Former SADMERC Director Calls for Stiffer Fraud-and-Abuse Measures

LOUDON, Tenn. — The former medical director of the
Statistical Analysis Durable Medical Equipment Regional Carrier
said this week that in some DME categories — such as
orthotics, prosthetics and wheelchairs — as much as 40
percent of the Medicare funds were paid to fraudulent suppliers.
And, he said, some manufacturers have contributed to the
problem.

Doran Edwards, M.D., of Advanced Healthcare Consulting, a
Medicare consultant to companies after the SADMERC was eliminated
by CMS in favor of the Pricing, Data Analysis and Coding contractor, asserted
that some DMEPOS manufacturers have outsourced production, reduced
standards for equipment and lowered quality in order to maximize
profits.

“Medicare can save billions in health care costs every year by
closing coding loopholes that allow inferior and unregulated
products to be sold as if they were approved durable medical
equipment,” Edwards said.

While CMS is addressing fraud by requiring DME providers to be
accredited by Sept. 30, Edwards said, “the issue of abuse by
companies who make and market defective equipment is not being
dealt with as urgently as needed.”

Edwards pointed out that in just a few years, there will be a
three- or four-fold increase in the number of baby boomers of
Medicare age.

“Without definitive action, the Medicare Trust Fund could be
depleted as early as 2012 or as late as 2020,” Edwards warned.

He added that “better coordination between CMS and the [Federal
Drug Administration] will also enhance Medicare’s ability to stop
paying for products the FDA deems to be unsafe and a risk to
patients (i.e., certain brands of electric heating pads).”

Currently, Edwards said, there is no communication between the
two entities.

He also suggested that another solution to fraud and abuse would
be a “robust HCPCS coding system” that would accurately define
products and services.

Medicare’s policies, he said, are based on the assumption that
all providers are honest, and that has made the program an easy
target for criminals and unscrupulous suppliers. “At present,” he
said, “a surprising number of codes for services and equipment are
vague, making them prime targets for fraud and abuse.”

He said that codes created for good quality, FDA-approved
equipment are sometimes used for low-quality goods, a problem that
is not caught until beneficiaries are harmed or Medicare auditors
spot spikes in code utilization. “Even then, the abusive practice
can be difficult to stop because the poorly defined code may
technically allow the inferior products to use that code,” Edwards
noted. “All of this highlights the need for a combined approach
with better policies, better code descriptions and strict
enforcement on the front end of the Medicare approvals.”

During his time with the SADMERC, Edwards addressed some coding
problems, especially those associated with power and manual
wheelchairs. New power wheelchair coding is now in place, but the
proposed manual wheelchair codes are stalled on the CMS desk (see
“New Manual
Wheelchair Codes in Limbo with SADMERC Transition,”
HomeCare Monday, July 28, 2008).

Edwards strongly believes that they must be approved and that
coding in other categories must be redefined, as well.

“It’s time for a different approach,” he told
HomeCare.