Fake firms given Medicare funds, study says

The government is putting millions of Medicare dollars at risk by authorizing fictitious sellers of wheelchairs, prosthetics and other medical supplies to submit reimbursement claims with only limited review, congressional investigators say.

A Government Accountability Office study, obtained by the Associated Press, sought to follow up on oversight gaps that have plagued the Centers for Medicare & Medicaid Services since at least 2005. About $1 billion of the $10 billion in annual Medicare payments the government makes for medical equipment are later deemed improper.

The investigation found the agency approved two companies in the last year for Medicare billing privileges that the GAO had set up as sham businesses. The companies did not have clients or medical inventory to supply prospective Medicare patients.

These fictitious suppliers, based in Maryland and Virginia, won privileges even though GAO investigators deliberately provided the government with sketchy information and false documents that offered little assurances the companies were legitimate.

“This sting operation proves that there are gaps in the system and that scam artists can exploit -- and are exploiting -- those gaps,” said Sen. Norm Coleman (R-Minn.) of the Senate Homeland Security and Governmental Affairs subcommittee, which requested the report.

In response to the findings, the agency agreed there were problems with its enrollment procedures and said it recently put in place new standards that would require medical suppliers to be certified.

But GAO investigators said the agency had made promises since at least 2005 to fix problems in its supply program, but has achieved only limited success.