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Medicare Approves Fake Suppliers of Wheelchairs, Prosthetics
By Elizabeth Lopatto, Bloomberg.com
August 4, 2008
Two fictional companies set up by government investigators were approved by Medicare to supply equipment such as wheelchairs even though the bogus suppliers had no clients and no inventory, a report to Congress said.
The fake companies, from Maryland and Virginia, were approved after the Government Accountability Office provided false documents and left a ``vague message'' on the answering machine of the contractor responsible for investigating the applications, according to a GAO report released today.
Medicare, the U.S. health-care program for the elderly and disabled, acknowledged making about $1 billion in improper payments of $10 billion it spent in the year that ended in March 2007 on wheelchairs, prosthetic devices, canes and other equipment, partly because of fraud, according to the GAO, the investigative arm of Congress.
``If real fraudsters had been in charge of the fictitious companies, they would have been clear to bill Medicare from the Virginia office for potentially millions of dollars of false supplies,'' the GAO said in the report. Investigators weren't able to complete billing tests for the Maryland front company because they didn't receive necessary passwords from Medicare.
One actual company fraudulently billed Medicare for $4.4 million in supplies and services never delivered, according to the report. The company got $2.2 million in payments. Only the secretary, who told investigators that there was no business activity in the office, wasn't in on the fraud, according to the report. The owner was sentenced to 4 years in prison and ordered to repay the $2.2 million in March 2007.
The Centers for Medicare and Medicaid Services acknowledged that covert testing showed gaps in its ability to oversee billing. The agency said it is putting into place new requirements for medical suppliers.
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