IG Report Slaps Medicare For Not Recouping More Overpayment For Equipment

Medicare has made nearly $70 million in overpayments to suppliers of consumers’ medical equipment, and more than half of that money is unlikely to be recovered, according to a new report from the Department of Health and Human Services Inspector General.

Since 2009, Medicare has required suppliers of such durable medical equipment, which includes wheelchairs, walkers and home oxygen equipment and supplies, to obtain at least $50,000 in surety bond coverage per location. But the report also found that as of October 2011, the Centers for Medicare & Medicaid Services had “inaccurate and incomplete” bond information for many suppliers. As of July 2012, just $263,000 out of the $50 million backed by surety bonds has been recovered.

The report also found that many overpayments to durable medical equipment suppliers exceeded $50,000. Because of that limit, much of the $42 million of the overpayments will not be recovered, according to the report.

That doesn’t sit well with a bipartisan group of senators. “At a time when we’re scouring every nook and cranny of the federal budget for savings, we can’t afford to let tens of millions of Medicare dollars go to waste without a serious effort to recover it,” Senate Finance Committee Chairman Max Baucus, D-Mont., said in a statement.

Sen. Orrin Hatch, R-Utah, the panel’s ranking Republican, said it was “unacceptable that lax oversight has allowed tens of millions of taxpayer dollars to fall by the wayside.”

The 2010 health care law gives CMS, which oversees the Medicare program, the power to increase the minimum amount covered by surety bonds.  The agency has the option of making the bond minimum match the amount of the supplier’s total billings, so that all overpayments would be eligible for recovery.

Jay Witter, vice president of legislative affairs for the American Association for Homecare, which represents durable medical equipment manufacturers and providers, said while his group supports efforts to stop Medicare fraud, increasing the size of the surety bonds may not be what’s needed to prevent fraudulent payments.

“If it’s $50,000 or a different number, the program is so mismanaged, it doesn’t seem like the amount of the bond is really the major problem,” he said, pointing to a finding in the report that CMS lost surety bond data for more than 27,000 durable medical equipment suppliers when it transitioned from one provider data system to another.  CMS later recovered the files.

This article was produced by Kaiser Health News with support from The SCAN Foundation.