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Medicare Fraud, Waste and Abuse

May 10, 2015 | Medicare Enrollment
After 50 years, Medicare has provided millions of men and women with effective, secure health care coverage. As of 2014, 15.6 percent of all Americans were covered by Medicare; by 2050, the number of enrollees is expected to increase to 95.8 million. Just imagine, millions of people 65 or older, as well as younger people with disabilities, will have access to hospital and medical care, preventive and other health services and prescription drugs.

This federal health insurance program is administered by the Department of Health & Human Services (HHS). But as with any massive, long-lived organization, Medicare funding and spending isn’t always effective and streamlined. Every week brings news about money being lost, whether through medical coding problems, unnecessary testing and controversial legal issues.

This is especially important and timely, as the Affordable Care Act (ACA) has put the spotlight on eliminating health care-related waste and  financial problems. In light of mounting Medicare fraud, waste and abuse, HHS is cracking down on Medicare. The Office of Inspector General (OIG) investigates Medicare-related criminal activity for HHS. Working with other federal, state, and local law enforcement entities, HHS-OIG has experienced great success. Between 2005 and 2009, nationwide OIG investigations showed that Medicare Part B (Medical Insurance) contractors overpaid physicians approximately $62.7 million.

Medicare Fraud, Waste and Abuse Case Studies

1.) An audit of claims from January 2010 through September 2012 found that $33 million may have been overpaid to physicians due to seemingly innocent coding errors for services. These findings were released in a May 2015 HHS-OIG report. The submitted claims were for services physicians performed in outpatient settings, such as ambulatory care centers.

But due to coding errors, the services were shown to have been performed in physicians’ offices or clinics; this led to overpayments for these services. These overpayments were attributed to: “internal control weaknesses at the physician billing level and to insufficient post-payment reviews at the Medicare contractor level to identify potential place-of-service billing errors.” As a result of these errors, HHS-OIG is advising its Medicare contractors to ensure these cases are investigated.

More than $14 million of these overpayments  should be recovered with little effort. According to the contractors, 87 physicians have already expressed their intent to refund about $7.1 million in potential overpayments. And an additional $7.3 million may be recovered from physicians who made coding mistakes for ambulatory surgical center services. The contractors still have to hunt down $19 million in potential overpayments that must be traced for hospital outpatient services.

Aside from recouping these lost funds, HHS-OIG recommended that the Center for Medicare & Medicaid Services (CMS) continue to educate physicians and billing personnel. Specifically, the CMS should stress the importance of internal controls to ensure the correct place-of-service coding for physician services. It’s also recommended that efforts to identify physician services at high risk for place-of-service miscoding be expanded and strengthened.

2.) A Dallas-area doctor is at the center of a $5 million Medicare fraud scheme. According to prosecutors, a doctor and his employee were charged on Friday, May 8, with conspiracy to commit health care fraud. Dr. Hector Molina of Irving, Texas, and his employee, Blanca Mata of Forney, Texas, are accused of making medical house calls allegedly made by an unqualified employee. Starting in 2012, the physician and Mata (not a doctor ) may have billed Medicare for home visits by Mata, but listed as done by Molina. Additionally, Dr. Molina, operator of the Dallas-based Molina Medical Housecall Services, allegedly billed for home visits in the Dallas area when he was out of the country.

3.) On May 7, the U.S. Justice Department stated that 16 hospitals reimbursed from Medicare for unnecessary services must now pay $15.69 million. In the settlement, Health Management Associates Inc. and 14 of its formerly associated hospitals will pay $15 million. Tennessee-based Community Health Systems and its Mississippi-based subsidiary, Wesley Medical Center, will pay $210,000. And North Texas Medical Center will pay $480,000. From 2005 to 2013, the companies allegedly billed for mental health treatments they knew failed to meet standard  Medicare reimbursement guidelines (i.e., providing substandard therapy). Under the terms of the agreement, these companies didn’t admit liability.

4.) Did you know that cataract surgery is one of the safest and quickest procedures? Not only does this surgery take about 18 minutes on average to complete, but there’s less than 1 percent of a risk of major cardiac problems or death.

But as a recent study published last month in the New England Journal of Medicine found, in 2011, more than half of  Medicare patients received at least one preoperative test in the month before undergoing cataract surgery. Some physicians were much more likely to order unnecessary tests, including complete blood counts, urinalysis and cardiac stress tests. In total, 36 percent of ophthalmologists ordered preoperative tests for more than 75 percent of their patients. “Their patients were no sicker or older,” says Catherine Chen, the study’s lead author and an anesthesiologist at the University of California, San Francisco. “It suggests that it’s habit or practice patterns.”

The study compared preoperative testing prevalence and costs in the month before 440,857 Medicare beneficiaries had cataract surgery. Testing expenditures during the 30 days prior to surgery were 42 percent higher than the average monthly Medicare spending for testing during the previous 11 months; this is a difference of $4.8 million. In the past, preoperative testing was essential. But today, a topical, numbing anesthetic eye drop or occasionally a local anesthetic is all that’s required. Preoperative cataract surgical testing may result in fewer adverse events or better surgical outcomes, regardless of a patient’s health.