were “improper” payments. But CMS officials said they do not know what share of improper payments are fraud or just errors in documentation.

“I want to get this money back and it doesn't look like you're very focused on that,” Sen. Claire McCaskill (D-Mo.), chairman of the panel, told Peter Budetti, director of the Center for Program Integrity at the CMS.

Budetti said the agency's system for projecting improper payments was not designed to estimate the extent of fraud in the CMS but assured the subcommittee that it was developing such a program. However, he told reporters after the program that durable medical equipment was dropped from a pilot fraud projection program expected to launch later this year.

The agency narrowed the pilot to examine just payments for home health services “to get some experience doing it,” Budetti said. The CMS plans to expand the projections, called the Fraud Measurement Pilot, to all of Medicare but has no timeframe to do so, Budetti said.

McCaskill said the projections are necessary to determine the extent of the problem and whether CMS recovery efforts are working. She and her colleagues were unimpressed with the CMS anti-fraud contractors' $34 million recovered from DME suppliers in 2011, measured against an estimated $5.2 billion in improper payments.

Senators also criticized the infrequency with which the CMS has banned--even temporarily--fraud-prone companies among its 96,000 DME suppliers. The Patient Protection and Affordable Care Act authorized the CMS to suspend payments to suppliers when a “credible allegation” of fraud is received. But in 2012 it investigated only 75 companies for allegations of illegal calls to Medicare beneficiaries pushing their equipment, despite concerns that such practices are widespread.

“This is one of those areas where zero tolerance would be effective,” McCaskill said. She said she is considering legislation to expand the federal sanctions against such cold-calling to include solicitations through the Internet and text messaging.

Separately, the Senate Finance Committee released a compilation of anti-fraud recommendations it has received in recent months after requesting ideas from the healthcare industry and 15% were from durable medical equipment suppliers.

Follow Rich Daly on Twitter: @MHrdaly