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by: Mike Moran - Wednesday, August 27, 2008

The days of writing about competitive bidding may be over (temporarily, at least), but it looks like the days of writing about fraud have just begun. In the past two months alone:

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*Two senators have pledged to make fraud prevention and detection a priority in the next Congress;
*The GAO has released a report detailing its success in getting two sham HME companies approved for Medicare billing privileges; and
*The OIG has released a report that criticizes Medicare's lackluster audits of HME claims (See blog below).

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Now you can add these, which happened this week:

*Rotech has agreed to pay $2 million to settle a Medicare fraud claim; and
*Sen. Charles Grassley, R-Iowa, has sent a letter The Notebook movies Twilight dvdrip to CMS demanding a "full accounting" of improper payments.

by: Mike Moran - Thursday, August 21, 2008

When the Government Accountability Office (GAO) released a report earlier this month that detailed how it was able to get two sham HME companies approved for Medicare billing privileges, the industry cheered. See, they said, CMS is partly to blame for fraud and abuse. For once, the industry was pointing fingers, instead of the other way around.

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A forthcoming report from the Office of Inspector General (OIG) could thicken the plot. Charles Duhigg of the New York Times, who obtained a draft of the report, wrote yesterday that Medicare had AdvanceMed Corp., the contractor in charge of its auditing program, "cook the books" in 2006 to make it appear that it had reduced the number of fraudulent and improper claims.

Here's how it happened, according to Duhigg:

"In calculating the agency’s rate of improper payments, Medicare officials told outside auditors to ignore government policies that would have accurately measured fraud, according to the report. For example, auditors were told not to compare invoices from salespeople against doctors’ records, as required by law, to make sure that medical equipment went to actual patients.

As a result, Medicare did not detect that more than one-third of spending for wheelchairs, oxygen supplies and other medical equipment in its 2006 fiscal year was improper, according to the report. Based on data in other Medicare reports, that would be about $2.8 billion in improper spending.

That same year, Medicare officials told Congress that they had succeeded in driving down the cost of fraud in medical equipment to $700 million."

The Descent trailer This report could both help and hurt the industry. Like the GAO report, it shows that CMS doesn't have its act together, not even close. But it also shows that any beliefs members of Congress had that fraud and abuse was on the decline may have been hot air. Now members of Congress like Sen. Charles Grassley, R-Iowa, and Rep. Pete Stark, D-Calif., are hopping mad.

The report will likely be made public next week.

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by: Mike Moran - Tuesday, August 19, 2008
Feeling no need to pontificate this late on a Friday, here are a few interesting reads:

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This means providers in California who do business with Medi-Cal will start getting paid again.

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Individuals and clients in parts of Texas have been extended a number of relief measures, including "guidelines for durable medical equipment and supplies replacement will be modified to allow earlier replacement should the item be damaged, lost or destroyed."

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by: Mike Moran - Friday, August 15, 2008

In mid July, just after Congress delayed national competitive bidding, I received an email from Mr. X, a well-known but secretive industry insider who delights in giving me a hard time. When his e-mail showed up in my box, I thought: Jeez, Bubba, what is it this time?

He wrote:

“Mike, what role will HME News play in getting the story out that with

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I wrote back:

The Breaks rip “Dear Mr. X, that’s simple: The HME Expo & Conference, April 21-23, 2009 in Baltimore. HME News is co-producing this event with Access 180 (a group of trade show professionals with a long history in our industry). We’re creating the Expo from scratch with the goal of helping providers change their business model to accommodate decreased reimbursement. I see this 18- to 24-month bidding delay as a major opportunity for the entire industry. This should be an incredibly exciting time for all of us.”

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I stopped for a minute to think and then continued.

“Recently, I began calling providers and asking them what they want the HME Expo's educational offering (which HME News is developing) to look like. It's all about the bottom line, they said. Providers don't want a comparison of portable oxygen concentrators. They want to know how they can make their billing departments more efficient. They don't want to know how to sell their company; they want to know how to grow it. They want to know how to use technology to make their companies more efficient. They want to know how to diversify their product and payer mixes. They want to know how to cut costs by renegotiating their telephone and other administrative contracts. They want to know more about cost accounting and how to read a P&L statement. They want help with customer service, sales, vehicle routing, retail sales, hiring and retaining good employees. They want to know what traits successful entrepreneurs share. They want networking opportunities with other providers who are in it for the long haul.

“The bottom line is this, Mr. X: Providers want to succeed in the changing/evolving HME marketplace, and that is exactly what we are going to help them do.”

Since that e-mail exchange, we have continued to work hard on the Expo. In early August, I began to refine our educational sessions by conducting a Web survey with hundreds of HME providers. The Expo, they said, must provide insights into how to reduce service calls, improve customer retention and boost employee productivity. Needless to say, the information we gather from providers will prove invaluable as we develop the HME Expo’s educational program.

As Mr. X said, if providers want to survive, they must become better in all phases of their business. The goal of the HME Expo & Conference is to make that happen. We’ll help you make the connections that will keep your company in the game.

by: Mike Moran - Tuesday, August 5, 2008
The industry yesterday was enjoying a bit of, "We told you so." The Government Accountability Office (GAO) released a report in July that calls CMS on the continued weakness of its enrollment and inspection process for durable medical equipment providers.

As part of its investigation, the GAO "used publicly available guidance to attempt to create DMEPOS suppliers, obtain Medicare billing numbers and complete electronic test billing." It succeeded in Virginia, setting up a sham operation that "would have been clear to bill Medicare...for potentially millions of dollars worth of nonexistent supplies."

The industry has long argued that CMS needs to do a better job creating barriers to entry for the DME industry. Now it has the GAO, an independent government body, echoing its call.

But industry stakeholders say they'll keep the, "We told you so," to a minimum. They want to use the report as a launching pad to have conversations not only with CMS but also with legislators about how to improve the enrollment and inspection process.

On another fraud note, the Miami Herald today published an article with this headline: "A former scam artist tells how it works: Angel Castillo Jr., a convicted trafficker who found his calling in healthcare fraud, offered an inside look at Medicare corruption in Miami-Dade." Unbelieveable!

by: Mike Moran - Thursday, July 31, 2008

AAHomecare recently put together a report for its board of directors that documents its activities from February 2008 through June 2008. AAHomecare's Michael Reinemer joked that the report "is not likely to be made into a major motion picture anytime soon," but it's worth reading for a few reasons.

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First of all, it's a great synopsis of all the issues the industry has had to deal with, in the first six months of the year alone (What's the second half of the year going to look like?). You'll see a lot of entries concerning national competitive bidding, of course. But you'll also see entries on improving coding for capped-rental items, lobbying against a surety bond proposal, fighting an OIG investigation into power wheelchair pricing, revising the quality standards. It goes on and on. It makes it hard to believe home medical equipment is such a small part of the healthcare industry.

Secondly, it's a who's who of industry players (Pride Mobility's Seth Johnson, Invacare's Cara Bachenheimer) and legislative allies (Sen. George Voinovich, R-Ohio; Rep. Pete Stark, D-Calif.). It's also a good record of articles in various newspapers and other media outlets.

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Thirdly, it's pretty good proof of the return on investment (ROI) of an AAHomecare membership.

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Click here to read part of the report. Enjoy.

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by: Mike Moran - Wednesday, July 23, 2008

A few providers who have been pawing through H.R. 6331, the bill that delays national competitive bidding for 18 to 24 months, have called us with some interesting clarifications and discoveries.

One provider called us to clarify that some of the bidding improvements included in the bill don't apply to Round 1 of the program. The paperwork requirement (CMS must notify bidders about discrepancies and give them time to make corrections) applies to Round 1, but these improvements apply only to Round 2:

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*"The Secretary may subdivide metropolitan statistical areas with populations (based upon the most recent data from the Census Bureau) of at least 8,000,000 into separate areas for competitive acquisition purposes"; and
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*"The Secretary shall exempt from the competitive acquisition program (other than national mail order) the following: Rural areas and metropolitan statistical areas not selected under round 1 or round 2 with a population of less than 250,000."

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The provider emphasized the use of the word "may" and "shall." In other words, CMS doesn't HAVE TO subdivide CBAs or exempt rural areas.

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Another provider e-mailed us to share this discovery: The bill, in Section 154, states: "...the Secretary of Health and Human Services shall provide for the transfer from the Federal Supplementary Medical Insurance Trust the Centers for Medicare & Medicaid Services Program Management Account of $20,000,000 for fiscal year 2008, and $25,000,000 for each of fiscal years 2009 through 2012.

That's $120 million in additional funds "for purposes of implementing the provisions of and amendments made by" the bill. The provider said: "That basically tells us Congress and CMS are $120 million more dedicated to the bidding process. That’s quite a bit of power that’s been handed to CMS without restriction."

Here's a link to H.R. 6331 (Just type in H.R. 6331 into "Search Bill Text.") What do you think?

by: Mike Moran - Wednesday, July 16, 2008

CMS has posted its first guidance on how the delay of national competitive bidding will work:

The Durable Medical Equipment Competitive Bidding Program, which affects only Medicare beneficiaries in traditional fee-for-service in 10 competitive bidding areas, has been delayed. Medicare beneficiaries may use any Medicare-approved supplier for Durable Medical Equipment. If a beneficiary changed suppliers when this new program started (July 1, 2008), they can either continue to use the new supplier or choose another supplier. The original DME payment rates in effect prior to July 1 are reinstated retroactively. All Medicare households in the 10 competitive bidding areas will be notified of this change directly in a letter from CMS within two weeks.

The DME Competitive Bidding areas are: (1) Charlotte-Gastonia-Concord, NC-SC, (2) Cincinnati-Middletown, OH-KY-IN, (3) Cleveland-Elyria-Mentor, OH, (4) Dallas-Fort Worth-Arlington, TX, (5) Kansas City, MO-KS, (6) Miami-Fort Lauderdale-Miami Beach, FL, (7) Orlando-Kissimmee, FL, (8) Pittsburgh, PA, (9) Riverside-San Bernardino-Ontario, CA, and (10) San Juan, PR. Information on payment rates and claims processing will be communicated to DME suppliers in the coming days.

More information on DME is available at

by: Mike Moran - Wednesday, July 16, 2008

We've had a few calls at HME News this morning from providers who want to make sure they've read the news right. It's official. The House of Representatives and the Senate voted late yesterday to override the president's veto of a Medicare bill that would delay Round 1 of competitive bidding for 18 to 24 months and Round 2 until 2011. The votes:

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House: 383-41
Senate: 70-26

Click here for House and Senate

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roll calls.

The New York Times reported: "Although the Senate vote was close enough to provide some suspense, it was still over the two-thirds needed, as a number of conservative Republicans who typically side with the president broke with him on this issue."

Before the House and Senate voted to override the bill, Michael Leavitt, the secretary of the Department of Health and Human Services, warned members of Congress. In an op-ed piece that appeared in The Washington Times, Leavitt wrote: "The bill aborts a major money-saving reform for consumers and taxpayers—by effectively killing a new program for the purchase of durable medical equipment (DME)."

Leavitt goes on: "What is at stake is whether our country lives under a system focused on one-size-fits-all coverage and price-fixing, or whether it embraces free-market incentives, competitive bidding, and consumer choice."

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The industry, and the majority of the members of Congress, beg to differ.

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by: Mike Moran - Wednesday, July 9, 2008

There's been no shortage of media attention on the home medical equipment industry this week, between the Senate's efforts to delay national competitive bidding and a Senate committee's efforts to publicize a new report on Medicare fraud.

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Competitive bidding: The industry prevails
Despite a critical opinion piece penned by Michael Leavitt, secretary of the Department of Health and Human Services, in The Wall Street Journal—and pieces by USA Today and The New York Times before that (see previous blogs)—the Senate yesterday voted to pass a Medicare bill that delays competitive bidding for 18 to 24 months. Nine Republicans changed their votes to make it happen (Thank them sooner rather than later). The bill's in the president's hands now, and word on the street is that he'll veto it, sending it back to the Senate and House. Industry sources say there are "plenty of votes" in the House and Senate to override him. Senate Majority Leader Harry Reid, D-Nev., backed those claims up, telling the capital beltway publication The Hill, "Let the president veto it. We’ll override it."


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A new report from the Senate Homeland Security and Government Affairs Committee's permanent subcommittee on investigations charges home medical equipment providers with using the ID numbers of dead doctors to bill Medicare for up to $92 million worth of equipment since 2000. Here's one of many newspaper stories

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on the report. Here's AAHomecare's response.