WASHINGTON--Once again, stories of DME fraud and abuse showed up in headline news last week following the release of a report by the HHS Office of Inspector General, which found that, in Los Angeles County alone, 115 of 905 suppliers (13 percent) did not maintain physical facilities or were not open during unannounced site visits.
The report, released just days before the industry took to Capitol Hill during AAHomecare's Washington Legislative Conference Thursday, was reported by The Associated Press and also detailed in a March 3 story in the Los Angeles Times. It added to the string of negative press reports on fraud in the industry, which has received recent drubbings from the New York Times, National Public Radio and "NBC Nightly News with Brian Williams." (See HomeCare Monday, Dec. 17, 2007.)
But while the mainstream press continues to focus on fraud, HME advocates are asking tougher questions, namely "Why are the good providers never recognized?" and "Where was the National Supplier Clearinghouse in all of this?"
"The frustration we have as an industry is where was the NSC for all of these years?" questioned consultant Mary Ellen Conway, president of Capital Healthcare Group, Bethesda, Md. "You get your Medicare supplier number from the NSC, and they are required to pay a site visit and ensure you are a legitimate business--so where have they been?"
John Gallagher, vice president of government relations for Waterloo, Iowa-based VGM Group, echoed similar questions about the NSC's role in preventing fraud, and wondered why it is that fraud reports always seem to surface when the industry is taking steps toward action.
"It is not by coincidence that this story comes out at this time," Gallagher said. "You may recall last year prior to [Congress'] vote on the 'doc fix' that a fraud story came out at that time. Each time when crucial activity is happening on the Hill and DME is in the sights by Congress for offset [funding], out comes a fraud-and-abuse story in some paper with no names, just sources from HHS or CMS or 'congressional staff.'"
Wayne Stanfield, president and CEO of the National Association of Independent Medical Equipment Suppliers (NAIMES), responded with a letter to LA Times writer Molly Hennessy-Fiske outlining the industry's position. In the letter, Stanfield states:
"While we totally support any actions to rid the industry of fraud and abuse in any form, it is the criminals such as you talk about that tarnish the good name of the tens of thousands of quality suppliers.
"The piece of the puzzle left out of your article is that NO company can bill Medicare for anything until Medicare and their contractors approved them and issues the suppliers numbers allowing them to bill. If there are fraudulent companies doing fraudulent billing, it is because CMS does not hold its own contractors accountable for their actions. The OIG has routinely reported problems [in] the oversight of Medicare with little results from such reports. Creating more barriers for entry will not resolve the problem, but enforcement of the existing standards and policy will.
"The timing of articles such as yours always seems coincide with efforts by the true suppliers, caring for the millions of Medicare beneficiaries, to raise awareness and affect change to policy through lobby efforts. This article just happens to precede the industry Legislative Conference in Washington this week."
While coverage of the OIG report was mostly negative, one quote from CMS Program Integrity Director Kimberly Brandt shows the industry's message about legitimate providers has not gone completely unheard. When asked about the fraudulent providers, Brandt told the AP, "These aren't real medical suppliers."
For its report, the OIG focused on four requirements: 1) suppliers must maintain physical facilities; 2) be accessible during business hours; 3) have visible signs; and 4) post hours of operation. Suppliers' billing patterns also were analyzed.
The report stated 30 of the investigated suppliers did not maintain physical facilities, and 85 were not accessible during business hours. The OIG said Medicare allowed $21 million in the 12 months beginning July 1, 2006, for these suppliers' claims.
In addition to the findings on vacant facilities and unmanned offices, another 79 suppliers (9 percent) were open but did not meet at least one of the two additional requirements: 78 suppliers did not post hours of operation, and five suppliers did not post signs indicating a business name. Four suppliers did not meet either requirement.
An additional 124 suppliers (14 percent) met the requirements, but the OIG noted their claims had in common an "atypical" characteristic: More than half of the Medicare beneficiaries for these companies did not receive other Medicare services (such as an office visit) from the ordering physician within a six-month period preceding the claim.
Even though CMS is requiring all DMEPOS suppliers in the Los Angeles and South Florida areas to re-enroll with the NSC as part of a two-year anti-fraud demonstration, both Conway and AAHomecare Vice President Michael Reinemer said the recent report findings mean that California can expect a deluge of scrutiny in the future.
"There has been a serious, well-known fraud problem in Los Angeles where criminals have posed as legitimate DME providers, so this story about the OIG action is no surprise," Reinemer explained. "Similar steps have been taken in South Florida."
"They're targeting California and South Florida as high-fraud areas," said Conway, noting that seven of the 70 MSAs selected for round two of competitive bidding are located in California. She added that findings such as those in the OIG report are what's fueling CMS' push toward new and revised supplier standards.
"This reinforces what they are trying to establish in the new supplier standards. This is why: One in eight [of the investigated companies] weren't even present for their review," she said. "Little teeny providers now have to do more because of these incidences. When someone screws up, now everyone's going to pay for the rest of the life of their business."