Combating Fraud and Abuse: What’s Next in the Battle

ATLANTA–Amid its trumpeting of the need to squelch fraud and
abuse in Medicare’s DME sector, CMS has recently taken steps that
some industry stakeholders see as contrary to the cause–namely,
reappointing Palmetto GBA as the National Supplier Clearinghouse
and dropping accreditation deadlines for round two of competitive
bidding.

The American Association for Homecare has been vocal about the
organization’s stance on both Palmetto’s continuing contract and
the discarding of the accreditation dates. On each count,
AAHomecare leadership says CMS is essentially shooting itself in
the foot when it comes to preventing fraud and abuse.

“You have to wonder whether the focus on DME is designed
to shift attention away from the failure of CMS to use its existing
authority and tools at its disposal to ferret out and stop fraud
against Medicare,” said AAHomecare President and CEO Tyler
Wilson.

“CMS has just renewed its contract with Palmetto GBA, the
private company that serves as the National Supplier Clearinghouse
for Medicare. Palmetto serves as the gatekeeper for issuing and
renewing DME Medicare billing privileges and is required to
establish and maintain programs to prevent and detect fraud. The
renewal raises the question, ‘Why is a contractor that has failed
miserably being rewarded with another contract?’”

In reference to mandatory accreditation, AAHomecare issued a
statement declaring its opposition to the CMS decision to drop the
round two deadlines: July 21, 2008, for providers who wished to
submit bids; and Jan. 14, 2009, for those who wanted to be
considered for contracts. (See HomeCare Monday, July 28.)

Reasoned Wilson, “Accreditation for this industry is 30
years overdue. If the federal government wants to get serious about
preventing fraud and preventing theft of taxpayer dollars, it
should use tools like accreditation more aggressively and use its
ample, existing authority much more effectively.”

Some Republican senators are looking at the fraud issue on their
own.

On Monday, the Senate Republican Conference held a hearing on
Medicare fraud presided over by Sens. John Cornyn of Texas and Mel
Martinez of Florida. While the hearing was designed to address
Medicare fraud on all levels, AAHomecare’s Michael Reinemer, vice
president of communications and policy, said the meeting missed its
mark.

“To their credit, the number of senators that spoke
pointed out that Medicare fraud cuts across a wide spectrum of
areas including physicians, labs, dentists, billing agencies–not
just DME. And to his credit, [Iowa Sen. Charles] Grassley mentioned
three or four reasons why competitive bidding was halted related to
the exclusion of providers and all of the administrative snafus
that occurred,” said Reinemer, who attended the hearing.

“However, the witnesses trotted out the same sorry litany
of DME examples, even though by their own accounting, DME fraud
represents less than 1 percent of the total [annual] Medicare
fraud.

“This hearing should have focused on the real, significant
causes of fraud. Instead, there were just some passing references
to other areas [of fraud] but they spent an inordinate amount of
time on wheelchairs and oxygen. It was way disproportionate to
their own accounting of where the majority of the fraud is
occurring,” Reinemer said.

According to government figures, Medicare loses approximately
$70 billion annually to fraud. Of that, approximately $700
million–less than 1 percent–is from fraudulent DME claims.

The focus on DME, Reinemer said, is “absurd.”

“The DME fraud, while abhorrent, is like a pimple on an
elephant. If it wasn’t so tragic it would be comic that these guys
spent so much time looking at the pimple and not the
elephant,” he said.

Regarding CMS’ recent actions, Joan Cross, director of
operations at Bradenton, Fla.-based C&C Homecare and former
president of the Florida Association of Medical Equipment Services
(FAMES), said she approves of Palmetto’s contract renewal and feels
that the Sept. 30, 2009, mandatory accreditation deadline for all
DMEPOS providers is acceptable.

“I liked CMS re-signing Palmetto,” said Cross, who
serves as chairman of the industry’s National Supplier
Clearinghouse Advisory Council. “Better the devil you know
… They may not always be able to do something about [a problem],
but they do take it back to CMS. They seem to be trying really hard
to do a good job. It’s hard. It’s a big industry. We don’t need any
more changes.”

She went on to say that, while “accreditation is certainly
closer to the answer for fraud than anything they’ve done thus
far,” she doesn’t think elimination of the round two accreditation
deadlines is a major concern.

“What difference does [it] make? Everyone has to be
accredited by Sept. 30, 2009. That’s only one year from now,” Cross
said, “so what’s the big deal [with dropping the other
dates]?”

All parties agree, however, that something must be done to
combat Medicare fraud.

Reinemer said AAHomecare is making some progress with
legislators.

“We are working with Sen. Cornyn and Sen. Martinez toward
some common-sense solutions to preventing fraud. There are some
constructive conversations … trying to ensure that anti-fraud
initiatives are effective and aimed at the right areas,”
Reinemer said.

He also said that a new bill–the Seniors and Taxpayers
Obligation and Protection Act (S. 3164) introduced in June by
Cornyn and Martinez–may yield some positive results.

The bill “is about helping to prevent fraud at the front
end of the process,” Reinemer said. “It’s designed to
implement some screens at the front end before payment is made
instead of the current system of ‘pay and chase’ where you pay and
then try to track them down afterwards,” Reinemer said.

According to AAHomecare, the “STOP” bill would establish a
system for unique identifiers of certain durable medical equipment,
urge HHS to implement the DME surety bond requirement that was
enacted in the Balanced Budget Act of 1997, require monthly
verification of the accuracy of charges for physicians’
services, provide for a study of real-time data review and amend
the Medicare enrollment application. 

For a summary of the bill’s provisions, see “STOP Act Aims to
Curb Medicare Fraud” in this issue.