Funding Focus

The Government’s Plan for a Scam

The 2010 OIG work plan reflects what the OIG believes to be problem areas in the HME industry.

• By Kelly Riley
• Mar 01, 2010

Far too often, the HME industry gets news of an announcement from the Office of the Inspector General (OIG) related to current business practices. Usually the news is stifling. These announcements are in conjunction with the role the OIG fulfills as it serves the Department of Health and Human Services.

Most recently the OIG published an Updated Special Fraud Alert on Telemarketing by Durable Medical Equipment (“DME”) Companies (the “Fraud Alert”). It appeared in the January 14, 2010, Federal Register.

There is an assertion in the Fraud Alert that suppliers who contact beneficiaries to follow through on a physician’s verbal or written order violate §1834(a)(17), and thereby expose themselves to liability for false claims if they submit Medicare claims arising from those contacts.

The new policy announced in the Fraud Alert leaves virtually every Medicare-enrolled DME provider open to liability for false claims. Requiring DME providers to have a beneficiary’s written authorization before contacting the beneficiary to deliver DME ordered by his or her physician is absurd.

Telephone contact with a beneficiary based on a physician’s order is fundamentally different from the telemarketing activities that Congress addressed when it enacted §1834(a)(17) of the Social Security Act. On the contrary, the provider’s communication, first with the physician and then with the beneficiary, is essential to ensure that the beneficiary receives a DME item that is both medically necessary and appropriate for his or her condition.

It comes as no surprise that the OIG is a powerful and, at times, intimidating force with which to contend. In 1999, the Fraud Control Account program paid off big-time for the OIG by showing a rate of return of 118 to 1! By the year 2000, four years after reporting a 14 percent improper payment rate, the OIG, assisting what was then HCFA, cut that rate in half. Fiscal year 2000 also brought reported savings of more than $15 billion, 3.350 exclusions, 414 convictions and 357 civil actions against individuals or entities who were engaged in fraud against, or abuse of, Federal programs. The Congressional Budget Office cited anti-fraud activities as one of the reasons underlying a 30-year extension of the life of the Medicare Trust Fund!

Each fiscal year, the OIG sets forth a work plan. This plan identifies multiple projects that will be undertaken by a variety of offices, including those of audits, evaluations, inspections and investigations. The plan is reflective of what the OIG believes to be problem areas. The projects that concern those of us in the HME industry are those planned for the Centers for Medicare and Medicaid Services and within the Department of Health & Human Services.

For those providers whose focus is the provision of respiratory services, take a close look internally at these areas cited in the 2010 work plan:

Physician Self Referral for Durable Medical Equipment Services:

Unless exceptions apply, physicians are prohibited from making referrals for designated health services. This includes DME to companies with which the physicians have financial relationships.

Medicare Payments for Various Categories of Durable Medical Equipment:

Specific to the respiratory provider there will be review of appropriateness of payments for oxygen. They will look for documentation that services are reasonable and necessary. There will be specific focus on proof of physician orders, proof of delivery, and documented medical necessity as determined in the policy. There will be added focus in selected geographic areas with high-volume claims.

Medicare Payments for Durable Medical Equipment Claims with Modifiers:

We have seen variations of this focus in previous years. Basically if the supplier is attaching a modifier to the claim, they are indicating that they have the appropriate documentation to support medical necessity on file and can provide it upon request. Unfortunately, reviews of suppliers conducted by CMS’s DME Regional Carriers found that suppliers had little or no documentation to support their claims. This suggests that many of the claims submitted may have been invalid and should not have been paid.

Comprehensive Error Rate Testing Program:

The OIG will review the actions taken by CMS in response to previous recommendations by the OIG regarding the medical review of claims. CMS was recommended to require the CERT contractor to review all available supplier documentation, review all medical records necessary to determine medical necessity AND contact beneficiaries named on high-risk claims. Within this item oxygen would be a specific area of interest and review.

The OIG has come a long way from its early beginnings in France in 1668, when its primary function was to enable the Inspector General to review the troops and report findings back to King Louis XIV. Really, not much has changed; our current Inspectors General deal with waste fraud and abuse in federally funded programs, much the same as in George Washington’s time when they dealt with defective military equipment and mismanagement of our government’s funds.

It is unfortunate that our industry has received this much attention in this area. Take steps to make sure your company is not part of the OIG success story.

This article originally appeared in the Respiratory & Sleep Management March 2010 issue of HME Business.