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D.C. probes Medicaid suppliers
Four of the top 10 companies in the $11.4 million business last year of providing power scooters, wheelchairs, prosthetic limbs and other medical equipment to D.C. Medicaid recipients have come under investigation.
At least six other "durable medical equipment," or DME, dealers also are being investigated, including one suspected of selling a recipient a walker, then billing the government for a $13,500 deluxe power scooter.
The D.C. Department of Health confirmed the investigations in response to a Freedom of Information Act request by The Washington Times.
Agency attorneys withheld several records, saying the documents are "investigatory records compiled for law enforcement," therefore exempt from public disclosure. Officials also would not release the names of the companies under investigation.
The situation raises questions about whether fraud and mismanagement, which have plagued the District's Medicaid transportation program in recent years, also have surfaced in the DME program.
The Medical Assistance Administration (MAA), an arm of the health department, oversees the city's more than $1 billion in Medicaid spending, which is funded by federal and local governments to provide health care for the poor.
Nearly 90 DME companies, mostly in the District and Maryland, received a combined $11.4 million in fiscal 2006 to supply the city's poor.
The figure is up from $10.1 million in 2005 and $9.8 million in 2004. And while officials say overall costs remain within budget, MAA spending could increase by 40 percent compared to 2004 figures. Already, MAA had paid out more than $12 million in fiscal 2007.
Records reviewed by The Times show DME companies alone accounted for nearly half all of the medical-equipment costs incurred by the city's Medicaid program in 2006.
Billing patterns vary widely. One company received $1.5 million after submitting 11,644 Medicaid claims while another received $1.5 million on only 426 claims.
A health department spokeswoman said MAA is "pro-active in reviewing and auditing DME claims."
"We cannot comment on particular efforts but can say that if we become aware of improper billing practices in a given area, we would devote appropriate effort to reviewing other providers from that area of concern," said spokeswoman Leila Abrar.
A recent internal MAA e-mail obtained by The Times shows that at one point, many Medicaid agreements between providers and the District were activated without a D.C. Medicaid official signing off on the documents.
In an internal memo, MAA's former acting manager, William Brown, stated in January that D.C. Medical officials had just recently learned that five years earlier a former program manager "did not sign several provider agreements."
As a result, the city's Medicaid contractor, Affiliated Computer Services, "activated hundreds (maybe thousands) of provider agreements ... that do not have a signature from an MAA official during the re-enrollment period in 2002," Mr. Brown wrote. He blamed former city Medicaid officials.
D.C. health officials declined to comment on the error other than to say they now follow the proper procedures.
"It is our policy to review and sign all provider applications before the provider is given a [Medicaid] number," Miss Abrar said. "This is currently being done."
But others call the lack of signatures a troubling signal.
"If you don't have a signature on the provider agreement then you don't have a contract," said one D.C. employee familiar with the situation, who spoke on the condition the source not be identified for fear of reprisal.
"MAA should have had the internal controls in place to have a person check these agreements," the source said. "It doesn't take a contractual expert to see if a page is signed."
Though officials have withheld the names of companies facing investigation, The Times has obtained a copy of a federal search warrant affidavit filed days before agents seized financial records from D.C.-based Doors of Hope Medical Supply in December.
The company received $550,000 from the city's Medicaid program from February 2003 to September 2005. More than half of the money went to pay for power scooters, records show.
Now investigators are looking into whether the company gave its patients cheaper medical equipment, then used their Medicaid numbers to bill the District for power scooters costing nearly $15,000.
On Dec. 14, the FBI seized D.C. government checks, tax returns, patient files and "presumptively forged invoices," according to records on file in federal court in the District.
Channing Phillips, a spokesman for the U.S. Attorney's Office in the District, said no charges have been filed in the Doors of Hope investigation but the matter is still pending.
D.C. Medicaid officials declined to comment on the probe. The company's offices in a medical building next to Greater Southeast Community Hospital have been shuttered, and phone messages were not returned last week.
Other DME companies also are hard to locate. Several of their phone numbers listed in the city's online Medicaid provider directory have been disconnected. Faith Hope Medical Supplies, for example, has no working number, and its address on Minnesota Avenue Northeast is now a beauty-supply shop.
Medicaid and Medicare fraud has been a recurring problem in the medical-equipment industry across the country, said Spencer Levine, former director of the Florida Medicaid Fraud Control Unit.
"All they need is access to recipient Medicaid numbers and a provider number," he said. "You can bill hundreds of thousands of dollars in weeks. It's literally a printing press."
One of the major ways to bilk the system is known as "upcoding," in which a provider gives a patient a cheaper piece of equipment, then bills Medicaid for a high-priced item, Mr. Levine said.
Earlier this month, U.S. Department of Health and Human Services Secretary Michael O. Leavitt announced a two-year effort to root out fraud in companies providing power scooters, wheelchairs and other equipment to Medicare recipients.
Federal strike forces were deployed in South Florida and Southern California, and officials hope to expand the program nationwide.
Florida-based Lincare Inc., which received $68,985 from the District's Medicaid office last year, paid $12 million to the federal government last year to resolve an investigation into kickbacks to doctors.
The company admitted no wrongdoing, but federal authorities said their investigation showed Lincare gave doctors golf outings, fishing trips, meals and purported consulting deals for referrals.
Malcolm Sparrow, a professor at Harvard University and author of "License to Steal: How Fraud Bleeds America's Health Care System," said a major reason Medicaid fraud often goes undetected is because states are under pressure to administer and pay out claims quickly.
"The cheapest way to pay claims is not to question them," he said.
However, Miss Abrar said many investigations into fraud begin with internal reviews by the city's Medicaid office.
D.C. Council member David A. Catania, at large independent and chairman of the council's Committee on Health, said he was "very concerned" by the investigations.
"I'll be watching the investigations closely," he said. "If the government is being cheated, I want to know by whom and how much."
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