Health Law Blog - Healthcare Legal Issues

DME Diabetes Supply Company – Corporate Integrity Agreement

Office of Inspector General Comes Down Hard on Compliance Failure

On July 20, 2012, the Office of Inspector General (“OIG”) added Pinnacle Medical Solutions, LLC (“Pinnacle”), a durable medical equipment company specializing in providing product solutions to people with diabetes, on the Corporate Integrity Agreement List due to its failure to comply with Medicare payment guidelines.


During an audit period (January 2006 through June 2009), 675 of the 870 selected line items for which Pinnacle made Medicare payments to providers for outpatient services were incorrect.  The overpayments totaled approximately $2.2 million and were a result of:

  • Incorrect units of service,
  • Healthcare Common Procedure Coding system codes not reflecting the procedures actually performed,
  • Lack of supporting documentation, and
  • Billing for unallowable service


Providers attributed the incorrect payments to clerical errors or to billing systems that could not prevent or detect the incorrect billing of units of service and other types of billing errors.  Pinnacle made the incorrect payment because neither the Fiscal Intermediary Standard System nor the CWF had sufficient edits in place to place to prevent or detect the overpayments.  The OIG did not accept these excuses.


As a result of their compliance failure, Pinnacle has agreed to do the following:

  • Recover the $2,159,595 in identified overpayments,
  • Implement a system edits that identify payments that exceed billed charges by a prescribed amount, and
  • Educate employees.

Furthermore, OIG has included Pinnacle on the Corporate Integrity Agreement List.  This means that Pinnacle will  have the OIG looking over its shoulder to ensure compliance for the next five years.

Action Piece

In order to meet the standards of the OIG, a provider should maintain a compliance program with a system to identify the specific risk areas that pertain to its operations.  Based upon an identified risk area, a sufficient audit program should be in place to detect potential errors that could lead to overpayments.  This case is reflective of the fact that the OIG will not accept excuses when obvious risk areas are overlooked during the self-audit process.

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John H. Fisher

Health Care Counsel
Ruder Ware, L.L.S.C.
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