CMS Launches Anti-Fraud Demo; Industry Asks, What Took You So Long?

BALTIMORE–HME providers in Los Angeles and Miami will face
increased scrutiny under a massive anti-fraud demonstration program
announced last week by CMS. The agency said each provider in the
two metro areas will have to reapply for Medicare billing
privileges and can expect multiple unannounced site visits.

“The point of the demonstration is to keep the fraudulent
providers out of the program before they rip us off,” acting CMS
Administrator Leslie Norwalk said in a July 2 press conference,
which attracted a slew of mainstream media reporters.

Asked why the initiative was being launched, Norwalk replied,
“I’ve had enough.” The story ran last week in newspapers across the
country.

Within three to four months, some 7,700 providers–just under
5,000 from five counties in the Los Angeles area and about 2,700
from Miami-Dade, Palm Beach and Broward counties in south
Florida–will be mailed a notice to resubmit their Medicare form
855S supplier enrollment applications. Failing to do so within 30
days of receipt of the notice would result in “immediate
revocation” of their billing privileges, explained CMS Program
Integrity Group Director Kimberly Brandt.

The remaining applications will be given an enhanced review,
including more aggressive background checks, and CMS said it will
put additional investigators on the job to handle the unannounced
site visits.

“We’re going to make sure we can put some feet on the street,”
Norwalk said.

The pilot will run for two years and, if successful, CMS said it
could expand to other parts of the country. Miami and Los Angeles
were selected as firsts for the program because of a high
concentration of suppliers, and because they have been identified
as high-risk areas for fraudulent billing. A fact sheet from the
Department of Health and Human Services said growth of DMEPOS
providers has nearly doubled over the past two years in those
locations, which it called “major hotbeds” for fraud.

Norwalk said the Medicare Fraud Strike Force, formed earlier
this year to combat program fraud in south Florida, has resulted in
the arrest of a number of area providers since May. (See HomeCare Monday, May 14.)

While previous efforts to thwart fraud have been more reactive,
Brandt added, the demonstration “is an attempt to be more
proactive.”

Getting Rid of HME’s Black Eye
Industry advocates generally applauded the initiative, though many
said the clean-up effort was long overdue.

“These are suggestions that [the American Association for
Homecare] and the provider community made … years ago to crack
down on fraud,” said Wayne Grau, director of rehab industry affairs
for Pride Mobility, Exeter, Pa.

“I think the initiative is good, it’s just 10 years too late,”
said longtime provider Randy Wolfe, CEO of Lambert’s Health Care,
Knoxville, Tenn. “During the 10 years that we’ve been waiting on
them to do this, we’ve had to sit by and watch them cutting our
fees and over-regulating us.”

“What [has the National Supplier Clearinghouse] been auditing
and how could they have allowed these people to exist?” asked Alan
Landauer of Mt. Vernon, N.Y.-based Landauer Metropolitan and
AAHomecare chair. “I think that’s a question that has to be
answered.”

Last month, the association published an open letter to Congress
taking Medicare and its contractors to task for failing “to
effectively exercise their already-existing authority to combat
fraudulent activity.”

Meanwhile, Raul Lopez, director of operations for Bayshore Dura
Medical, Miami Lakes, Fla., and president of the Florida
Association of Medical Equipment Services, said he was happy with
“any type of fair and legal action” to reduce fraud. However, he
said he stressed the word “fair,” and referred to the NSC’s
suspension of 200 provider numbers in Miami last year. According to
attorneys and providers, many of the suspensions were without
appropriate cause. (See HomeCare Monday, Jan. 22.)

Though reapplying for billing privileges is “kind of a
nuisance,” Lopez said–particularly for Miami providers preparing
for competitive bidding and accreditation–“the re-enrollment in
and of itself isn’t a huge problem. It’s basically just
documentation which you should already have on file.”

Bob Achermann, executive director of the California Association
of Medical Product Suppliers, said that “it does the industry well
to have these bad providers out of the program, but in the meantime
it also creates a lot of additional paperwork and administrative
requirements for legitimate companies.”

During Monday’s press conference, Norwalk cited several
egregious examples of DME fraud, including Medicare’s paying $2
million for a single wheelchair billed over and over, and one
supposed provider with a sham location who used taxpayer money to
buy a Rolls Royce.

However, she also said that “legitimate suppliers are given a
bad name because of this fraud” and that the effects of fraud are
“tough” on them, which some mainstream news stories noted.

With the industry’s current push for the Tanner-Hobson bill
(H.R.1845), intended to minimize the effects of competitive
bidding, some sources worried that the headlines might hurt chances
for action on the measure.

But, said Grau, “I don’t think it’s going to have a huge effect
because the industry for five years has been beating the drum that
we need to institute a number of things to help get rid of the bad
apples in our industry.” With 83 cosponsors, some of H.R. 1845’s
provisions could be attached to Medicare legislation that may be
debated in the next few weeks, Grau said.

Wolfe, however, urged continued vigilance.

“It shouldn’t hurt, but if you read the mainline press that is
out this week, we don’t look very good,” he said. “If you don’t
separate those people from us, then things like Tanner-Hobson have
a more difficult chance of passing. We have to make sure that
doesn’t happen, because that’s wrong.”

For an HHS fact sheet on the demonstration project, click here.