Home Health & Hospice Week

OIG paints DME industry with broad fraud brush -- make sure your ads aren't on the easel.

A festival of finger-pointing between federal agencies took place at a recent Senate hearing on power wheelchair fraud and abuse in the Medicare program, and suppliers were often the targets.

The HHS Office of Inspector General and the General Accounting Office blamed the Centers for Medicare & Medicaid Services for ignoring warnings of wheelchair fraud since 1997 and failing to act on the fraud until it reached mammoth proportions. And all three agencies blamed the industry for its part in the fraud.

"Our office has devoted considerable resources to conducting investigations, evaluations and audits in the area of medical equipment and supplies," the OIG's Dara Corrigan testified in the 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."

Corrigan insisted the wheelchair fraud issue was "the latest in a long line in the medical equipment area that the OIG has taken concerted efforts to address." The OIG spends a "disproportionate" amount of its investigative resources on medical equipment, she added.

"We respectfully caution about drawing overgeneralizations of our industry," American Association for Homecare CEO Kay Cox said in her testimony. Most durable medical equipment suppliers are honest and hard-working providers who comply with the law, Cox maintained.

"Most suppliers and most manufacturers are putting in an honest day's work and submitting accurate bills to the federal government for payment," Senate Finance Chair Charles Grassley (R-IA) said in his opening statement. "They are playing by the rules."

Ads Should Be Free of 'Free'

Warning: Advertising activities by wheelchair suppliers especially raised the feds' ire, according to their prepared testimony. "Almost one-quarter of beneficiaries who responded to our survey learned about their power wheelchair suppliers from a television commercial," the OIG noted in one of the reports it released the day of the hearing (OEI-03-02-00600). Another 9 percent chose their suppliers after receiving mailings, and 4 percent obtained their power wheelchairs from suppliers who visited their homes, according to the OIG.

"Aggressive direct-to-consumer advertising" is "largely" responsible for the increase in power wheelchair utilization, CMS concurred in its response to the OIG report. Suppliers' advertising has been "abusive and misleading," the GAO's Leslie Arnovitz said in hearing testimony.

The one word you should never use: The GAO was critical of any ads that mentioned the word "free" in connection with a Medicare-covered power wheelchair, regardless of what the specific message was. The watchdog also censured some clearly prohibited activities, such as paying beneficiaries kickbacks in exchange for ordering wheelchairs on their behalf.

Beneficiaries were confused over the products they received and how much Medicare would be charged, the OIG criticized.

CMS In the Hot Seat

Suppliers weren't the only ones with a black eye from the hearing. CMS itself took harsh criticism from the GAO and OIG for its role in the rise of wheelchair fraud.

CMS ignored repeated warnings from the statistical analysis DME regional carrier (SADMERC) and the four DMERCs that power wheelchair utilization was out of control, the GAO accused. The warnings reached back as early as 1997.

Funding for DMERC medical review decreased 22 percent from 1999 to 2003, and Region C DMERC Palmetto GBA was especially overloaded with claims volume, the GAO maintained. CMS issued a 1998 fraud alert about power wheelchairs, but did little else to curb related fraud and abuse, the GAO blasted.

CMS' Herbert Kuhn insisted the agency took "swift action" to address fraud once CMS became aware of it. Fraud patterns are hard to detect due to claims payment system intricacies, Kuhn argued.

CMS attempted to shift blame at least partially to suppliers. The DMERCs tried to implement additional medical review requirements such as required physical therapy notes or evaluations for all wheelchair claims, but the power wheelchair industry stood in the way, Kuhn told the committee. "The power wheelchair industry objected to the increased scrutiny due to excessive administrative requirements, thus stalling actions on an industry-wide basis," he said.

Editor's Note: Hearing statements are at http://finance.senate.gov/sitepages/hearing042804.htm.