After a series of surprise inspections in Los Angeles County, Medicare fraud investigators found persistent corruption among medical equipment suppliers who set up phony offices that billed the government $21 million over one year, prompting officials to call for stronger enforcement efforts, according a report to be released today.
Investigators checked 905 suppliers. Their offices should have been filled with wheelchairs, crutches, bedpans and other medical equipment. But the offices of about 115 suppliers -- 1 in 8 -- were closed, in vacant buildings or listed under the addresses of other businesses, such as a doctor's office and an art gallery, according to the report.
Federal investigators are expected to recommend today that the government investigate those suppliers and do more to fight fraud among Medicare equipment suppliers in L.A. County.
Medicare records show that L.A. County is home to nearly 5,000 suppliers. Investigators have uncovered $300 million in potentially fraudulent billing in the last two years. Victims include non-English-speaking Asian and Latino Medicare recipients who were duped by fake suppliers and then billed for items they did not need or receive.
Investigators from the Office of the Inspector General at the U.S. Department of Health and Human Services visited L.A. in September and October after a similar investigation in southern Florida. Both areas have recently been hit by fraudulent billing to Medicare, the federal health insurance program for the elderly.
Investigators found Medicare managers can do more to reduce supplier fraud, including conduct more surprise federal inspections; require suppliers to pay for and pass a federal background check and maintain a sufficient inventory; charge suppliers who can't be found during surprise inspections; and declare a temporary moratorium on accepting new suppliers in high-fraud areas.
In response to the report, Medicare managers said they were aware that L.A. had become a fraud hot spot and were addressing the problem through new requirements that are to take effect in 80 metropolitan areas this spring. Included are Los Angeles, Bakersfield, Fresno, Sacramento, San Diego, San Francisco, San Jose and Visalia.
Under the new rules, suppliers will have to apply to one of 10 accrediting organizations, paying fees of $1,500 to $10,000. During accreditation, they will have to pass background checks and more frequent inspections with short notice. If those checks raise suspicions of fraud or the potential for fraud -- for instance, if a manager has had a felony conviction within 10 years -- the supplier could be expelled from Medicare.
