Medicare

Behavioral Medical Systems, Inc. (BMS), of Sugarland, Texas, represented itself to Medicare as a healthcare provider but actually functioned as a broker of medial services, contracting with third-party billers that submitted claims to Medicare on behalf of providers that had entered into contracts with BMS. BMS contracted with nursing homes to provide psychiatric services to their residents. BMS also contracted with psychiatrists and psychotherapists--as independent contractors--to provide those services. Of the 4,900 claims that BMS filed in a 20-month period, 87 percent were for medical services reportedly not provided. These Medicare claims for fictional services totaled $1.3 million. In GAO's view, BMS violated the general statutory principle that Medicare payments should be made directly to the beneficiary or the assigned doctor who provided the medical services. As a result of GAO's investigation, Medicare temporarily suspended BMS in July 1999, and the matter has been referred to the Inspector General of the Department of Health and Human Services and to the Justice Department. However, the founder of BMS is now submitting Medicare claims under an old provider number--unrelated to BMS--issued to her in 1993.

GAO noted that: (1) although BMS represented itself to Medicare as a health-care provider, in fact it functioned as a broker of medical services and, according to its contracted psychiatrists, a third-party biller; (2) further, through the services of the third-party biller with which it had contracted, BMS consistently caused improper Medicare claims to be submitted for services by six psychiatrists contracted to it; (3) of the approximately 4,900 Medicare claims that BMS filed in the 20-month period GAO investigated, 87 percent--or almost 4,300 claims--were for services that reportedly were not provided; (4) those improper Medicare claims totalled $1.3 million; (5) as another matter, GAO believes that BMS violated the general statutory principle that Medicare payments should be made directly to the beneficiary or the assigned physician who provided the medical service; (6) neither of these situations pertained to BMS; and (7) on the basis of GAO's investigation, the Medicare carrier temporarily suspended BMS from Medicare program participation on July 9, 1999.