CMS Strengtens Efforts to Fight Waste, Fraud and Abuse
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CMS Strengtens Efforts to Fight Waste, Fraud and Abuse

Medicare Issues Final Rule Requiring Surety Bonds for DMEPOS Suppliers and Takes Next Step in Fighting Home Health Fraud
The Centers for Medicare & Medicaid Services (CMS) recently announced it is requiring certain durable medical equipment suppliers to post a surety bond.  In addition, CMS is announcing that it has revoked the billing privileges of more than 1,100 medical equipment suppliers in south Florida and southern California and suspending payments to home health agencies in the Miami-Dade, Fla. area.
CMS has issued a final surety bond regulation, required by the Balanced Budget Act of 1997, that makes certain suppliers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) post a $50,000 surety bond.  Existing suppliers must comply with this requirement by Oct. 2, 2009 while newly enrolling suppliers must meet this requirement by May 4, 2009.  This requirement was due in part to the large number of improper and potentially fraudulent payments to medical equipment suppliers for furnishing medical equipment and devices to people with Medicare.  The 2007 Medicare error rate report found approximately $1 billion in improper payments for medical equipment and supplies.
The surety bond requirement is designed to limit the Medicare program risk from fraudulent equipment suppliers and help to ensure that only those suppliers who remain in the program furnish items to Medicare beneficiaries that are considered reasonable and necessary from legitimate DME suppliers.
Suppliers who have had certain adverse legal actions imposed against them in the past may also be required to post a higher bond amount.  All newly enrolling suppliers that meet the requirements of the rule will be required to have a surety bond before they can enroll in the Medicare program.  More information about the new regulation can be found at
While this regulation requires most suppliers to obtain a surety bond, some companies or organizations that supply these items are exempt from the surety bond requirement, including certainphysicians and non-physician practitioners, physical and occupational therapists, state-licensed orthotic and prosthetic personnel, and government-owned suppliers.
To prevent fraud, CMS has revoked billing privileges of 1,139 DMEPOS suppliers as part of the DMEPOS High-Risk Suppliers Demonstration.  This project began in October 2007 and focuses on DMEPOS suppliers in South Florida and the Los Angeles metropolitan area.  These suppliers, who were paid a combined total of $265 million between calendar years 2005 and 2007, lost their billing privileges for not re-enrolling in the Medicare program and not meeting Medicare's supplier standards.
CMS is continuing to fight waste, fraud and abuse by home health suppliers in the Dade County, Fla., area by suspending payments and taking other payment and review actions.  On Oct. 6, CMS initiated efforts to address potential waste, fraud and abuse by suspending payments to 10 home health agencies and is continuing to review claims and payments to other agencies as resources allow.
In addition to suspending payment, CMS is:
  • Implementing extensive pre- and post-payment review of claims submitted by ordering/referring physicians;
  • Validating claims submitted by physicians who order a high number of certain items or services by sending follow-up letters to these physicians;
  • Verifying the relationship between physicians who order a large number of home health services and the beneficiaries for whom they ordered those services; and
  • Identifying and visiting high risk beneficiaries to ensure they are appropriately receiving the services for which Medicare is being billed.


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