Lambert’s Ready to Take on the Government–Again

REDDING, Calif.–A California HME provider who sued the
Department of Health and Human Services over K0011 wheelchair
documentation–and won in federal court–is now taking on the
Medicaid program over a little-known law that appears to invalidate
Medi-Cal fee schedules.

Tom Lambert, president of Maximum Comfort in Redding, said some
Medi-Cal auditors are telling providers they are violating state
law by submitting power wheelchair claims that exceed state law
limits, even though the claims adhere to Medi-Cal fee schedules
and, in many cases, have been pre-approved. The agency is asking
for the money back, to the tune of $469,000 in Lambert’s case.

A source who asked not to be named said at least 12 providers of
power wheelchairs have been assessed between $50,000 and $500,000
in repayment for alleged overbilling dating back to 2004. Letters
received by providers from Medi-Cal clearly state that the
repayment is not being sought because of fraudulent claims, but
because of unintentional overbilling.

The repayment notices couldn’t have come at a worse time.
Providers in California are still recovering from lengthy delays in
receiving reimbursement when Noridian Administrative Services took
over as the Jurisdiction D Medicare contractor early this year. And
the state of California is more than a month behind in its payments
because legislators could not agree on a budget until a week
ago.

“I’m getting calls from providers from all over,” Lambert said.
“We need to try to get a moratorium on [audits and recovery
actions] so we can sit down and re-educate everyone. We’re dealing
with two sets of instructions here. They can’t have it both
ways.”

At issue is Title 22, a state law passed in 2003 that
establishes upper billing limits for HME. According to Bob
Achermann, director of the California Association of Medical
Product Suppliers, the law was enacted as a way of combating
Medi-Cal fraud.

“This was done at a time when the state was paying $4 for heel
protectors and they were costing providers eight cents,” Achermann
said. “[Legislators] thought that the only thing they could do was
to put a cap on what a provider could charge.”

While CAMPS fought the effort and succeeded in getting a
carve-out for rental HME, Achermann said, Title 22 was nevertheless
enacted. It essentially places a ceiling on what providers can bill
Medi-Cal; what that ceiling is, however, is a point of debate.
Lambert said he understands the ceiling is 100 percent above
invoice for power wheelchairs and accessories and 67 percent above
invoice for all other HME. Achermann said the limit is 100 percent
across all HME.

Either way, those limits appear to be in conflict with the
published Medi-Cal fee schedules.

“If a dealer buys a power wheelchair, the average cost is $1,500
to $1,800 and he’d bill about $4,800 under the fee schedule,”
explained Lambert. “But the maximum under the state law would be
$3,000 to $3,600, so by billing under the fee schedule, you’re
violating the law.”

Providers contend they either knew nothing about Title 22 or
thought it was superseded when, in 2004, California adopted a fee
schedule that was no more than 80 percent of that allowed by
Medicare. For Lambert, as for other dealers, the discrepancy came
to light during a recent audit when the auditor, after reviewing
Lambert’s invoices and documentation, informed him he was in
violation of Title 22.

Lambert, who had been audited the previous year without
incident, questioned the auditor’s assertion. The only way to
adhere to the Title 22 regulation would be to do manual pricing and
submit catalogs or invoices with each claim, he said.

“What they are saying is that we should be doing manual pricing
[and] submit our invoices with these requests so they can figure
out what [the reimbursement should be], but that’s not required. No
one is asking for it,” Lambert said.

In fact, he and other stakeholders pointed out, Medi-Cal’s own
Web site clearly states that no manual pricing and no catalog or
invoice is required if there is a code for the product. Products
with codes are simply billed electronically. Further, when the 2004
changes were made, providers were instructed to bill the
allowables, they said.

Lambert also questioned why the fee schedules themselves do not
adhere to state law. “If you have a state law, the bureaucrats
don’t have the authority to do it another way,” he said. “But who
do you listen to? We are following [Medi-Cal’s] directions to the
‘T’ and getting into trouble because of it … I don’t think that
since I was doing it by the book, I should have to repay
$469,000.”

Achermann agrees that the whole issue is confusing and perhaps
even unfair. To date, CAMPS has heard complaints from half the
providers who have so far been hit with repayment notices. “We
think the auditors are using some [unusual] interpretations of the
provision,” he said. “We don’t think they are interpreting it
correctly.”

Achermann did not rule out further discussions with the
California Department of Health Services on the matter.

Lambert said he had written a letter to that state agency
complaining about the billing issue and was told to take his case
to the Joint Legislative Audit Committee. “We have to go through
the interior appeals process before we can go to a state or federal
court,” he said. “Meanwhile, [Medi-Cal] has offset $165,000 from
us. We’ve asked for a payment plan, but we haven’t heard a
thing.”

Lambert said he wants to form a coalition of providers to work
to settle the issue. He’s contacted some providers by phone and
others by letter.

“For the past two years, the state of California has been
auditing dealers and found that most dealers were … billing
listed, coded items with a price on file electronically rather than
manually pricing at a percentage over cost and filing a paper
claim,” Lambert wrote in his letter. He added that by billing in
this manner, providers “have probably exceeded the upper billing
limits set by state law.”

He cautioned that “rather than taking any action to resolve the
problem that exists at every level of the Medi-Cal system … and
re-educating everyone within the system, they have chosen to go
after dealers, one at a time, who are simply following the billing
instructions of the California Department of Health Services.”

Already, Lambert said, nine other HME companies have pledged to
pay into a legal defense fund should one become necessary.

While the issue currently affects only power wheelchair
providers, stakeholders are fearful that it could spread to
encompass all of HME.

“Theoretically, it could apply to anything,” Achermann said.

Lambert believes it will. “The ones that haven’t been hit yet,
it’s just a matter of time,” he said.

Lambert, who has been in business since 1989, doesn’t really
relish having another battle on his hands. In 2003, he sued HHS for
requiring additional documentation beyond a CMN for K0011 claims. A
U.S. District Court judge sided with Lambert in a June 2005
decision. HHS appealed that decision; the appeal is still under
review in the 9th District Court of Appeals.

It will take some months, perhaps years, before that case is
finally resolved, Lambert said.

Ironically, he has worked to pare his reliance on Medicare
revenue and now deals more with Medi-Cal. But Lambert has no
intention of giving up on HME.

“I chose when to get into this business and I’ll choose when to
get out,” he said.

For details of Lambert’s fight with the government over power chair
CMNs, see
HomeCare Monday, July 12, 2004.