OIG: CMS not using surety bonds as fraud tool

WASHINGTON - When it comes to HME fraud and abuse, CMS isn't doing itself any favors, according to early findings from the Office of Inspector General (OIG).

CMS began requiring providers to obtain surety bonds of at least $50,000 in October 2009. One of the goals of the requirement: Ensure that the agency recovers erroneous payments resulting from fraudulent or abusive billing practices.

Two years later, however, the OIG has found that CMS isn't using surety bonds as a program integrity tool.

“Requiring surety bonds is an important integrity tool that not only limits fraudulent suppliers' access to the program, but also serves as a means for Medicare to guarantee recoupment of some overpayments,” the OIG writes. “Not using this tool leaves Medicare vulnerable to losses from fraudulent suppliers.”

The OIG found that:

CMS has not finalized procedures for recovering DMEPOS overpayments through surety bonds.

In the summer of 2011, CMS sent draft procedures to the National Supplier Clearinghouse (NSC) and the DME MACs for comment. However, CMS reports significant personnel changes within the agency have delayed the finalization of these procedures.

CMS has not recovered any DMEPOS overpayments through surety bonds since the requirement was implemented.

As of July 2011, CMS had not sought payment from holders of surety bonds, and as a result, it had not recovered any overpayments through the requirement.

Now the OIG is working on a study to determine: the number of suppliers with outstanding un-recovered payments since the surety bond requirement was implemented, and the amount of these overpayments.

The OIG will also determine the amount that could have been recovered if CMS had sought recovery of these overpayments through surety bonds.

To read the OIG's report (OEI-03-11-00351), go to http://go.usa.gov/0po.