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Compliance:

SUPPLIERS BRACE FOR CONTINUED SCRUTINY BY FEDS

Published on Thu Jun 24, 2004

If you're not on your best behavior, it could mean criminal charges.

It's not just your imagination -- the feds are coming down especially hard on durable medical equipment suppliers these days.

Just take a look at the HHS Office of Inspector General's latest semiannual report to Congress. In the OIG's examples of enforcement actions from October 2003 to March 2004, other providers such as hospitals and nursing homes are described as having mostly civil settlements involving corporate integrity agreements or restitution.

In contrast, "with one exception, all of the listed items [for suppliers] involved a criminal plea or a conviction," notes attorney John Wester with Sidley Austin Brown & Wood in Washington, DC. "The range of suppliers and conduct covered by the criminal cases indicates the OIG and the Department of Justice are devoting significant attention to the DME sector," Wester warns.

Bad Reputation Plagues Suppliers

Suppliers such as those highlighted in the OIG report are making life harder for everyone, laments attorney Seth Lundy with Fulbright & Jaworski in Washington, DC. "There are a small number of bad actors whose activities are so egregious that they raise the level of scrutiny for all other suppliers," Lundy tells Eli.

Being painted with a broad fraud brush, thanks to the few rotten apples, is a "significant issue facing all DME suppliers," Lundy cautions.

The OIG has made no secret of the fact that it has it in for the industry. The watchdog agency "has devoted considerable resources to conducting investigations, evaluations and audits in the area of medical equipment and supplies," the Acting IG Dara Corrigan testified in an April 28 hearing held by the Senate Finance Committee. "This area of the Medicare program has been particularly susceptible to fraud, waste and abuse over the years" (see Eli's HCW, Vol. XIII, No. 17).

And of course lately, power wheelchairs have been investigators'favorite target area. The OIG lists in its report two high-profile Florida cases resulting in millions in restitution and jail time for eight individuals. In one of the cases, the supplier submitted Medicare claims for power wheelchairs "that were either not provided, were used or refurbished but billed as new, or were exchanged for less expensive scooters," the OIG recounts. The supplier also billed for unnecessary repairs of the equipment and paid kickbacks for wheelchair referrals.

These will be far from the last wheelchair cases splashed across newspaper headlines, predicts attorney Clay Stribling with Brown & Fortunato in Amarillo, TX. "In addition to the Florida cases cited in the report, high profile cases in Houston and Dallas indicate that power mobility fraud enforcement will continue to be a priority," Stribling says.

"There are a small number of bad actors whose activities are so egregious that they raise the level of scrutiny for all other suppliers." -- Seth Lundy, attorney Fulbright & Jaworski

Other topics in the OIG report include:

  • Medical necessity. The OIG lists the example of St. Louis, MO-based Unity Health Services, which agreed to pay $877,000 for submitting claims that lacked the required medical necessity documentation (see Eli's HCW, Vol. XIII, No. 1). The equipment at issue was wheelchairs, hospital beds, oxygen, enterals and continuous positive airway pressure devices.

    Suppliers often are stuck between a rock and a hard place when it comes to medical necessity documentation. "Suppliers are not in a position to determine medical necessity and must rely on statements and orders from the physician," Lundy points out. But when physicians can't produce the documentation, it's suppliers who are on the hook. "The supplier's claims will be denied," he notes.

    DME regional carrier audits for medical necessity, and the cash flow interruption they cause, is bad enough, Stribling notes. But fraud and abuse charges can be even worse. "Suppliers must also face the possibility that certain cases of insufficient documentation could lead to scrutiny by the OIG," he warns.

  • Self-disclosure. The one thing that did make Unity's case less harsh was the fact that the provider self-disclosed its documentation problems, Wester highlights. "The one non-criminal case" listed in the report "resulted from a supplier's voluntary disclosure of the matter," he stresses. That emphasizes the OIG's desire "that suppliers who identify problems internally take action to correct the problems, and avoid turning a possible billing problem into a potential criminal matter."

  • Enteral nutrition. Abbott Laboratories' massive $615 million settlement with the government over enteral nutrition products should spur suppliers to check over their own related policies carefully, Stribling advises. Abbott's Ross Productions Division was accused of paying kickbacks to the purchasers of enteral nutrition -- often suppliers -- with a number of creative reimbursement schemes (see Eli's HCW, Vol. XII, No. 27).

    Those tactics included "conditioning the sale of enteral nutrition sets on the purchase of enteral nutrition feeding pumps; failing to collect rental payments for the sets and pumps; and paying 'conversion bonuses'that bore no relation to the actual cost of converting from one manufacturer to another," the OIG explains.

    "The Abbott settlement should encourage all suppliers who provide enteral products to review their pump rental policies and procedures," Stribling urges.

  • Kickbacks. In another case listed, a DME company co-owner took patients to doctors'offices and offered them gifts to obtain prescriptions for orthotics and incontinence supplies, the OIG says. One of the owners was sentenced to 46 months in prison and the other to one year in prison. They were ordered to pay more than $200,000 in fines and restitution.

    Editor's Note: The OIG report is at http://oig.hhs.gov/publications/semiannual.html.

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