Rampant fraud practices by medical equipment suppliers in the US medical sector have resulted in severe losses for the government compelling it to initiate new rules to check them.
The US Department of Health and Human Services is taking punitive actions against suppliers of medical equipment that cost hundreds of millions of dollars to taxpayers, reported Nationaljournal.
Medicare officials allege that in Los Angeles County alone, fraudulent billing of the government by suppliers exceeds $300 Million. The trend is especially pronounced in the urban regions of Southern California and South Florida with a high concentration of elderly Medicare recipients.
Government accreditation of equipment suppliers and fixing of prices through a bidding process have now been made mandatory. The new rules have prompted some medical equipment suppliers to threaten to back out of Medicare as they think the rules are just too harsh.
In the past, the process used to require the suppliers to apply to the government for participation in the program, face inspection and conform to general standards for operating a legitimate business. But from 2007 onwards, Medicare increased the frequency of inspections and suppliers had to renew applications every three years. However, ample advance notice enabled suppliers to deceive inspectors about legitimate operations and close up shop prior to the inspectors’ arrival.
Prior to 2007, a single screening and inspection for suppliers was required at the time of applying for a Medicare billing number. Despite claiming to be legitimate business, Medicare was often billed by suppliers for equipment never delivered, or never prescribed to or needed by patients.
The new rules however require a payment for applying to one of ten accrediting bodies. The accreditation process involves more stringent background checks, greater frequency of inspections and shorter notice. In case of any suspicions of fraud or potential for it, for example, a manager’s conviction for felony in the past five to ten years, the supplier may be dropped from the program.
A Senior Research Analyst at RNCOS attributes the crisis in the US medical sector to numerous frauds involving the supply of medical equipment and said, “These have cost the government dearly in terms of monetary losses. But with the US government initiating new rules in the medical sector, medical equipment suppliers will be subject to more stringent checks. The move is expected to put a halt on the scams in the US medical industry, regarded as a sensitive sector for reliability.”
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