WASHINGTON--The Department of Health and Human Services Office of Inspector General said it saved the government $35.4 billion with its anti-fraud activities during fiscal 2005.

In its semiannual report to Congress, OIG reported that it negotiated $1.4 billion in civil and administrative settlements related to Medicare, Medicaid and other federal health care programs in fiscal 2005, which ended Sept. 30.

During this period, OIG excluded 3,806 individuals and entities from participating in federally sponsored health care programs, and reported 537 criminal actions and 262 civil actions.

HHS Inspector General Daniel R. Levinson said accountability for Medicaid funds and payment for Medicaid prescription drugs were focal points of OIG work this period. The Dec. 2 report also cited a number of DME-related examples in the government's efforts to combat fraud and abuse, including:

--The owner of a Texas DME company was sentenced to 41 months in prison and ordered to pay $2.2 million in restitution for health care fraud and money laundering. As part of the scheme, the man paid recruiters for locating Medicare patients and paid physicians for fraudulent certificates of medical necessity and prescriptions for wheelchairs. Though Medicare was billed for power wheelchairs, beneficiaries either never received wheelchairs at all or were provided with much less expensive scooters.
--An Oregon DME supplier and its owner were sentenced for charges related to paying business associates to induce Medicare referrals. The company received reimbursements from Medicare for wheelchairs and accessories, hospital beds and enteral nutrition that were not medically necessary. A $2 million settlement agreement was previously reached, resolving their liability for DME that was allegedly either not provided or medically necessary and for allegedly using CMNs that were false, fraudulently obtained or forged.
--Home Health Corp. of America agreed to pay $300,000 and enter into a five-year integrity agreement to resolve its liability under the Civil Monetary Penalties Law provisions applicable to kickbacks. OIG alleged that from February 1997 through May 1998, HHCA made payments in the form of loans, consulting fees and monthly space rental payments to six physicians located in Pennsylvania and Florida in exchange for their referral of Medicare beneficiaries requiring home health services and/or DME provided by HHCA.
--United Healthcare Insurance Co. agreed to pay $3.5 million to resolve allegations that the contractor defrauded the Medicare program from 1996 to 2000. The government alleged that United Healthcare's telephone response unit mishandled beneficiary and provider phone inquiries and falsely reported its performance information to CMS while under contract with CMS as a regional carrier for DME claims.

The report also updated OIG's September 2004 report on Medicare payments for home oxygen equipment. The MMA mandated that CMS use Federal Employees Health Benefits plans' median payment rates to reduce Medicare fee schedule allowances for home oxygen equipment in 2005. As a basis for those rates, OIG issued a report analyzing FEHB median payments for home oxygen equipment.

But because questions were raised about the inclusion of oxygen contents for stationary and portable equipment in FEHB payment rates, OIG conducted additional work to clarify data in its earlier study and found that the plans' median payment rates were 12.4 percent lower for stationary equipment and 10.8 percent lower for portable equipment. The greatest difference between the median FEHB payment rate and the median Medicare fee schedule allowances was for oxygen concentrators.

While actual fee cuts varied by state, this year CMS reduced rates by an average of 8.6 percent for stationary oxygen and 8.1 percent for portable equipment.

OIG said its $35.4 billion in savings and expected recoveries include $32.6 billion in implemented recommendations and other actions to put funds to better use; $1.2 billion in audit receivables; and $1.6 billion in investigative receivables.

To view the report, click here.