GAO addresses troubling fraud

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Elizabeth Newman
Elizabeth Newman

It's always tempting to think reports issued from the Government Accountability Office are written by bureaucrats sharpening pencils and tapping into computer databases. But a report on actions needed to improve eligibility verification shows some impressive legwork.

The report, “Additional Actions Needed to Improve Eligibility Verification of Providers and Suppliers” was presented in testimony Wednesday to Special Committee on Aging by Seto J. Bagdoyan, Director, Forensic Audits and Investigative Service. Bagdoyan's team estimated 23,400 out of the 105,234 addresses were ineligible - that's 22%.

As long-term care providers know, to be in the Medicare program, the Centers for Medicare & Medicaid Services requires prospective providers and suppliers to be in the Provider Enrollment, Chain and Ownership System (PECOS). These physical locations must be open to the public and providing healthcare, and not just be a location with a post office box. That seems reasonable, right? But as anyone in healthcare knows, fraudsters find a way around the rules.

In 2014, CMS told Medicare Audit Contractors there would be revisions to verifying practice locations, where the MAC had to contact the person listed in the application and use Finalist software integrated into PECOS to standardize the location. More verification, such as using or USPS, “is only needed if Finalist cannot standardize the actual address,” the report says.

The problem is the new screening procedure is basically the equivalent of your teenage daughter saying she is going to spend the night at her friend Lauren's house. You suspect she's actually going to a party, or to see her boyfriend. Do you

  1. Call her on her smartphone and ask her where she is?
  2. Go to Lauren's house and see if she's there?

If you said B, you're in the same boat as the GAO, who said “our findings suggest that the revised screening procedure of contacting the person listed in the application to verify all of the practice location addresses may not be sufficient to verify such practice locations.” The investigators mentioned it selected a generalized stratified random sample from the USPS address-management tool called Commercial Mail Receiving Agency well as using Google Maps, provider websites and physical visits. The latter is my personal favorite, as the report includes art, specifically of alleged healthcare facilities that are located inside mailbox rental store or fast food restaurants.

The report also mentions providers who did not self-report adverse actions. Shocking, I know - who would have thought the physician suspended for five months in 2009 by the Rhode Island medical board would forget to mention that to CMS? The MAC did not identify this action when revalidating the physician's information, and the individual billed Medicare for $348,000 when he should have been listed as ineligible.

There's never going to be a way to eliminate all fraud. But among the GAO's recommendations is that CMS modify its software to include specific flags related to questionable practice location addresses such as a CMRA. CMS agreed to that, but did not agree a MAC should do additional research beyond phone calls. That's a shame, as the audit clearly choses many providers are slipping through the cracks based on existing guidance.

“As our report highlighted, we identified providers with potentially ineligible addresses that were approved by MACs using the process outlined in the existing guidance. Therefore, we continue to believe that the agency should update its guidance for verifying potentially ineligible practice locations,” the report states.

For the many long-term care providers working hard to provide quality care, there should be no tolerance for the types of shenanigans listed in the report. It may be a rare case where providers should support pushing CMS and MACs to be tougher in an effort to crack down on fraudulent billing.

Elizabeth Newman is Senior Editor at McKnight's. Follow her @TigerELN.


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Daily Editors' Notes

McKnight's Daily Editors' Notes features commentary on the latest in long-term care news and issues. Entries are written by Editorial Director John O'Connor, Editor James M. Berklan, Senior Editor Elizabeth Newman and Staff Writer Marty Stempniak.