Two government reports recently released by the Office of Inspector General (OIG) and the Government Accountability Office (GAO) highlight ongoing concerns over Medicare reimbursement. The problems were discovered in part through the use of recovery audit contractors (RACs) and others were found in payments for medical equipment and supplies where the claim had the identical national provider identifier (NPI) for the supplier and referring physician.

In the GAO's report, the research concerned issues that were discovered in a three-year project wherein the Centers for Medicare and Medicaid Services (CMS) used the RACs to identify improper payments and recoup overpayments, and the CMS's response to those issues. The GAO found that CMS had not developed "an adequate process" to handle vulnerabilities identified through the project. These vulnerabilities represented over $231 million in improper payments for medical services and medical equipment. Although given data regarding the vulnerabilities by the RACs, CMS had not addressed the problems with implementing thorough monitoring, oversight and control. Although CMS had recommended actions on preventing improper payments, the GAO said the recommendations lacked authority to resolve the situations promptly and adequately.

CMS has, since the project, taken several steps to improve one problem in communication between RACs and Medicare claims administration contractors. The solution included taking the steps of enhancing data warehousing and automating claims adjustment, as well as initiating independent review of RAC determinations. The GAO recommends that CMS make further improvments by designating "responsible personnel with authority to evaluate and promptly address RAC-identified vulnerabilities to reduce improper payments." CMS is said to agree with the GAO's recommendations.

The OIG report on identical NPIs concerns vulnerabilities due to a temporary CMS provision allowing medical equipment suppliers to use their own NPI in claims for themselves and for the referring physician if the suppliers cannot obtain a physician's NPI. CMS initiated this provision in May 2008 and intends to end it in January 2011, although the termination of the provision has already been delayed twice. OIG reviewed six quarters in which the temporary provision has been in effect.

The data the OIG collected on the claims with identical NPIs of supplier and physician showed that oxygen concentrators formed the highest percentage of claims, followed by diabetic shoe inserts and vision lenses. The third highest individual supplier claimant was actually indicted for false claims regarding power wheelchairs and motorized scooters.

Medicare paid 26 percent of the suppliers receiving Medicare payments for claims with identical NPIs for that type of claim almost exclusively. Five of those suppliers received over $500,000. Sixty percent of the payments to the top nine suppliers were for claims with identical physician and supplier NPIs.

The number of such claims declined around seven months after the provision was introduced, but then went on the rise again, and suppliers are currently able to submit claims without the physician's NPI. OIG says that CMS's claims processing system did not verify that the equipment associated with the payments was ordered by an eligible physician. The agency believes the provision is a continuing program vulnerability and recommends ending it at the earliest date possible.

The GAO report: http://www.gao.gov/new.items/d10143.pdf

The OIG report: http://oig.hhs.gov/oei/reports/oei-04-10-00110.pdf

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