D.C.’s Medicaid retained ineligible providers

Nearly a dozen companies that receive federal and state tax dollars to supply power wheelchairs, oxygen machines and other medical equipment to low-income D.C. residents remained active in the city’s Medicaid program even after federal regulators fired the businesses, a federal audit released Thursday found.

The report by the Office of Inspector General for the Department of Health and Human Services doesn’t name the companies, nor do regulators say how much of the overall $50 million paid by city’s Medicaid office to medical suppliers from 2007 to June 2010 went to vendors that should have been booted out of the program.

But federal auditors found that 10 companies whose Medicare status had been revoked somehow managed to remain active in the city’s Medicaid program. Under the city’s Medicaid rules, that’s not supposed to happen. To do business with the city’s Medicaid office, providers of so-called “durable medical equipment” must also be enrolled in Medicare.

Medicare is a federal program that covers health costs for older Americans. Medicaid covers low-income residents and, though funded jointly by the District and federal government, is managed by local officials. As of March 2010, there were nearly 200 equipment suppliers enrolled with the city’s Medicaid program.

The federal audit said the companies that remained active in the city’s Medicaid program previously had their Medicare provider numbers revoked “for violating one or more of the Medicare supplier standards.” The report also said the companies’ troubled backgrounds went undetected because the District wasn’t checking.

“All 10 remained active in the District’s Medicaid program because the state agency had no control in place to check the Medicare status of the … providers,” the audit concluded. In the District, the Medicaid program is overseen by the D.C. Department of Health Care Finance.

D.C. officials declined to comment Thursday on the audit, nor would they release the names of the companies cited in it. In a written response sent to the inspector general, Wayne Turnage, director of the health care finance department, pledged to fix the problem.

Mr. Turnage also said that while all 10 companies had been terminated from the city’s Medicaid program, one provider’s termination was later rescinded when it provided proof that it was in good standing with Medicare. He also said seven of the 10 providers were “functionally inactive” and didn’t get any money from the District after they were barred from Medicare.

Still, Mr. Turnage said he agreed with a recommendation by federal regulators to start checking whether providers were in good standing with Medicare. He said such a “policy and procedure” would be in place by Oct. 1.

Fraud involving providers of durable medical equipment has been a persistent problem for federal health regulators over the years. In one recent case in Washington, Donna Barry, former chief executive of Doors of Hope Medical Supply, was sentenced to five years’ probation last year.

Authorities said Barry billed the government for high-end power scooters but gave city Medicaid manual wheelchairs instead.