Manipulating Medicare

Published — August 19, 2011 Updated — May 19, 2014 at 12:19 pm ET

$100 million for artificial legs and feet in question

Artificial limbs for amputees Evan Vucci/AP


A Medicare investigation has turned up more than $100 million in questionable payments for artificial legs and feet, including suppliers in Alabama, Mississippi, Wyoming and Puerto Rico who were twice as likely to turn up in the inspector general’s sights.

Between 2005 and 2009, Medicare expenditures for lower limb prostheses increased 27 percent, to $655 million. Even as spending increased, approximately 2,000 fewer people benefitted, according to the Department of Health and Human Services inspector general’s report.

Medicare made at least $43 million in unnecessary payments in 2009—all because government contractors weren’t careful enough when they processed claims for prosthetic lower limbs. It also paid $61 million that year for beneficiaries who did not have claims from a referring physician. Without a referring physician, the risk that a claim is fraudulent increases.

The Centers for Medicare & Medicaid Services, the federal agency that administers Medicare, contracts with numerous companies to process and pay claims for artificial legs and feet. Several of these contractors failed to observe some of the best practices identified by the report, resulting in claims that were medically unnecessary or did not include a referring physician. Additionally, only two of the contractors analyzed claims with a particular eye toward their legitimacy.

“These payments—for 32,260 claims for 9,265 beneficiaries—could have been prevented if claims processing edits had been in place,” the report said.

Similar issues apply to suppliers of prostheses, the report found. Of 267 suppliers, 136 had questionable billing practices and often submitted claims that did not comply with Medicare requirements or were not from a referring physician. These suppliers accounted for more than half of inappropriate Medicare payments of $43 million, with one supplier in particular accounting for $2.5 million in payments.

The suppliers who were found to have questionable billing practices are under investigation, said Donald White, senior public affairs specialist at HHS. White said he could not provide the names of the suppliers for privacy reasons.

As for Alabama, Mississippi, Puerto Rico and Wyoming, White said it was impossible to say exactly why these areas have become hotspots, but he suggested suppliers might relocate once the area they are operating in becomes a focal point for law enforcement.

“The heat gets turned up a little too high,” White said.

FAST FACT: 1,632 of 4,575 prostheses suppliers accounted for 92 percent of the $655 million in claims billed to Medicare.

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