Redding, Calif. It tells like a John Grisham novel. A small-town provider and a local lawyer with no legal experience in HME bring a case against the

Redding, Calif.

It tells like a John Grisham novel. A small-town provider and a
local lawyer with no legal experience in HME bring a case against
the federal government and, through sheer tenacity, last longer
than anyone expects.

During the past several years, Tom Lambert, president of Maximum
Comfort, has sold his house and put his company through bankruptcy
reorganization to pay for a drawn-out legal battle over exactly
what documentation is required for Medicare DME claims
reimbursement. And in late June, a federal judge in California
issued a preliminary ruling in Lambert's favor, stating that a
properly completed certificate of medical necessity (CMN) is the
only proof necessary for claims payment.

In his ruling, Judge Lawrence Karlton of the U.S. District Court
for the Eastern District of California said the government cannot
require suppliers to obtain beneficiaries' medical records or to
make a judgment about whether DME is medically necessary.

The decision is the latest bout in a fight that began in late
1999, when, after an audit of the company's 1998 and 1999 claims,
the Region D DMERC began investigating Lambert's business for K0011
over-utilization. While CMNs were provided with the claims,
post-payment reviewers said the supplier had failed to submit the
additional documentation necessary to establish medical necessity
for the power wheelchairs, and concluded that Medicare had overpaid
Maximum Comfort more than $785,000.

After the company appealed, two administrative law judges (ALJs)
ruled in Lambert's favor, but the Medicare Appeals Council
subsequently reversed the ALJs' decisions. Lambert then filed suit
against the Department of Health and Human Services (HHS), and the
case ultimately ended up in front of Judge Karlton in federal
court.

Decision Sets Precedent

While Congress granted the HHS Secretary “broad discretion
over the criteria required to prove medical necessity,” the
judge wrote in his ruling, he continued that the existing statute
“plainly specifies that Congress intended that whatever
information may be required by carriers from suppliers to show the
medical necessity and reasonableness of DME must be contained in a
CMN.”

Once final, the ruling would have binding authority only in the
district where the judge presides, but according to Jim Walsh,
president of VGM Management, Ltd., and general counsel to The VGM
Group, Waterloo, Iowa, the decision “has a huge psychological
impact. Somebody has said the emperor has no clothes.”

In fact, the decision has become a subject of debate among
industry stakeholders. While some say corroborating medical
documentation is vital for preventing fraud, others insist there
are problems with the CMN, which should ask the right questions and
provide space for doctors to explain the product's medical
necessity.

According to Lambert, physicians, not suppliers, should be
making the decisions about the medical necessity of DME. “The
government can ask the physician, [who would be] under penalty of
perjury, anything on that CMN.”

Walsh noted that the ruling puts the agency in a tough position.
If CMS can't police HME providers on medical necessity, whom can
the agency police? “The theory Congress relied on was
doctors, but doctors are very poor gatekeepers when it comes to
medical equipment. They don't know what it is; they don't
understand it and have no motivation to fight the patient who wants
it. It's a dilemma for CMS … but its solution to put the
providers at risk [by making them responsible] wasn't fair
either.”

According to a statement from the Restore Access to Mobility
Partnership (RAMP), “the ruling in California should spark a
reform effort that establishes a new documentation policy for
processing claims filed on behalf of Medicare beneficiaries. While
[CMS] is currently reviewing coverage policy issues with an eye
towards announcing changes by the end of the year, the California
case … underscores the need for CMS to (a) issue an interim
clarification to resolve problems currently being encountered; (b)
include the documentation issue as part of their ongoing review;
and (c) work with the industry to devise a policy that is fair to
suppliers and better serves patients in need of powered
mobility.”

RAMP members include the American Association for Homecare,
Invacare, The MED Group, Mobility Products Unlimited, Pride
Mobility, The Scooter Store and Sunrise Medical.

Don Clayback, vice president of networks for The MED Group,
Lubbock, Texas, said the district court decision will focus CMS'
attention on its power wheelchair CMN. “We need to work with
CMS to give them input on what is the appropriate criteria so that
the CMN does prove to be an effective piece of documentation and
not something that would create the opportunity for abuse,”
he said. “We need that appropriate balance between too much
documentation and too little.”

For legal help when the case began, Lambert turned to Bart
Fleharty, a partner with the Redding law firm of Wells, Small and
Selke. “When we started, this guy didn't know a wheelchair
from a flying saucer,” Lambert said, but the pair thought the
case “was pretty simple if you just read the law.”

According to Fleharty, a challenge during the case was for
Maximum Comfort “to stay fiscally alive.” During the
appeals process, Maximum Comfort began paying back what Medicare
said it owed. CMS began pre-reviewing all of its K0011 claims, and
the company's power wheelchair sales dropped 90 percent. Legal fees
topped $130,000 last year.

In June 2003, Maximum Comfort filed for bankruptcy and is only
now emerging from the action. Lambert sold his home and an
investment property. His business has shrunk from five branches to
four, and from 48 employees to 22.

“We're a shell of what we used to be,” Lambert said.
“[But] we didn't see anywhere we could compromise. I had to
keep going, because I knew I hadn't done anything wrong.”

“We're recommending appeal, of course,” said Ana
Maria Martel, the assistant U.S. attorney for the Eastern District
of California in Sacramento who represents HHS. “The judge is
wrong because HHS has the right to audit and request additional
medical documentation that shows, in fact, that the CMN was issued
correctly. If [the government] can't ask for additional
documentation … [it will] have to audit first before paying,
and can you imagine what havoc that will cause on the system?

“It will substantially slow down the processing of claims,
and suppliers will have to wait months before [Medicare] pays, as
they do with private insurers.”

The court ruling will remain preliminary until Judge Karlton
reviews Maximum Comfort's request to get back the funds the company
repaid to Medicare. After he issues a final ruling, the government
has 60 days to file an appeal.

“I've been getting offers of financial help for the
appeals,” Lambert said. “I'm hearing people say it's
important for the industry that I stay in business. It looks like I
won't be on my own anymore.”

A CMS spokesperson said the agency had, at present, no
comment.

For more, see “Washington Wit & Wisdom” on
page 48
.

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