Testimony before the
Permanent Subcommittee on Investigations
Committee on Homeland Security &" Governmental Affairs
U.S. Senate
"Medicare Payments for Claims
with Identification Numbers of
Dead Doctors"
Testimony of
Robert Vito
Regional Inspector General for
Evaluation and Inspections
Office of Inspector General
Department of Health and Human Services
July 9, 2008
10:30 A.M.
342 Dirksen Senate Office Building
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Daniel R. Levinson,
Inspector General
Department of Health and Human Services Testimony of:
Robert A. Vito
Regional Inspector General for Evaluation and Inspections
Health and Human Services
Office ofInspector General, U.S. Department of 
the Subcommittee. I am Robert Vito,
Good morning, Mr. Chainnan and Members of 
Regional Inspector General for Evaluation and Inspections in Philadelphia at the U.S.
Health and Human Services' (HHS) Office ofInspector General (OIG).
Department of 
Consistent with its statutory mandate, OIG has devoted considerable resources toward
fighting fraud, waste, and abuse involving Medicare coverage and payment for durable
medical equipment (DME), prosthetics, orthotics, and related supplies. OIG has
perfonned evaluations, investigations, and audits on an array ofDME-related issues;
made recommendations to the Centers for Medicare & Medicaid Services (CMS) to help
correct vulnerabilities that make the DME area so susceptible to fraud, waste, and abuse;
and perfonned targeted follow-up work to ensure that corrective actions have been taken
to eliminate or minimize these vulnerabilities.
One issue-the Medicare requirement that a supplier include on a DME claim the unique
physician identification number (UPIN) of the physician who ordered the DME-is the
subject of my testimony today. OIG has found that the lack of edits or other reviews that
validate the UPIN listed on DME claims presents a vulnerability that has allowed
millions of dollars in questionable claims to be paid. OIG studies have uncovered:
INs that were invalid or inactive, (2) the use ofUPINs that belonged to
(1) the use of  UP 
physicians who had died prior to the dates of service, (3) the improper use of surrogate
UPINs, and (4) the use oflegitimate UPINs that were associated with an unusually large
number of claims.
national
It should be noted that effective May 23,2008, CMS began requiring the use of 
provider identifiers (NPls) rather than UPINs on supplier claims, as mandated by the
Health Insurance Portability and Accountability Act of 1996. However, OIG remains
concerned that the vulnerabilities identified in our UPIN studies, as well as other NPI-
specific challenges, may affect the integrity of the new system.
My testimony today provides a brief overview of OIG and our work related to DME. It
then specifically focuses on studies involving the use ofUPINs on DME claims. Finally,
I wil discuss issues to be considered by CMS now that the NPI requirement has been
implemented, as well as OIG's future plans to provide oversight on this important issue.
Role and Responsibilties of HHS OIG
HHS OIG was created in 1976 and was the first statutory OIG in the Federal
Governent. Two years later, the Inspector General Act of 1978 (IG Act) established
the Federal Governent, as well as at some
OIGs at other Cabinet-level departments of 
independent Governent agencies.
1 Congress created OIGs to be independent and objective units within Federal departments
and agencies for the purpose of: (1) conducting audits and investigations of programs
and operations; (2) coordinating and recommending policies to promote economy,
programs; (3) preventing and
efficiency, and effectiveness in the administration of 
detecting fraud and abuse; and (4) keeping the Department Secretary or Agency
Administrator and Congress infonned about the necessity for corrective action.
To achieve these objectives, our office reviews deparmental programs to identify
systemic vulnerabilities and makes recommendations to improve their efficiency and
effectiveness; investigates specific instances of fraud, waste, or abuse and takes
appropriate enforcement actions; audits specific payments, providers, and programs to
identify and recover overpayments; and promotes voluntary compliance by issuing
guidance to health care providers and the health care industry.
Although the Medicare program relies on providers to submit accurate and appropiiate
providers are honest and trustworthy,
claims for payment, and the vast majority of 
the program. OIG plays
provider efforts alone are not sufficient to ensure the integrity of 
beneficiares. Our
. a key role in protecting public funds and the health and welfare of 
effectiv~ness relies heavily on coordination and cooperation with our law enforcement
partners, including the Deparment of Justice's (DOl) Civil, Criminal, and Civil Rights
Divisions, US. Attorneys' Offces, and the Federal Bureau ofInvestigation (FBI). As the
administrator of Medicare, CMS is also a key parner and plays an important role in our
efforts to protect the program and its beneficiaries.
Our staff expertise, national presence, organizational structure, and collaboration with
law enforcement parters enable OIG to leverage scarce resources to achieve maximum
return for the oversight dollars invested. In the 6-month period from October 1,2007, to
March 31, 2008, OIG conducted audits and investigations that resulted in anticipated
recoveries of$2.2 bilion; exclusions of 1,291 individuals and entities from paricipation
in Federal health care programs; 293 criminal prosecutions for crimes against HHS
programs; and 142 civil or administrative monetary recoveries pursuant to False Claims
Act cases, unjust enrchment suits, civil money penalty cases and administrative
recoveries related to provider self disclosure matters. For fiscal years 2004-2006, our
average retu on investment was nearly $13 for every $1 in fuding.
Each year, to help ensure thatwe achieve maximum effectiveness and impact, OIG
develops a work plan to guide our activities. i Although resource constraints preclude us
from annually reviewing a1l300-plus programs administered by the Departent, OIG
engages in this comprehensive work-plannng process to identify the most important and
timely issues for the upcoming fiscal year and to direct our resources accordingly.
Among the things that OIG considers in setting its work priorities are findings from
the program (e.g., expenditures, number of
previous OIG and external reviews, the size of 
beneficiaries served), specific requests for work from Congress and the Department, the
need to revisit program areas with identified vulnerabilities, and the need to review new
and emerging issues.
i Available online at http:i!www.oig.hhs.gov!pubJications/workpJan.htmI.
2 In addition to our work-planning process, and consistent with the requirements ofthe IG
Act, OIG reports to Congress semiannually on our activities. OIG's semiannual report
provides a 6-month summary ofOIG's completed work during the reporting period and
covers the spectrum of OIG audit, evaluation, and enforcement accomplishments. Each
semianual report identifies significant recommendations described in previous
completed. Appendixes to
semianual reports for which corrective action has not been 
each semiannual report list significant unimplemented recommendations.
the appendixes to the semiannual reports, OIG also
Because of  the abbreviated nature of 
Inspector General
issues a "Compendium ofUnimpleInented Offce of 
Recommendations,',2 This document serves as a useful tool for Congress, the
Administration, and the Departent in their respective efforts to identify ways to contain
costs, maximize the effectiveness of programs and services, and improve the effciency of
deparmental programs. Implementation of the recommendations in this document could
result in substantial savings and increased effectiveness in the operation of the Medicare
program.
OIG Work Related to DME
OIG work related to UPINs was undertaken within the broader context of our oversight
efforts involving Medicare coverage and payment for DME. Because Medicare's DME
benefit has proven to be paricularly susceptible to fraud, waste, and abuse, it has been a
focal point of a number of OIG activities, initiatives, and recommendations. Medicare
Part B expenditures for DME and related supplies totaled more than $10 billion in 2007,
which beneficiares paid more than $2 bilion in the fonn of copayments and
of 
deductibles. OIG evaluations, audits, and investigations have demonstrated that:
(1) Medicare pays too much for certain DME and supplies; (2) Medicare pays for some
DME claims that do not meet coverage requirements; and (3) a number ofDME suppliers
have been able to circumvent the existing controls and defraud the program, costing
Medicare millions of dollars a year. I wil discuss each of  these in tu.
Pricine of DME and Related Supplies
OIG's evaluations involving power wheelchairs, hospital beds, diabetic supplies, home
oxygen equipment, and inhalation drugs used with nebulizers, among other items, have
consistently found that Medicare pays too much for certain pieces ofDME and related
supplies. In many cases, we have perfonned additional studies on a subject in an attempt
to ensure that our recommendations were implemented and outstanding issues were
resolved.
For example, OIG issued its first report on excessive Medicare payments for home
oxygen equipment in 1987. 3 We released a second report on the issue in 1991, again
2 Available online at http://www.oig.llhs.gov!publicaiions!compendium.html.
3 "Medicare Reimbursement for At-Home Oxygen Care" (OAI-04-87-00017). December 1987.
3 finding that Medicare paid substantially more than other payers.4 We revisited the
subject of oxygen reimbursement in a 2005 report, which found that Medicare allowances
for home oxygen equipment were substantially higher than the Federal Employee Health
Benefit program rates. 5 Infonnation from our report was used to reduce Medicare
payment rates by an average of 8.6 percent for stationary oxygen equipment and
8.1 percent for portable oxygen equipment. To assess the impact of these changes, in
December 2006, OIG released another report, which found that Medicare payment levels
for oxygen concentrators were stil several times higher than their actual cost. 6
In addition, OIG issued eight reports between 1996 and 2004 that focused on Medicare
payments for inhalation drugs used with nebulizers (e.g., albuterol, ipratropium bromide)
that are covered under the DME benefit.7 We repeatedly found that Medicare
reimbursement amounts for these drugs greatly exceeded other pricing points (i.e.,
Medicaid, supplier acquisition costs, and retail prices), and made numerous
recommendations calling for Medicare payments to be lowered. These recommendations
were implemented by the new drug reimbursement methodology established by the
Medicare Prescription Drug, Improvement, and Modernization Act of2003.
DME Coveraee Requirements
OIG has also perfonned numerous reviews to determne whether the DME claims paid
under Medicare confonned to coverage requirements. For example, in a 2004 evaluation,
we sought to determne whether power wheelchair claims met Medicare's coverage and
the reviewed claims did not meet
documentation requirements.8 We found that most of 
Medicare's coverage criteria for the wheelcllair that was provided; however, some claims
may have met coverage criteria for a less expensive mobility device. For over half ofthe
claims we reviewed, required documentation was missing, incomplete, or dated after the
date of service listed on the claim. We recommended that CMS improve compliance
with Medicare's coverage criteria for power wheelchairs and suggested several specific
steps to help accomplish that goal.
CMS implemented many ofOIG's recommendations through its power wheelchair
workgroup, which was established to develop a plan of action to ensure that Medicare
payments are only made for power wheelchairs that are reasonable and necessary. We
recently started another study on power wheelchairs that wil detennine the effect of
CMS's actions.
OIG has also investigated cases in which DME suppliers biled for services not rendered
or medically unnecessary services. For example, OIG, in coordination with its partners at .
4 "Oxygen Concentrator Reimbursement: Medicare and the Department of  Veterans Affairs~'
(OEl-03-91-0071l). August 1991.
5 "Medicare Payment Rates for Home Oxygen Equipment" (OEI-09-03-00160). March 2005.
6 "Home Oxygen Equipment: Cost and Servicing" (OEI-09-04-00420). December 2006.
7 For example, see "Update: Excessive Medicare Reimbursement for Albuterol" (OEl-03-03-0051 0).
January 2004, and "Update: Excessive Medicare Reimbursement for Ipratropium Bromide"
(OEI-03-03-00520). January 2004.
8 "Medicare Payments for Power Wheelchairs" (OEI-03-02-00600). April  2004.
4 the Texas Medicaid Fraud Control Unit and FBI, recently completed an investigation
involving inappropriate DME claims submitted by The Scooter Store, Inc. The
Governent alleged that the company submitted false claims to Medicare and Medicaid
for power wheelchairs that beneficiaries did not want, did not need, or could not use;
submitted claims for used power wheelchairs, scooters, and accessories as though the
equipment were new; submitted claims for power wheelchair accessories that were not
ordered by a physician; and improperly induced beneficiaries by promising free mobility
equipment. In 2007, The Scooter Store entered into a settlement agreement with the
Governent to resolve its False Claims Act liability. The Scooter Store agreed to pay
$4 milion and relinquish its right to approximately $13 millon in claims initially denied
for payment by CMS. The Scooter Store and its individual owner also agreed to enter
into a 5-year corporate integrity agreement.
Controls To Ensure Appropriate DME Pavrnent
OIG has also focused on DME suppliers and, in some cases, ordering physicians, who
these efforts
circumvent existing controls in order to defraud the program. Many of 
addressed the three basic controls employed by Medicare to ensure that claims are
legitimate. These three controls validate that: (1) the beneficiary is enrolled in the
Medicare program; (2) the DME supplier meets the Medicare standards and has received
a Medicare biling number; and (3) the DME or supplies have been ordered by a
these in more
physician or other approved health care practitioner. I wil address each of 
detail below.
OIG Work on Beneficiary and Supplier Controls
Beneficiaries
As part of many DME-related studies, OIG has contacted beneficiaries to gather their
experiences with certain pieces of equipment or particular suppliers. We have also
analyzed claims data to identify payments made to suppliers for ineligible beneficiaries.
For example, as part of a study published in 2000, we found that Medicare paid
$9.2 million in 1997 for DME and related supplies provided after the beneficiary was
deceased. 9 We recommended that CMS conduct prepayment edits and postpayment
reviews to ensure that payments are not made for these tyes of claims. In response,
CMS created a prepayment edit to deny payments when the beneficiary is deceased. In
addition, CMS instructed its contractors to conduct anual postpayment reviews to
identify and recover payments for items and services furnished and claimed after a
beneficiar's date of death.
Suppliers
DME suppliers must enroll in the Medicare program to sell or rent items to Medicare
beneficiaries and, in turn, submit claims to Medicare for reimbursement. Currently,
9 "Medicare Payments for Services After the Date of 
Death" (OEl-03-99-00200). March 2000.
5 DME suppliers must comply with 24 supplier standards to receive and maintain a
Medicare billing number. For more than i 0 years, OIG has reported on weaknesses in
CMS's oversight ofDME suppliers' compliance with Medicare's enrollment standards.
In a 1997 report, OIG recommended that CMS conduct site visits of DME suppliers
specifically at the time of enrollment in the Medicare program. 10 Subsequently, CMS
incorporated initial site visits into the supplier enrollment process. In a second report
issued in 2001, we recommended that CMS institute random, unannounced site visits of
suppliers in addition to the initial enrollment and reenrollment visits. i I In response, CMS
stated that it would increase site visits to suppliers that did not pass inspection. .
We have recently expanded efforts to identify suppliers who were not in compliance with
Medicare enrollment standards. In 2005, we conducted out-of-cycle site visits to
169 DME suppliers to detennine whether they met the Medicare requirements of
maintaining a physical facility and being open to conduct business during posted hours. 12
We found that 10 of these suppliers were not in operation at their business address, yet
stil billed Medicare almost $393,000 in the 2 months after we had detennined they did
not maintain facilities at their address of record.
Further, based on evidence of concentrated problems with supplier enrollment in certain
areas ofthe countr, we conducted unannounced site visits to 1,581 DME suppliers in
these DME suppliers did not
South Florida in late 2006.13 We found that 31 percent of 
maintain physical facilities or were not open and staffed during their posted business
hours. Another 14 percent of suppliers were open and staffed but did not meet additional
requirements we reviewed. We recommended several steps that CMS could take to
address the concerns highlighted in these reports, including conducting random
unannounced site visits, strengthening the provider enrollment process, and limiting the
ability of fraudulent suppliers to obtain Medicare billing numbers. In response, CMS
implemented a 2-year demonstration project involving the enrollment ofDME suppliers
14
into Medicare. 
of supplier enrollment by conducting unannounced site
In 2007, OIG expanded its review 
IS We found that 13 percent of  suppliers
visits to 905 suppliers in Los Angeles County. 
did not maintain a physical facility or were not open when we visited, and an additional
9 percent did not meet additional standards we reviewed. We again recommended that
CMS strengthen the supplier enrollment process and ensure that suppliers meet Medicare
10 "Medical Equipment Suppliers: Assuring Legitimacy" (OEI-04-96-00240). December 1997.
ii "Medical Equipment Suppliers: Compliance with Medicare Standards" (OEI-04-99-00670).
August 2001.
12 "Medical Equipment Suppliers: Compliance With Medicare Enrollment Requirements"
(OEI-04-05-00380). March 2007.
13 "South Florida Suppliers' Compliance With Medicare Standards: Results From Unannounced Visits"
(OEI-03-07-00150). March 2007.
14 AvailabJe online at
http://www .cms. hhs.gov/?\1edicareProviderS upEnro ll! downloads!DME%20F act%20Sheet. pdf
15 "Los Angeles County Suppliers' Compliance With Medicare Standards: Results from Unannounced Site
Visits" (OEl-09-07-00550). February 2008. .
6 supplier standards. In response to our recommendations, CMS stated that, among other
unannounced site visits, begun targeted
actions, it had increased the frequency of 
suppliers in high-fraud areas, and anounced a mandatory
background checks of 
accreditation process for DME suppliers.
Recent investigations by OIG, DOl, and other law enforcement agencies have also
identified and pursued enforcement actions against fraudulent DME suppliers. In March
Federal, State,
2007, OIG and DOl fonned a Medicare Fraud Strke Force composed of 
and local investigators to combat the fraudulent activities of medical equipment suppliers
in South Florida through the analysis of  Medicare billng data. During a 3-month period
in 2007, 56 individuals were charged in South Florida with fraudulently billing Medicare
more than $258 milion. As of March 2008, the Stre Force had brought charges against
120 defendants, resulting in 101 convictions. Our investigation included one case in
which a Medicare DME company biled Medicare over $14 million (and paid more than
$1 milion) for wound care, enteral nutrition products, and wheelchairs that were neither
prescribed nor delivered. In this case, certain claims listed two prescribing physicians
the company.
who were deceased prior to the incorporation of 
OIG Work on UPINs and Physician Controls
OIG has conducted evaluations, audits, investigations, and additional data analysis
focusing on the ordering physicians listed on DME claims. The Consolidated Omnibus
Budget Reconciliation Act of 1985 required CMS to establish UPIN s for all physicians
who provide services to Medicare beneficiaries. Infonnation on UPINs is stored in a
national database known as the UPIN Registry.
Prior to the recent implementation of the NPI, Medicare regulations required DME
suppliers to provide the UPIN of the physician who ordered the equipment on the claim
fonn. Medicare relies on physicians and other health care practitioners to act as
gatekeepers to ensure that only medically necessar equipment and supplies are ordered.
When a DME supplier puts a UPIN (or NPI) in the appropriate field on the claim fonn,
the supplier is indicating that a physician has verified the need for the equipment. In
the UPIN or NPI enables CMS to determne who prescribed the
addition, the presence of 
equipment and/or supplies as par of any postpayment reviews.
Pavments for DME Claims With Invalid and Inactive UPINs
In conducting our DME-related work, we learned that Medicare claims-processing
systems verified only that the UPIN listed on a claim met certain fonnat requirements.
Computer system edits were not performed to ensure that the UPIN listed on a claim had
this vulnerability, OIG detennined
been assigned or was active. To assess the impact of 
invalid and inactive UPINs listed on Medicare claims in 1999, and
the prevalence of 
released a report on the issue in 2001.16
16 "Medical Equipment and Supply Claims With Invalid or Inactive Physician Numbers"
(OEI-03-01-0011O). November 2001.
7 We compared the UPINs listed on Medicare DME claims in 1999 to infonnation
contained in the UPIN Registry. We then identified Medicare payments for claims for
which the listed UPIN was either invalid or inactive on the date of service. An invalid
UPIN is one that has never been assigned; an inactive UPIN has been assigned but all the
practice settings associated with the UPIN have been deactivated.
We found that Medicare and its beneficiaries paid $32 milion for DME claims with
the invalid UPINs began with a letter for which
invalid UPINs in 1999. One-quarter of 
no UPINs had ever been issued, meanig that the UPIN could easily be identified as
the invalid UPINs were each
one which was never assigned. Approximately 100 of 
associated with more than $50,000 in Medicare DME payments. A single invalid UPIN
was listed as the ordering physician by seven different suppliers on $1.1 millon in paid
Medicare DME claims.
Furthennore, Medicare and its beneficiaries paid an additional $59 millon in 1999 for
DME claims listing UPINs that were inactive on the date of service. Almost $8 millon
this amount involved UPINs for physicians who were deceased prior to the dates of
of 
the inactive UPINs listed on the
service entered on the claims. Over 30 percent of 
claims had been inactive for at least 3 years.
Finally, we found that a small number of suppliers accounted for a significant share of
the $91 milion in Medicare payments for DME claims with invalid or inactive UPINs.
One hundred suppliers were reimbursed for $17 millon of that total. One supplier was
responsible for $1.2 millon in Medicare claims, using over 1,700 different invalid or
inactive UPINs on medical equipment and supply claims that year. Another supplier
had 62 percent of its Medicare reimbursement associated with one invalid UPIN.
To address the issues identified by this report, OIG recommended that CMS: (1) revise
claims-processing edits to ensure that UPINs listed on DME claims are valid and active
using accurate UPINs when
and (2) emphasize to suppliers the importance of 
submitting claims to Medicare. In responding to our recommendations, CMS indicated
claims
that it had developed instructions, system changes, and edits which would reject 
listing a deceased physician's UPIN. CMS also stated that it planned to expand the
2002,
edits to include all invalid and inactive UPINs. In November 2001 and April 
deceased
CMS issued instrctions to its carers stating that DME claims listing a 
17 We are unaware of any fuher CMS action taken
physician's UPIN would be denied. 
invalid and inactive UPINs on DME claims. Therefore, we
to address the presence of 
continued to promote our recommendations addressing the invalid and inactive UPIN
issue by including them through 2007 in our anual publications listing unmplemented
18
OIG recommendations. 
17 Available online at http://www .cms.hhs.gov!transmittals/down !oads/BO l73.pdf and
http://www .cms.hhs. gOY ITransmi ttals! down! oads!B02024. pd f
18 "Compendium of  implemented Offce ofInspector General Recommendations" May 2007, page 21.
Un 
8 Accuracv of the UPIN Reeistrv
To ensure effective edits that prevent payments for DME claims with invalid and
inactive UPINs, CMS needs to maintain accurate infonnation in the UPIN Registr.
However, in a 1999 report, we found that although CMS had taken steps to enhance the
IN data, some problems stil persisted. 19 These problems included
accuracy of  UP 
UPINs with no recent claim activity stil being listed as active, inaccurate physician
infonnation in UPIN Registr fields, and fonnat-related issues. Further, in 2002, we
issued a report to CMS that noted issues with the physician addresses listed in the UPIN
registry that we identified during a study involving Medicare mental health services.20
In 2003, OIG issued another report on the accuracy ofCMS's UPIN data.2J For this
study, we contacted providers and asked them to verify information contained in the
UPIN database for each of their active practice settings. We also reviewed the universe
of active UPIN registry records to identify inconsistent, missing, and questionable
infonnation.
providers listed in the active UPIN database had
OIG found that 52 percent of 
their practice setting records. Seventeen
inaccurate infonnation in at least one of 
percent of providers no longer billed Medicare from any of the practice settings listed
that number, 14 percent were deceased, and 26 percent
in the active UPIN file. Of 
indicated they had retired. Another 9 percent of providers could not be contacted by
mail at the addresses listed in the UPIN Registry.
We noted that when infonnation housed in the UPIN Registry is unreliable, CMS's
ability to conduct effective oversight is jeopardized. For instance, inaccurate UPIN
data limits CMS's ability to identify unusual billing activity, both in the perfonnance of
services and the ordering of services, and also inhibits CMS from verifying that
sanctions are correctly imposed.
Therefore, OIG recommended that CMS: (1) correct inaccurate and incomplete
infonnation in the UPIN Registr and deactivate practice settings that have never been
or are no longer used by Medicare providers; (2) review data contained in the UPIN
Registr to ensure that they are complete, accurate, and consistent; (3) conduct a review
of providers who biled Medicare for Par B services in 2000 but could not be contacted
by mail; and (4) review and revise existing UPIN Registry data entry guidelines. CMS
concurred with our recommendations and indicated that it was taking steps to correct
the issues.
19 "Accuracy of  Unique Physician Identification Number Data" (OEI-07-98-0041 0). October 1999.
20 "Inaccuracies in the Unique Physician Identification Number Registry: Incorrect Addresses for Mental
Health Service Providers" (OEI-03-99-00131). May 2002.
21 "Accuracy of  Unique Physicianractitioner Identification Number Registry Data" (OEI-03-01-00380).
May 2002.
9 Use of Surroeate UPINs
22
In 2002, OIG issued a report examining the use of surrogate UPINs on DME claims. 
Under Medicare guidelines, surrogate UPINs are temporary UPINs that may be used
the ordering physician for a DME item
until an individual UPIN has been assigned. If 
does not have a pennanent UPIN, the supplier must use a surrogate UPIN when
submitting the claim. At the time of our review, CMS had established four specific
surogate UPINs, as well as guidelines for their use.
We selected a sample ofDME claims from 1999 that listed surrogate UPINs. We
reviewed claims should have listed a pennanent UPIN rather
found that 61 percent of 
than a surrogate, because the ordering physician had a pennanent UPIN at the time the
service was provided. Furhennore, nearly half of the DME ordered with a surrogate
medical necessity to
UPIN (45 percent) had either: (1) no written order or certificate of 
support the service or (2) a written order or certificate of medical necessity with one or
more items missing. Medicare paid an estimated $61 million for these services that
year.
We noted that the use of surrogate UPINs on medical equipment claims enables them to
be processed automatically whether the equipment has been ordered by a physician or
the inappropriate use of surrogate UPINs by suppliers goes unchecked, the
not. If 
Medicare program becomes vulnerable to fraudulent billings and inappropriate
payments. Therefore, OIG recommended that CMS: (1) perfonn targeted reviews of
claims for DME ordered with surrogate UPINs and (2) continue to educate suppliers
and physicians that accurate UPINs must be used on claims. CMS concurred with
OIG's recommendations.
Additional Work on UPINs
OIG has also identified numerous UPINs that were used to order unusually high dollar
amounts ofDME. For example, in 2006, through the coordinated effort ofOIG, DOl,
and others, a South Florida physician pleaded guilty to violating the anti-kickback and
false claims statutes. According to the press release issued by the u.s. Attorney's
Offce for the Southern District of Florida,
Beginning in approximately April 1999 , (the physician) established
referral relationships with the owners of numerous medical equipment
companies. The owners would bring "patients" to (the physician's) office
and specify which tyes of equipment and medications they wanted her to
prescribe. Defendant would conduct a cursory examination of the patients
22 "Durable Medical Equipment Ordered with Surrogate Physician Identification Numbers" (OEI-03-01-
00270). September 2002.
10 whether they were
and then sign the requested prescriptions, regardless of 
medically necessar.23
The UPIN belonging to this physician was used on almost $8 milion in DME claims in
1999. This dollar amount equates to the physician ordering more than $20,000 in DME
each day of the year.
In other cases, it is likely that the physician did not know his or her UPIN was being
used to order the DME. Our audits of DME suppliers identified several situations in
which the physicians whose UPINs were listed on Medicare claims said that they had
not ordered the equipment or supplies. In most cases, the physicians had no medical
records for these beneficiaries, and/or stated that the beneficiaries were not their
patients. The suppliers identified in these audits were then forwarded to OIG's Offce
ofInvestigations for further review.
More recently, we have identified additional UPINs that are associated with
questionable billing levels in South Florida for inhalation drugs used with DME.
According to CMS, its local Miami office has begun to actively monitor UPIN usage
and is now working with the physicians, most of whom did not know about the billings,
to limit fraudulent claims.
These cases ilustrate that using UPINs (or NPls) as a control to prevent fraud is more
complicated than simply perfonning edits to ensure that the identifier is valid and
active. Because UPINs and NPls are readily available to the public, fraudulent
suppliers can easily obtain a valid number from their geographic area and use that
number on their DME claims.
National Provider Identifier
The Health Insurance Portability and Accountability Act of 1996 requires issuance of an
health care. To comply with this
NPI to each physician, supplier, and other provider of 
requirement, CMS began to accept applications for NPls on May 23,2005. Begining
May 23, 2008, the NPI must be used in lieu oflegacy provider identifiers, such as
supplier numbers and UPINs.
To determne whether CMS addressed the problems identified with invalid and inactive
the NPI, we are in the
UPINs in the months directly prior to the full implementation of 
process of analyzing DME claims from 2007. Based on our preliminar analysis and
discussions with CMS staff, we have found evidence that issues with invalid and inactive
UPINs still existed in 2007, and may be a continuing problem with the NPI. According
to CMS docunnents, edits wil be established to verify that the NPI is in the correct
fonnat. 24 However, it is unclear whether there wil be any edits to identify NPls that
have not been assigned or that correspond to inactive physicians.
23 Available online at http:// 149.101.1 .32!usao/fls/PressReleases/060825-03 .htmJ.
24 Available online at http://www.cms.hhs.g.ov!MLNMattersArticles!downloads/MM4320.pdf.
11 Furthennore, according to a CMS communication published on its Web site and dated
lune 2, 2008, CMS is temporarily allowing DME suppliers to use their own NPls rather
than the NPls of the ordering physicians:
To assist those biling providers, which, after reasonable effort, are stil
unable to obtain NPls for secondary providers, Medicare has instituted a
temporar measure that allows biling providers to use their own NPI in
secondary identifier fields.25
The communication does not indicate the date when this policy wil be discontinued.
However, as long as DME suppliers are allowed to enter their own NPls rather than the
the ordering physicians, a major control for preventing fraud, waste, and abuse
NPls of 
wil not exist.
the NPI, OIG is planning additional
Because of our concerns with various aspects of 
studies on the subject. Therefore, we expect to conduct several evaluations on the NPI
during fiscal year 2009.
Conclusion
OIG has devoted considerable resources to identifying fraud, waste, and abuse involving
DME claims. From large-scale reviews involving supplier site visits to data analysis
involving the UPINs listed on DME claims, OIG has worked to safeguard taxpayer
dollars and protect Medicare and its beneficiaries. OIG will continue to focus its
attention on the integrity of Medicare payments for DME, make recommendations to
resolve potential vulnerabilities, and conduct targeted follow-up work as warranted.
One of the best ways to combat fraud, waste, and abuse is to ensure that the safeguards
put in place to protect the program are operating effectively. One such safeguard, the
requirement that an identifier for the physician orderig the equipment be listed on the
claim, can be bolstered though the appropriate use of prepayment edits. However,
despite our earlier recommendations, CMS never implemented edits that would ensure
that the UPINs listed on DME claims were valid and active. As a result, we remain
concerned that the vulnerabilities highighted by our earlier work, as well as new
challenges, may affect the integrty of the NPI system.
Unfortately, edits like those we previously recommended will not completely prevent
fraud, waste, and abuse. As our work has shown, some suppliers will use valid identifiers
(often without the physicians' knowledge) when submitting their claims. In those cases,
CMS must work to identify cases when there are spikes in the use of a particular NPI,
when the NPI is consistently associated with an aberrant number of claims, or when the
NPI used on claims is not in the geographic vicinity of the beneficiary. These
postpayment reviews would require not only data analysis, but also outreach to the
physicians whose NPls are being abused. To that end, OIG is available to assist CMS in
25 Available online at httj):!/www.cms.hhs.gov/NationaJProvIdentStand/02 WhatsNew.asp.
12 monitoring the use ofNPls on DME claims as well as developing effective methods for
increasing the awareness ofNPI-related issues among the supplier and physician
community.
This concludes my statement. Thank you for the opportnity to testify today. I would be
pleased to answer your questions.
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