Areas Eyed in Medicare Probe

By Aliza Marcus
Bloomberg News
Tuesday, July 3, 2007

The federal government plans to target medical equipment suppliers in Los Angeles and South Florida in an effort to root out fraud in Medicare, the insurance system for the elderly and disabled, a Medicare official said yesterday.

Medicare will require sellers of durable equipment such as wheelchairs and providers of artificial limbs, braces, splints and other devices in those areas to reapply to the program. The agency also plans spot visits to make sure the companies exist and provide the promised equipment.

The two-year pilot project will cover about 7,500 suppliers in two locations where Medicare has the largest number of beneficiaries and the most providers of durable medical equipment. Fraud may total hundreds of millions of dollars, said Leslie Norwalk, acting administrator of the Centers for Medicare and Medicaid Services, during a conference call with reporters yesterday.

"The point is to keep fraud providers out of the program before they can rip us off," Norwalk said. "With re-enrollment and multiple surprise visits, we think we can stop the fraud."

If the experiment succeeds, Medicare may expand it to other parts of the country, Norwalk said. In the first six months of the current fiscal year, Medicare paid $2.7 billion to equipment suppliers in Florida and $976 million in California.

Fraud previously discovered in South Florida included $2 million in government payments as a result of repeated billings for a single wheelchair. In another case, the owner of a company that was little more than a closet and a broken oxygen machine billed enough to Medicare to buy a Rolls-Royce, Norwalk said.

"The legitimate suppliers are given a bad name because of this fraud," she said.

In January 2006, after spot visits to 480 suppliers in South Florida, which includes Miami, 191 firms had their billing rights revoked, Medicare said in a statement.

Joint investigations with the Justice Department also are targeting fraud throughout the country. In May, Attorney General Alberto R. Gonzales said 38 people who billed $142 million to Medicare had been arrested.

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