Fraud Hearing: Same Old Same Old Irks Providers

WASHINGTON — After years of trying to educate legislative
and regulatory bodies about the home medical equipment industry,
the HME community was disheartened Tuesday when representatives of
regulatory agencies appearing at a congressional hearing trotted
out the same errant examples of Medicare overpayments to providers
and cited competitive
bidding as an anti-fraud measure.

Rep. Pete Stark, D-Calif., chairman of the House Ways and Means
Health Subcommittee on Health, and Rep. John Lewis, D-Ga., chair of
the Oversight Subcommittee, convened the hearing to “examine the
administration’s efforts, as well as the enhanced tools and
resources, to fight fraud contained in the Affordable Care Act,”
Stark said.

Officials from CMS, the General Accountability Office, the
Health and Human Services Inspector General and the Department of
Justice had an opportunity to lay out their agencies’ plans for
combating fraud and abuse in the massive government program.

It was a remark by Kathleen M. King, director, health care, for
the GAO, that particularly stung HME stakeholders.

“Congress has directed CMS to implement a competitive bidding
program for DME, which could also help reduce fraud, waste and
abuse because it authorizes CMS to select suppliers based in part
on new scrutiny of their financial documents and other application
materials,” she said.

That prompted swift rebuttals from the Accredited Medical
Equipment Providers of America, the VGM Group and the American
Association for Homecare.

“It’s very frustrating that they are promoting competitive
bidding as an anti-fraud measure,” said AMEPA President Rob Brant,
who attended the hearing. “We hope that [legislators] can see past
that and see that … limiting providers is not the answer. It
is not the solution.”

By industry estimates, up to 90 percent of providers in the
competitive bidding areas could be locked out of the Medicare
program.

“To characterize the bidding program as a mechanism for stemming
fraud is extremely misleading,” said Tyler Wilson, president and
CEO of AAHomecare. “The real solution to keeping criminals out of
Medicare is better screening, real-time claims audits and better
enforcement mechanisms for Medicare.

“In setting the record straight, we want to make sure the
government acknowledges that it has done a poor job in enforcement
of up-front controls that would otherwise keep criminals from
defrauding Medicare and tarnishing the name of legitimate home
medical equipment providers,” he added. (View AAHomecare’s anti-fraud legislative plan.)

King did indeed acknowledge that, saying that “CMS has not taken
sufficient steps to prevent entities intent on defrauding Medicare
from enrolling in the program.”

She said CMS itself has estimated that it made improper payments
exceeding $24 billion in 2009 for Medicare fee-for-service.

She ticked off five areas in which CMS must improve in order to
combat fraud, waste and abuse effectively: strengthening provider
enrollment process and standards; improving pre-payment review of
claims; focusing post-payment claims review on most vulnerable
areas; improving oversight of contractors; and developing a
“robust” process for addressing identified vulnerabilities.

Oxygen Singled Out Again

Several agencies cited the accreditation and surety bond
requirements as effective tools for discouraging DME fraud. Those
mandates along with other enrollment requirements and unscheduled
site visits helped to reduce the number of suppliers enrolling in
the Medicare program in 2009 by nearly 15 percent from 2008 levels,
according to Kim Brandt, CMS’ director of Medicare Program
Integrity.

“Combined, these efforts have resulted in a reduction of more
than 16,000 suppliers being removed from the Medicare program in
2009 without any impact to beneficiary access to care,” she
said.

Lewis Morris, chief counsel for the OIG, also upset stakeholders
when he used oxygen as an example of Medicare’s paying too much for
services and products.

“In 2006, Medicare allowed approximately $7,200 in rental
payments over 36 months for an oxygen concentrator that cost
approximately $600 to purchase. Beneficiary coinsurance alone for
renting an oxygen concentrator for 36 months exceeded $1,400 (more
than double the purchase price),” he said.

Lewis made no mention of the 36-month oxygen cap that has been
in place since last year. (View Lewis’ full testimony in PDF format.)

That grabbed VGM’s attention.

“While the primary focus of the nearly three-hour meeting was
curbing fraud in the Medicare program, oxygen providers must once
again go on the defensive and educate their elected officials on
the costs of providing services associated with the Medicare home
oxygen benefit,” officials said in a legislative update.

“A 2006 study (the same time period cited by Mr. Morris) by
Morrison Informatics suggested that the average cost of providing
equipment, supplies, and services for an oxygen patient exceeded
$200 per month,” the update said.

AMEPA’s Brant said he would like a hearing just on oxygen so the
industry could spell out what is entailed in providing it.

“There still is this fight with having them recognize that we
provide a service,” he said. “Medicare is paying for a vehicle but
they are not paying for the gasoline for the vehicle. They never
talk about portable gas, or the $28 a month we get for oxygen and
that could cost the provider several hundred dollars depending on
what the patient needs. They never talk about liquid or portable
systems or all the services we do to take care of the
patients.”

Referring to CMS’ estimate of a near-15 percent drop in provider
enrollment in Medicare, Brant said the number in South Florida,
where he runs North Miami Beach-based City Medical Services, is
more than 50 percent just for oxygen providers.

“We had 401; now we have 196 oxygen providers,” he said, adding
that many were forced out of business by stiffer standards such as
a mandate to have a respiratory therapist on staff.

Despite the wide-of-the-mark assertions by regulatory officials
at the June 15 hearing, however, Brant said he believes the
industry’s efforts to educate legislators have made a
difference.

“The legislators have been educated, and they realize that with
accreditation and the mandatory surety bond, HME has turned the
page,” he said.