The Scooter Store Sues HHS for Unpaid Claims

SAN ANTONIO–The Scooter Store has filed suit against the
Department of Health and Human Services, seeking payment for denied
Medicare claims that the company says has cost it hundreds of
thousands of dollars.

According to the suit, filed Jan. 25 in federal district court,
Medicare failed to reimburse The Scooter Store for 101 power
wheelchairs and scooters delivered to Medicare beneficiaries from
2000 to 2003. The New Braunfels, Texas-based company also charges
HHS with violating the law by demanding documentation to prove a
patient’s need for the equipment, in addition to a physician-signed
Certificate of Medical Necessity (CMN).

In an effort to crack down on fraud, CMS has routinely requested
additional records from providers–particularly in the Houston
area–to prove medical necessity. The Scooter Store says these
requests cause a delay in payment for equipment after delivery and
make it more costly and difficult to supply equipment to patients.
Furthermore, the company claims the CMN is all that is needed by
law.

“The CMN is defined by Congress as a formal document to
establish medical necessity,” said Stephen Azia, an attorney
representing The Scooter Store. “If you’re a medical supplier, you
have the right to rely on a document completed by the physician to
establish medical necessity. We feel the claims were medically
necessary, and we think the company complied fully with the
rules.”

In a similar case in California, a judge issued a ruling last
year stating that a properly completed CMN was enough for supplier
reimbursement. The case involved Redding, Calif.-based Maximum
Comfort, which received a favorable ruling last year from the
Eastern District of California.

“We felt the federal judge [in California] followed the law in
that case, and that’s all we ask,” Azia said.

Other DME companies nationwide are facing similar dilemmas, Azia
continued. “If a supplier is relying on the professional medical
judgment of a physician and delivering equipment to people with
real medical needs, and if those claims continue to be denied, you
will see more suppliers take their cases to court.”

During 2004, The Scooter Store laid off 400 employees and, by
the end of the year, announced it would no longer provide power
wheelchairs and scooters to Medicare beneficiaries in the Houston
area, citing “drastically more restrictive interpretations of
coverage guidance than anywhere else in the country.”

Although CMS did not comment on the pending litigation, the
allowed-charges figures in Harris County (Houston), Texas–the
epicenter for the government’s Operation Wheeler Dealer crackdown
on wheelchair fraud–still show only a small percentage of claims
being paid.

According to Steve McAdoo, associate regional administrator for
the Division of Medicare Financial Management in CMS’ Dallas
regional office, in December about $372,000 out of $1.1 million in
submitted charges were paid. In November, Harris County providers
submitted $3.9 million in K0011 charges, while only $137,000 was
paid. Since Wheeler Dealer, all K0011 claims from the county have
been “personally and individually approved” by members of a special
CMS task force.

McAdoo explained that the Region C DMERC uses “an automated
process of requesting medical records” for Harris County power
chair claims. “If [the DMERC] doesn’t get anything back, those
claims are automatically denied,” he said.

The CMS official added that the DMERC began sending letters to
providers describing the number of claims denied and giving “a
person in the medical review area for suppliers to contact if they
have specific questions on coverage.” McAdoo said the agency hopes
this “educational effort will improve the situation.”

According to a recent HomeCare magazine survey of
mobility providers throughout the country, 52 percent said they
have experienced no change in their company’s level of power chair
claim denials since Operation Wheeler Dealer took effect in the
fall of 2003. Another 11 percent indicated that denials had
increased at first but then returned to normal levels, while 19
percent said their denials for these products have increased.