Albion Monitor /News

Investigators Uncover Nursing Home Fraud

Adult diapers billed as expensive prosthetic devices

The Office of Inspector General has issued a special fraud alert, warning that nursing facilities and their residents have become common targets for fraudulent schemes involving medical supplies. Among the illegal practices uncovered by the Office were kickbacks for Medicare or Medicaid referrals, double billing, and charges for supplies that are not medically needed.

Many inappropriate transactions involve marketing of incontinence supplies. In one case, a supplier was found to have delivered adult diapers, which are not covered by Medicare, and improperly billed these items as expensive prosthetic devices called "female external urinary collection devices."

Submitting or causing false claims to be submitted to Medicare or Medicaid may subject the individual to criminal prosecution, civil penalties including treble damages, and exclusion from participation in the Medicare and Medicaid programs.

Although the Office of Inspector General noted that many of these fraudlent arrangements profit medical suppliers, nursing facility management and staff also are sometimes involved in these schemes.

Government investigators found suppliers giving nursing facilities non- covered medical products at no charge, provided the facility assists in the ordering of Medicare reimbursed supplies. They have identified instances where suppliers have billed the program for providing nursing facilities with thousands of incontinence kits. The nursing facilities accepted delivery of the kits, removed the diapers and other items useful in general patient care, and discarded the remainder of the kits. At the same time, the supplier received Medicare reimbursement for shipment of products which were not medically necessary and often not used.

Nursing facility administrators and staff complained about suppliers delivering unordered goods billed to Medicare

The Office has also uncovered numerous instances in which suppliers provide the nursing facility with general medical supplies such as tape, adhesive remover, skin creams and syringes. But rather than bill the facility, the supplier submits claims to Medicare.

For example, one supplier billed Medicare for an "oral/nasal hygiene program" which consisted of supplies, such as saline solution, latex gloves, and cotton swabs, marketed as prepackaged kits. Upon investigation, it was determined that these items, which were shipped to the facility in bulk quantities, were neither medically necessary nor used for the care of the residents identified on the claims.

In such a case, the supplier may be liable for criminal or civil charges for submitting fraudulent claims. The nursing facility may also be liable if the nursing facility knew or should have known that the claims were false and participated in the offense.

Investigators found that the nursing facility is sometimes directly involved. Suppliers engaged in the fraudulent schemes avoided detection by sometimes bribing nursing facility administrators and staff through the payment of kickbacks and other illegal remuneration.

Also cited were many complaints from nursing facility administrators and staff about suppliers that deliver unordered goods which are billed to Medicare. Analysts and investigators also found that many nursing facilities do not always report such abuses, perhaps because the nursing facilities may gain a benefit from the use of these "free" supplies.

Other abuses uncovered by the Office include:

  • Suppliers who provide nursing facilities with low cost items, but submit Medicare claims for high priced items. For instance, one supplier provided simple restraining devices, but claimed that custom made orthotic body jackets were provided to specified Medicare beneficiaries.

  • Nursing facilities actively soliciting unauthorized deliveries or other items of value, such as cash and in kind rewards. In exchange, the nursing facility offers the equipment supplier access to patients' medical records and other information needed to bill Medicare.

  • Suppliers gathering information on the death of nursing facility residents. Immediately thereafter, the supplier back dated orders of medical supplies in quantities consistent with Medicare's 30 day limitation on after death shipments.

    The Office of Inspector General asks anyone with information about these types of activities to contact the Office of Investigations at 1-800-HHS-TIPS.

  • Albion Monitor August 19, 1995 (

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