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Obama Promises Healthcare Reform, But What Will Stop the Fraud?

June 14, 2009

In his weekly youtube address, the President acknowledged that the U.S. currently spends 50% more per person on healthcare than any other country in the world while fewer and fewer of her citizens get the care that they need. He also acknowledged that “Medicare and Medicaid pose one of the greatest threats to our federal deficit.” Acknowledging the problem is the first step to a solution, and the President is to be commended for that. But arguably the largest part of the problem lies with something that the President only hinted at: the massive, unapologetic fraud that plagues the U.S. healthcare system. The President danced around this problem with phrases like “rooting out waste” and “unnecessary spending” and promises to “make drug makers pay their fair share” and calling on doctors and hospitals to cease “unnecessary treatments and tests” — but he didn’t call these practices what they are: fraud.

In just over a month, this law blog has chronicled more than twelve major national healthcare fraud investigations, civil settlements, and criminal convictions: that’s more than three national healthcare frauds discovered per week (to say nothing of qui tam cases that are currently under seal and the untold fraud that goes undiscovered). At roughly the same time that the President was taking the oath of office, Frohsin & Barger was announcing that it had settled civil allegations of the largest Medicare Hospice fraud in the country’s history, recovering nearly $25 million of fraudulent charges related to perhaps the most sacred of healthcare service, palliative care for the dying. Since that time, we have only seen similar fraud increase dramatically. If fraud can pervasively invade the care for the dying, then there is no where it can’t go.

Until we tackle head-on the fraud pandemic, then we have no hope of salvaging our healthcare system. FraudBlawg applauds the President for acknowledging that the U.S. healthcare system is broken, admires his fearlessness in trying to fix it, and appreciates his promise to “insist upon fiscal responsibility.” But taking responsibility means rooting out the greed, corruption, and fraud that is now the status quo in the U.S. healthcare industry. Cutting costs will simply motivate more insidious fraud, and — conversely — throwing more money into the system will simply make the fraud easier to perpetrate and will motivate more unscrupulous people to jump into the game. While there is no easy solution, any attempt at healthcare reform must begin by making a priority of and allocating more resources to fighting healthcare fraud and taking a relentless and unforgiving stand against those who have and would cheat the taxpayers and defraud the federal and state healthcare systems.  

Some important strides have been made thus far under the Obama administration — including the bi-partisan support and passage of the Fraud Enforcement Recovery Act and the newly-assigned combined HSS and DoJ Health Care Fraud Prevention and Enforcement Action Team (HEAT) — but we still have a long way to go before the word “reform” is anything more than a buzz word in a stump speech.

To report healthcare fraud and government waste and abuse, contact Frohsin & Barger.

  1. The American Association for Homecare, which represents the home medical equipment and service sector (durable medical equipment), has proposed an aggressive 13-point anti-fraud legislative plan to prevent criminals from getting into Medicare in the first place.

    Some of these proposals were included in the recently introduced U.S. Senate bill, the Seniors and Taxpayers Obligation Protection (STOP) Act, S. 975, which the Association supports. However, Congress should adopt all 13 of the anti-fraud measures proposed by the home medical equipment and service (HME) sector.

    This proactive solution is far more effective than the “pay and chase” method and makes more sense than the long cycle of unwarranted cuts to Medicare reimbursement for home medical equipment. This solution, endorsed by the HME community, targets the source of the problem.

    Specific Anti-Fraud and Abuse Recommendations:

    The American Association for Homecare has proposed the following 13 specific recommendations:

    • Mandate Site Inspections for All New Home Medical Equipment Providers
    A July 2008 GAO report underscored the need for CMS to ensure that its contractors are conducting effective site inspections for all new applicants for a Medicare supplier number.

    • Require Site Inspections for All HME Provider Renewals
    All renewal applications should require an in-person visit by the National Supplier Clearinghouse (NSC), the contractor that CMS uses to ensure integrity in the Medicare program.

    • Improve Validation of New Homecare Providers
    Additional validation of new providers should be included in a comprehensive and effective application process for obtaining a Medicare supplier number.

    • Require Two Additional Random, Unannounced Site Visits for All New Providers
    Two unannounced site visits should be conducted by the NSC during the first year of operation for new HME providers.

    • Require a Six-Month Trial Period for New Providers
    The NSC should issue a provisional, non-permanent supplier number to new suppliers for a six-month trial period. After six months of demonstrated compliance, the provider would receive a “regular” supplier number.

    • Establish an Anti-Fraud Office at Medicare
    CMS should establish an office with the sole mandate of coordinating detection and deterrence of fraud and improper payments across the Medicare and Medicaid programs.

    • Ensure Proper Federal Funding for Fraud Prevention
    Increase federal funding to ensure that the NSC completes site inspection and other anti-fraud measures.

    • Require Post-Payment Audit Reviews for All New Providers
    Medicare’s program safeguard contractors should conduct post-payment sample reviews for six months’ worth of claims submitted to Medicare by new providers.

    • Conduct Real-Time Claims Analysis and a Refocus on Audit Resources
    Medicare must analyze billings of new and existing providers in real time to identify aberrant billing patterns more quickly.

    • Ensure All Providers Are Qualified to Offer the Services They Bill
    A cross-check system within Medicare databases should ensure that homecare providers are qualified and accredited for the specific equipment and services for which they are billing.

    • Establish Due Process Procedures for Suppliers
    CMS should develop written due process procedures for the Medicare supplier number process, including issuance, denial and revocation of the Medicare supplier number. The procedures must include, for example, an administrative appeals process and timelines.

    • Increase Penalties and Fines for Fraud
    Congress should establish more severe penalties for instances of buying or stealing beneficiaries’ Medicare numbers or physicians’ provider numbers that may be used to defraud the government.

    • Establish More Rigorous Quality Standards
    Ensure that all accrediting bodies are applying the same set of rigorous standards and degree of inspection to their clients.

    For details, see Or information about the American Association for Homecare, visit

  2. fraudblawg permalink

    Preventive medicine is definitely needed but in addition — not as an alternative — to aggressive policing of fraud.

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