Golden Hammer: Medicare asleep at the switch with payments for studies

If thinking about wasteful government spending keeps you up at night, Medicare can help — for a scant $17 million.

That’s how much investigators think Medicare officials wasted in 2011, overpaying for sleep studies known as polysomnography.

In fact, investigators at the Health and Human Services Department’s inspector general’s office are worried that Medicare officials were asleep at the wheel and missed obvious signs that hospitals and clinics were billing the government for procedures that never took place.

Some reported patients received two studies per day, an impossibility considering that the procedures require an overnight stay, the inspector general said.

Medicare’s parent office, the Centers for Medicare and Medicaid Services, “could likely have prevented nearly all of these inappropriate payments” with a more rigorous oversight system, investigators said.

For allowing businesses to sleepwalk away with taxpayer funds, CMS wins this week’s Golden Hammer, a distinction awarded by The Washington Times to examples of fiscal waste, fraud and abuse.

CMS officials agreed that there are problems with the system and said they were studying ways to improve oversight and reduce mistakes and fraud. In the meantime, the agency said it will try to recover the $17 million in overpayments.

In January, the government sued and successfully won a $15.3 million payment from Florida-based American Sleep Medicine LLC over claims that the company was trying to get reimbursed for bogus studies.

“The CMS is committed to preventing improper and fraudulent billing for polysomnography services, particularly given the rise in Medicare spending for such services,” a statement from the agency said.

Further comments from CMS were unavailable as public information officers have been furloughed because of the government shutdown.

The number of Americans suffering from sleep disorders is on the rise, and the Centers for Disease Control and Prevention estimates that almost 70 million people in the U.S. suffer from a lack of sleep, contributing to rises in obesity, hypertension, diabetes and depression, not to mention a loss of concentration and productivity.

Spending on the sleep studies also has been growing steadily, from $407 million in 2005 to $565 million in 2011.

In 2009, the CDC estimated that each month about 5 percent of the population falls asleep while driving as a result of lack of sleep.

Medicare patients can be referred for the tests only by doctors who believe it will diagnose a recognized sleep disorder such as sleep apnea. Federal guidelines say the tests should not be used when lack of sleep is likely the result of other causes such as depression or stress.

Tom Schatz, the president of Citizens Against Government Waste, a fiscal watchdog, said making improper payments is a problem in Washington that is getting increased attention.

“I think there are just systemic problems in all of the payment systems throughout the government that do not let them catch these improper payments before they occur,” he said. “Unfortunately, improving management and systems is not the most exciting headline that members of Congress can get.”

Mr. Schatz said the government is estimated to have wasted $108 billion by making overpayments in 2012. Of that, about $32 billion is being lost through Medicare and Medicaid. But in the past few years, bipartisan efforts have been made to cut down on inappropriate payments, he said, and the White House Office of Management and Budget has been effective in stopping a lot of waste.

Still, federal funding is often a zero-sum game.

“If the money that is being paid is being used for something else, then it means that people may not be getting all the benefits they use,” Mr. Schatz said.

The majority of mispayments were made for claims labeled with the wrong diagnostic code. The codes allow Medicare to make sure the program is paying for needed treatment and that patients are receiving the correct procedures.

“The Medicare system is extremely complex, and therefore incorrect coding is not uncommon,” Mr. Schatz said.

Other wasteful payments went to medical centers that claimed patients were getting two procedures on the same day.

“Because an overnight stay is required for a polysomnography service, beneficiaries can undergo only one such service in a day,” the inspector general said.

Investigators said CMS officials could have avoided paying by using a simple computer program that checks whether patient claims listed more than one procedure.

But evaluations “to prevent inappropriate payments did not exist or were ineffective,” the inspector general said.

Investigators also found 180 medical providers with histories of incorrectly billing the government and high numbers of claims for multiple studies per day. The inspector general said further scrutiny is warranted to make sure the businesses were not trying to rip off the government. CMS said it would investigate the medical centers and take action if needed.

Polysomnography studies diagnose conditions that can affect sleep and evaluate medical devices that help treat the disorders. The procedure requires an overnight stay at a medical facility, with the patient hooked up to sensors to monitor brain wave activity and other sleep indicators.