Audit: More Than 23K Potentially Fake Addresses Of Health Care Providers In Medicare Program

Program paid out more than $60 billion in improper payments last year

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• July 29, 2015 5:00 am


A recent audit from the Government Accountability Office (GAO) discovered more than 23,000 potentially fake or bad addresses of health care providers in the Medicare program.

The report sheds light on instances of Medicare providers registering addresses as vacant lots, mailboxes, and, in one case, a fast-food chain that has been located at the listed practice address for years–problems that make the program susceptible to greater fraud and abuse.

The report said that in 2014, more than $60 billion in taxpayer dollars was spent on improper Medicare payments. The figure accounts for more than 10 percent of the entire Medicare budget.

The audit, conducted from January 2014 to June 2015, used a USPS management tool to verify locations of people and practices enrolled in a centralized database of Medicare providers. Prospective Medicare providers must be listed in the database, known as the Provider Enrollment, Chain and Ownership System (PECOS), before they can provide services to Medicare beneficiaries.

The GAO investigation found that many of the addresses that set off red flags. Of the 105,234 addresses initially appearing as either a Commercial Mail-Receiving Agency, vacant, or an invalid, an estimated 23,400–22 percent–were deemed ineligible addresses. Of these addresses, 19,900 were found to be invalid, 3,200 vacant, and 300 registered as commercial mail receiving agencies.

In one such case, a provider listed a hospital as its practice address. The USPS tool found the address had been vacant since September 2013. By December 2014, when GAO visited the site, the hospital had been demolished. Despite this, the provider slipped through the revalidation process and was approved in January 2015 using the same address. The Centers for Medicare and Medicaid Services (CMS) requires providers to report any change of address within a 30-day period.

In a December 2014 instance, GAO inspectors visited an address site and found a fast-food franchise at the Medicare provider’s listed location. Employees at the restaurant told GAO representatives the restaurant had been open almost three years at the time of the visit. Additionally, GAO found a Google Maps image dated September 2011 showing the address to be vacant at that time. In January 2015, the provider had not updated its address and continued to use the fast-food location. This provider is currently enrolled in Medicare as an ineligible practice location. However, because the provider is still enrolled in PECOS, it may be eligible to bill Medicare in the future.

GAO also discovered providers using mailbox rental stores with a suite number address as a practice location during their investigation.

On top of the 23,400 potentially fraudulent addresses within the Medicare system, the report found more than 100 doctors listed as ineligible to bill Medicare.

Some 147 physicians who received a final adverse action form in March 2013 for "crimes against persons, financial crimes, or other types of felonies" that were either not revoked from the Medicare program until months after they should have been or were never removed at all.

Due to Medicare’s high level of improper payments, the program has been deemed a "high-risk" program for more than 20 years now.

Leslie Paige, Vice President for Policy and Communications for watchdog group Citizens Against Government Waste, said while the GAO’s audit is another example of them doing great work, it is only as beneficial as shining a light on the problem. She said it is up to those who can act on the data the GAO has brought forward.

"GAO is doing yeoman’s work, as usual, but their work is only useful so far as it lights a fire under the behinds of the folks who can make use of this data to do something to change the program’s culture of waste. All the bells and whistles and data analysis programs in the world are useless unless the powers that be are prepared to act forcefully with that information. That isn’t happening," Paige told the Washington Free Beacon in an email statement.

"The improper payments rates government-wide are going in the wrong direction, and Medicare and Medicaid are by far the biggest drivers of that trend.  CMS has a convoluted and ineffective regime of pay-and-chase, after-the-fact oversight, which simply quantifies the tip of the iceberg. It is no surprise that CMS is moving at a glacial pace—this has been the history."

Eliminating waste and fraud is not a top priority for CMS, and it cares more about protecting doctors and hospitals than solving the problems of abuse, Paige said.

"Program integrity and eradicating waste, fraud, and abuse is not the CMS’s top priority. The agency seems much more fixated on protecting doctors and hospitals from oversight than in rigorously and unapologetically going after the billions being lost to errors and confusion and outright fraud on behalf of taxpayers and Medicare beneficiaries, whom are also indirect victims of these schemes," Paige said.

"Unfortunately, Medicare fraud is too easy and as often as the administration likes to pat itself on the back for some of its big anti-fraud cases, the numbers tell the real story and it is an ugly picture of a program being preyed upon relentlessly by unscrupulous providers and con artists, as well as legitimate providers who can also game the coding system."

Congress is largely to blame as it has weakened one of the most useful tools to discover improper payments, she said.

"Congress must also bear a great deal of the responsibility for this scourge. For example, some members of Congress, who are responding to pressure from doctors and hospitals rather than the needs of taxpayers, have sought to undermine and weaken one of the most effective and successful tools we have ever had to identify improper payments and claw those billions back, the RAC program.  They have sat back while the RAC program has been systematically delayed and deferred.  In the meantime, the Medicare program hemorrhages billions annually.  Shameful."