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.

(This article courtesy Home Care Magazine, Monday Update. www.homecaremag.com)