CMS’ Round Two Announcement Puts the Accent on Fraud

ATLANTA–Poised for months to hear the details about Round Two
of national competitive bidding, home medical equipment providers
were knocked off their pins last week when CMS’ long-awaited
announcement appeared to spin the project as an anti-fraud
initiative.

While the regulation includes an accreditation component,
competitive bidding was mandated by the Medicare Modernization Act
of 2003 mainly as a cost-cutting initiative, stakeholders pointed
out. But Tuesday’s announcement–made at a press conference held in
Los Angeles, the site of an ongoing anti-fraud demonstration
project–focused instead on the bidding program as a
fraud-and-abuse deterrent.

“Through the certification process, beneficiaries will be given
another layer of protection from fraud,” said CMS Acting
Administrator Kerry Weems. “We welcomed this program when it was
created by the Congress because we believed it could help lower
costs for our beneficiaries and help us in our efforts to keep the
small number of dishonest providers from taking advantage of
American seniors.”

Weems went on to tell members of the press that “many DME
suppliers are just empty storefronts. Well, if you’re going to be
part of the program, we’re not going to accredit an empty
storefront.”

The stage was set by a CMS media advisory sent Monday headlined:
“Federal Government Announces Expanded Program to Provide Medicare
with More Tools to Fight Fraud, Abuse.” The advisory explicitly
said the Round Two competitive bidding announcement would be held
at a “news briefing to announce expansion of Medicare’s anti-fraud
and abuse efforts in Los Angeles County and in 69 other
communities.”

The anti-fraud agenda captured the interest of consumer press
across the country, including the Los Angeles Times, the
Chattanooga Times Free-Press and the Austin American
Statesman, which explained competitive bidding to their
readers as a deterrent to fraud, as well as a money-saver.

The Los Angeles Times article, which appeared in the
newspaper’s Jan. 8 edition, presaging the press event, particularly
outraged some in HME since it focused on an 84-year-old blind woman
who cannot walk and was reportedly victimized by a provider who
talked her into acquiring $28,300 worth “of products she didn’t
need or want.”

Acknowledging that government efforts to deal with fraud in the
industry are long overdue, stakeholders said they felt the
Times article and others misled the public about the
intent–and the effects–of competitive bidding.

“I found my blood pressure rising by the minute” after reading
the Times article, said Miriam Lieber of Lieber
Consulting, Sherman Oaks, Calif. “When will the press learn that
not every HME provider is a fraud? As the 70 new competitive
bidding MSAs were released, it seemed ironic that the article
painted competitive bidding as an opportunity to prevent fraud
rather than a chance to eliminate two-thirds of the industry.”

Lieber said she believes the non-trade media did not understand
the issues and quite possibly even mixed up the announcement of
Round Two bidding with the current anti-fraud demonstration project
in L.A. “They either mixed up the stories or didn’t know the
stories,” she said. (See HomeCare
Monday, July 9, 2007.)

CMS intentionally announced the expansion of competitive bidding
“at the Los Angeles anti-fraud event because of the very important
consumer protection messages that need to get out to all
beneficiaries, but especially those in the new competitive bidding
areas,” said Ellen B. Griffith, a CMS spokeswoman.

“As the home health industry said after the event, it is vitally
important that Medicare protect honest suppliers from competition
from the unscrupulous, and the educated beneficiary is one of the
best sources of information about fraud,” Griffith added.

She said there were two main messages CMS wanted to get across
to beneficiaries in making its announcement.

“Beneficiaries need to know how to protect themselves from
unscrupulous suppliers of durable medical equipment, prosthetics,
orthotics and supplies,” she said. “Under the competitive bidding
program, only accredited suppliers of DME will be permitted to bill
Medicare for items of DMEPOS, and only contracting suppliers will
be able to bill Medicare for items within the eight categories of
DMEPOS furnished to beneficiaries in the designated competitive
bidding areas.”

The second point CMS wanted to make, Griffith said, was that
“beneficiaries, who pay 20 percent of the Medicare payment rate for
items of DMEPOS, need to know that CMS is taking steps to make sure
that for these commonly prescribed items, they are not paying more
than they would have paid if Medicare payment rates were closer to
the rates in the competitive marketplace.”

But stakeholders said the fraud-and-abuse angle obscured what
competitive bidding is really about.

Mark Higley, vice president of development for Waterloo,
Iowa-based VGM Group, said he was disappointed that CMS’ public
announcement of the next 70 MSAs “clearly suggested that the
competitive acquisition process was intended as a cure-all for
fraud and abuse in the HME industry.

“Competitive bidding may very well reduce HME provider services,
lower the quality of innovative products offered to Medicare
beneficiaries and increase overall Medicare expenditures (via
increased acute care service needs) … but it is not a panacea for
the elimination of fraud,” Higley said.

Walt Gorski, vice president of government relations for the
American Association for Homecare, said the association was
surprised at the anti-fraud emphasis, but noted that it was easier
to present competitive bidding to the public couched as a deterrent
to fraud and abuse.

“CMS sees utility in classifying competitive bidding as an
anti-fraud and abuse mechanism,” he said. “It is virtually
impossible to criticize an anti-fraud and abuse technique.”

Wayne Stanfield, president and CEO of the National Association
of Independent Medical Equipment Suppliers, said he was surprised
at the tactic as well. Instead of combating fraud and abuse, he
said, competitive bidding was designed to save Medicare money.

“Also, if you look at the figures, which make little to no
sense, they say they are going to save $1 billion annually with the
competitive bidding expansion–but Medicare is a $400 billion
annual expenditure. So they’re going to save one quarter of one
percent, which is pretty much nothing.”

In any case, providers and others pointed out, CMS has had the
option of many vehicles by which to combat fraud.

“As an industry, our message to CMS is that there are plenty of
ways–much more productive ways–to control fraud and abuse.
Competitive bidding has little to do with curbing fraud and abuse,”
said Don Clayback, vice president, The Med Group, Lubbock,
Texas.

“It may [cut down on fraud], but it’s so much easier to become
accredited with these new expectations that it may not,” said L.
Jack Clark, RRT, founder and principal of Mid Georgia Respiratory
in Macon, Ga. “I get the sense from my three decades of experience
in the home care arena that probably people that are shysters
generally look for the easy ways to be a shyster and aren’t going
to worry about another hurdle like the one accreditation would
offer them.”

Meanwhile, the industry is left to do damage control. As Gorski
noted, since the CMS announcement follows several press reports on
Medicare fraud and abuse from such venerable entities as the
New York Times, National Public Radio and NBC, it makes
the situation even more difficult for the honest provider.

“I think the constant drumbeat of fraud is very negative for the
field,” he said. “It harms the integrity of the HME supplier whose
interests are aligned with the beneficiary.”

Shortly after the CMS press conference, AAHomecare issued a
statement questioning why it has taken Medicare so long to impose
effective measures to prevent fraud. “It’s important to note that
Medicare has failed to effectively exercise its already ample
authority to combat fraud and abuse. It is time for CMS to shine a
spotlight on its own processes with respect to its ability to
ensure the integrity of Medicare,” the association said.

Several questions should be asked of Medicare officials,
AAHomecare said:

–What is Medicare’s accountability in the program’s inability
to prevent bad actors from obtaining a Medicare supplier number and
the program’s inability to identify billing irregularities?

–Why has Medicare failed to protect taxpayer dollars by
enforcing its current mandates?

–How many fraudulent suppliers have been caught in their first
year or are turned away when applying for a supplier number in
Medicare?

“All I know is that while they are trying to eliminate fraud,
basically what they are doing is torturing and terrorizing the good
providers,” said Lieber. CMS has upped its burdensome requests for
additional documents and employs “scare tactics with demonstration
projects where [providers] have to re-enroll as if they were
already found guilty,” she said.

That, plus competitive bidding and threatened reimbursement
cuts, is causing some providers to ask whether it is worth it to
stay in the business. “I am counseling people to really look at
their core business,” Lieber said. “We can’t rely on the government
anymore.”

The reports are also unfair to beneficiaries because they do not
let people know exactly what the implications of competitive
bidding really are, Lieber said. All the extra service that
providers routinely offer will disappear under competitive bidding,
she said.

“We are one of the only medical communities left that actually
does provide service,” she said. “No more. Somehow, we need to let
them know that all the good that we do right now isn’t going to
continue if they keep cutting … We can’t afford to continue doing
business the way that we are doing it.”