OIG: Third-party billing procedures rife with holes
One company worked a $362,000 scam
An Office of the Inspector General (OIG) report on third-party billing problems scorches Medicare administrators for a lack of safeguards.
For instance, the April report said a Texas billing company collected some $362,000 in false Medicare claims over a 20-month period without its provider-client’s knowledge.
Medicare "cannot identify most of the clearinghouses and billing agencies submitting claims" to the program, OIG found. When third parties submit claims to Medicare, they use the physician’s or medical supplier’s billing number and submitter number, according to the report. "Medicare cannot determine whether claims enter their system from an authorized biller’s site and computer or from unauthorized sites and computers."
Because both the provider and billing company employees have access to patient and provider information necessary to access the Medicare system, those data "can be misused [without the medical provider’s knowledge] by clearinghouses or their employees to generate false claims," the OIG noted.
As a safeguard, the OIG wants HCFA to:
• use passwords and new technologies, such as caller identification, to ensure claims are received and processed only from known terminals;
• put more pressure on providers to review and verify the remittance notices they receive for any erroneous claims submitted to Medicare using their provider ID numbers.
Currently, HCFA simply asks that providers review remittance notices for any possible misuse of provider numbers. However, under the present system, these notices can be rerouted to a billing company or another address so authorized providers may never get to see them.
"An unknown number of providers allow billing companies to use their submitter number. The potential for misuse of submitter numbers is a vulnerability not adequately addressed by Medicare," according to the report.
When it comes to the billing software used to produce claims, OIG said proprietary software presents the greatest fraud risk. Proprietary software can be a problem "because it is created for, and used by, a select few," according to the report. Because hidden programs can add or modify claim information, this "poses the greatest risk of being intentionally designed to produce improper or inaccurate claims."
Commercial software that produces inaccurate claims, however, "has a greater chance of detection and of being reported by honest medical providers," the report said.
The OIG previously has expressed problems with arrangements in which providers pay third-party billers based on a percentage of the claims they collect.
Despite that, "there is nothing inherently wrong — or illegal — with a percentage of collections arrangement," says Bob Burleigh, CHBME, of Brandywine Healthcare in Malvern, PA. "Properly structured, a percentage of collections can work just fine."
However, a percentage of claims or charges deal "would be problematic, since the only incentive would be to submit claims, not get them paid," he says.
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