The Department of Health & Human Services (HHS), Office of Inspector General (OIG), has issued an early memorandum report evaluating the extent to which the Centers for Medicare & Medicaid Services (CMS) uses surety bonds to recover overpayments made to durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) suppliers.
According to a December 1997 OIG report, Medical Equipment Suppliers: Assuring Legitimacy, OEI-04-96-00240, historically, Medicare Part B payments for DMEPOS have been vulnerable to fraud and abuse as the ease and low expense of acquiring a Medicare supplier number coupled with the potential for high revenue have attracted unscrupulous DMEPOS suppliers. In recent years steps have been taken to improve the supplier enrollment process, including the implementation of accreditation and supplier enrollment standards and requiring certain suppliers to obtain surety bonds of not less than $50,000, in accordance with the Social Security Act § 1834(a), as amended by section 4312(a) of the Balanced Budget Act of 1997, P.L. 105-33. CMS promulgated a final rule on January 2, 2009, which became effective on March 3, 2009.
The OIG found that CMS has not finalized procedures for recovering DMEPOS overpayments through surety bonds. In addition, as of July 2011, no overpayments had been recovered through surety bonds since October 2, 2009, the date the surety bond requirement became effective for all suppliers.
Additionally, the OIG stated that requiring surety bonds is an important program integrity tool that not only limits fraudulent suppliers’ access to the program but also serves as a means for Medicare to guarantee recoupment of some overpayments. Failure to use this tool leaves Medicare vulnerable to losses from fraudulent suppliers.
The OIG has indicated that a full report, to be issued at a later date, will provide additional information on the number of DMEPOS suppliers that received overpayments, the amount of unrecovered overpayments, the extent to which DMEPOS overpayments could have been received if CMS had sought collection through surety bonds, and the number of these suppliers whose billing privileges have been revoked or have become inactive since October 2, 2009.
This story has been summarized from Early Alert Memorandum Report, OEI-03-11-00351, from the Office of the Inspector General.
