This issue:

1. Featured Case: eBay Used for Medical Supply Fraud
2. What to do before you contact the prosecution
3. States up in arms over Payment Error Rate Measurement Rule

1. eBay Used for Medical Supply Fraud

In Washington last week, deputies arrested Sally Hansen after they caught her selling medical supplies on eBay. The supplies were allegedly paid for by Washington state for Hansen’s disabled child. The Seattle Post-Intelligencer reported thta the state Department of Social and Health Services paid $15,100 for diapers, fruit drinks, and PediaSure, and a state employee health insurance program paid about $23,000 for medical supplies for Hansen’s daughter.

The investigation reportedly started after Wanda DeGolier bought PediaSure from Hansen on eBay. Ms. DeGolier contacted the medical supply company after she noticed that a label on the box that said the supplies were intended for Hansen’s daughter. Read the Seattle Post-Intelligencer article

eBay is such an easy way to sell medical supplies and durable medical equipment. How can we prevent supplies that we paid for from being sold on eBay?

This investigation was started because the person that bought the supplies noticed the label that the supplies were intended for Hansen’d daughter. And she did something about it. She called the supply company, and the supply company called the state. We can deter medical supply fraud, if we require that each sealed package state the name of the intended recepient and a statement that if anyone other than the intended recipient receives the supplies, they should call the fraud hotline.

2. What to do before you contact the prosecution

I spoke at the ACFE Insurance Fraud Conference in Hartford, CT August 24. Some of the other presentations were facinating, especially the presentation Cam Towers Jones did called Prosecuting Multi-Jurisdictional Health Care Fraud Cases. Ms. Jones is the Assistant United States Attorney with the Criminal Division, Western District of Tennessee. Previously, she as the Health Care Fraud Coordinator for the Executive Office for the United States Attorneys, Washington, DC.

In addition to talking about the importance of coordination in preparing a multi-jurisdictional case, Jones stressed the importance of building a very strong case before going to the prosecutor. Three things you’ll need before going to the prosecutor:

1. 90 Second Case Statement that describes what fraud occurred and how you’ll prove it.
2. Executive Summary that describes the key points of the case in a few pages
3. Case Document that includes carefully organized charts, graphs and other evidence to support your case.

3. States up in arms over Payment Error Rate Measurement Rule

Payment Accuracy Measurement Update was the most heated session at the annual conference of the National Association of Surveillance and Utilization Review Officers (NASO) meeting. August 27, the last weekday before the conference started, the Federal Register included the Proposed Rule for Medicaid Program and State Children’s Health Insurance Program: Payment Error Rate Measurement (PERM). State representatives are very upset about the proposed rule, because it will require states to make a large investment in error measurement. According to presenters at the conference, the new PERM rule is very different from the Payment Accuracy Measurement (PAM) studies that states have been participating in for the past few years. The sampling requirements are seen as particularly cumbersome, and annual reviews will be far more expensive than having them every three years. Download the proposed regulation

Yes, measuring costs money, which is why the federal government realizes that most states aren’t going to voluntarily measure accuracy. But the payoffs for measuring can be huge. Without measurement, we really don’t know what we’re up against. Read my article about measurement. I would be in favor of having even stricter measurement requirements and reducing frequency to every two years. Measurement is not thorough enough, if it does not include some patient and provider interviews and only asks for one medical record per provider. It is very easy for providers to fabricate records for one patient. It is much harder for them to fabricate records for 25 or 50 patients. That doesn’t mean that you have to review all 50 records. Pick the one you really wanted and shred the rest. An accurate accuracy rate is great tool for evaluating your performance, and an inaccurate rate is meaningless and not worth the money. Since you have to spend the money, go all the way and do it right.