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by: Mike Moran - Thursday, November 1, 2007

Here we go again. The OIG issued a report in October, claiming that the Medicare fee schedule amounts for power wheelchairs were 45% higher than the median Internet prices available to consumers in the first quarter of 2007.

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Are these guys stubborn, stupid or just trying to be irritating? Just about anyone with half a brain knows that Internet pricing is much less expensive because Web companies have next to no overhead and many—certainly not all—provide little or no service after the sale.

The industry has made this abundantly clear to government officials numerous times in the past, when some bean counter, for example, tried to use the same rationale as support for a reimbursement cut. What makes this even more galling is that everyone knows buying over the Internet is often a trade off—lower cost for less service. That’s fine if you’re buying a blender, but would any intelligent person suggest that trade off for a power wheelchair or some other product that’s critical to a person’s well being?

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No. Yet, here we have the OIG doing exactly that, proving once again that they just don’t get it. They don’t understand the needs of beneficiaries or the complexities of power mobility devices. To come out with a report like this after having examined the HME industry for years from every imaginable angle is really quite pathetic.

by: Mike Moran - Wednesday, October 31, 2007

The M&A market for home medical equipment companies may be in the doldrums, but that doesn't mean no one is trying to sell their company. Check out Baby Mama download

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Mean Girls rip The Internet site specializes in selling businesses and lists 57 durable medical equipment companies for sale. For each listing, you’ll find the name of the company, it’s location, asking price, revenue and more. For example, Medical Supply, Respiratory Drugs & Pharmacy in Humphreys County, Tenn., is on the block for $7.8 million. Click on the name of the company and you’ll receive additional information, including a description of services and facilities, cash flow, gross revenue and more.

Happy shopping.

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by: Mike Moran - Monday, October 29, 2007
Red Heat hd Hardly an issue of HME News goes to print without one or more stories about providers who are diversifying their product mix to, hopefully, make up in one area what they’re losing in another. See the upcoming December issue, for example, for a story about a rehab provider who’s getting into mail-order diabetic supplies (He has even submitted bids in all 10 competitive bidding areas). More and more, providers are diving into cash products, due to an increasingly hostile Medicare environment. I spoke with one such provider earlier this month.

The provider told me she had added a new cash product to her showroom to complement more traditional mobility equipment. I suggested we print a photo of her using the product and a caption describing her attempts to survive reimbursement cuts and changes by thinking outside the box. The provider, however, didn’t want to appear in HME News; she didn’t want to tip off her competitors.

We have providers say this to us every now and them. Each time, we wonder whether they’re doing themselves, or the industry, any favors. One of the most valuable features of the HME Business Summit sponsored by HME News are brainstorming sessions for boosting revenues (think expanding your cash business by filling oxygen tanks for fire departments and ambulance services) and reducing expenses (think using the U.S. Postal Service to deliver small, non-technical equipment). Maybe more importantly, if providers were more open to sharing not only ideas but also data, would they be in the position they’re in now? How can the industry get the cost effectiveness of home care to resonate with Congress without transparency?

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When it comes to sharing ideas, providers should know, at the very least, that there are few business secrets these days, regardless of the industry. It’s all in the execution.


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by: Mike Moran - Wednesday, October 24, 2007


The Bush Administration is taking some more hits over its shoddy treatment of veterans.

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Over the next decade, disability costs for injured vets returning from the wars in Iraq and Afghanistan will be at least $60 billion dollars (some of that, undoubtedly, will be for durable medical equipment such as power wheelchairs and prosthetic legs and arms). That $60 billion is more than six times the Bush Administration’s official estimates, according to an article in this week’s Newsweek, “How Do You Fund a War, But Not the Casualties?”

A new VA study shows that the number of vets diagnosed with post-traumatic stress syndrome is rising rapidly, from 29,041 a year ago to 48,559 this year. Few of these soldiers are counted in the Pentagon’s official tally of 27,753 wounded in Iraq.

The administration’s underestimate of what it will cost to treat our soldiers has angered some vets and their families, Newsweek reports.

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“I would love to have the president live my life for one week to see how difficult it is,” said Annette McLoed, whose husband, Wendell McLoed, suffers from PSTD after serving in Iraq. “How do you fund a war but not fund the casualties.”

When you consider this story, and the news earlier this year about the horrible conditions at Walter Reed Army Medical Center in Washington, the good work of HME provider Pete Lancaster Imagine That movie download shines even brighter. Lancaster, you might remember, found his “passion” helping to fit and repair wheelchairs for disable veterans.”

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While you wouldn’t know it from the Bush Administration’s poor behavior, all you have to do is look around a little to find heroes abroad and at home. With that in mind, we should all say: Thank you, Pete Lancaster.

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by: Mike Moran - Wednesday, October 24, 2007

While making calls for the December issue, an industry source asked me whether I had noticed participation in state association events dwindling. The attendance was “abysmal,” he said, at each of the state association events he has spoken at this year. When the source sought answers from executive directors, they told him: “Accreditation is over. National competitive bidding is the law of the land. People don’t feel the need to learn anything anymore.” Say it ain’t so.

It’s long been an industry gripe that not enough providers participate in AAHomecare and state associations. Call me naïve, but I thought national competitive bidding had changed all that once and for all, especially for state associations. Providers will claim that, now more than ever, they’re strapped for cash and time, and I believe them. But being involved in state associations takes so little effort. The membership and meeting fees are reasonable, especially when providers consider what they get out of them, and it’s a lot easier to drive or fly a short distance to a state association event than it is for other events.

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The state associations aren’t giving up on providers—“Just as providers should adapt to the new reimbursement environment, so should associations,” said one executive director—nor should providers give up on them.


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by: Mike Moran - Monday, October 22, 2007

The Whole Wide World hd Here’s a statistic I cannot get out of my head: Of the 276 providers who responded to our October HME NewsPoll, 51% said that most of their Medicare beneficiaries cannot afford the 20% copay for durable medical equipment. I know seniors live on fixed incomes, but don't tell me that 51% can’t afford the co-pay. That’s absurd. This kind of behavior feeds into CMS’s belief that Medicare pays too much for durable medical equipment. And if you can regularly write off 20% of your Medicare reimbursement, maybe CMS is right. I mean, what else is there to think? What am I missing here? You tell me.

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If you regularly let the co-payment slide, which, let me remind you, is in most cases illegal, here’s something else to think about. A good friend of mine is over 65, has been involved in the DME industry for years, and he estimates that 85% of seniors can easily afford the 20% co-pay. In fact, he said, for many items, seniors don’t mind paying cash. They are more concerned with how a product looks than how much it costs. Sounds like there may be a retail opportunity here.

Rather than not being able to afford the co-pay, I think most seniors would prefer not to pay it. I’d also prefer not to pay my healthcare co-pays, but you know what? I pay them. Just like you do.

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Halloween 4: The Return of Michael Myers film So unless you know a Medicare beneficiary is a hardship case, collect that co-pay. Otherwise, you are doing yourself and the industry a disservice.

by: Mike Moran - Thursday, October 18, 2007

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Invacare’s  Top End line of sports wheelchairs for disabled athletes got a shout out on a PBS show called “Wired Science” last night. The episode, called “Hot Wheels,” also featured Pride Mobility Products wheelchairs.

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Host Ziya Tong interviewed engineers and researchers and developers at Invacare, Pride and the University of South Florida “who are designing chairs nimble and light enough for basketball, fencing…even ballet.” Tong spends a good amount of time interviewing Paul Schulte, a Top End design engineer who happens to be one of the greatest wheelchair basketball players in the world.

It’s good stuff.

Click here to watch the episode.

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by: Mike Moran - Wednesday, October 17, 2007

t’s the moment home medical equipment providers have been waiting for, right? A 62-year-old retired Maryland schoolteacher became the first retiring baby boomer to apply for Social Security benefits on Monday, setting off what’s being dubbed a “silver tsunami.”

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Many cringe at the thought of about 10,000 people a day becoming eligible for benefits over the next two decades. But not home medical equipment providers. For years, they have waited to navigate this “tsunami” equipped with a boatload of home medical equipment—paid for by Medicare or, even better, with cash—to meet all of baby boomers’ aging needs. They’ve attended seminars by industry consultant Ty Bello on how to capture this market (His favorite number is 7,918, the number of people who turn 65 every day this year). They’ve spent $300,000 like Home Care Medical in New Berlin, Wis., to expand and remodel their showrooms to woo baby boomers and their middle-aged children.

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Type "baby boomer" into Google News to read any one of the 361 articles on the first retiring baby boomer to apply for Social Security benefits. Click here to read a story by The Associated Press. Red Heat movie full

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by: Mike Moran - Tuesday, October 16, 2007

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Makes sense to me: Why deal drugs and chance being killed in a drive-by shooting when instead you can become a DME dealer and defraud Medicare out of millions—and be considered a white collar criminal to boot. I guess for some people that's considered moving up in the world.

At least that's what NPR reporter Greg Allen reported last week in a long piece on Medicare fraud in South Florida.

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If you want to listen to the story, click here. Otherwise, I've included a transcript below.

Legal Affairs
Medicare Fraud Acute in South Florida

Listen to this story... by Greg Allen

Morning Edition, October 11, 2007 · There's a nationwide crime epidemic
going on that rakes in $35 billion or more each year. Exactly how much is
being stolen is impossible to say, because the federal government doesn't
try to measure it.

It's Medicare fraud. The $368 billion federal program is a tempting target
for crooks, and there are signs the problem is growing. It is particularly
acute in South Florida, where it seems to be replacing drug trafficking as
the crime of choice for those who want to get rich quick.

The smart action is in something called "durable medical equipment," which
includes items such as wheelchairs, back braces, canes, walkers, electric
beds and shower-transfer tubs.

April Showers dvd It sounds mundane, but the numbers involved are mind-boggling. Fraudulent
Medicare claims estimated at between $300 million and $400 million were
prosecuted in just two South Florida counties in the past year. And those
are just the cases that have drawn the attention of the courts. Estimates of
total losses range as high as 10 times that much.

Medicare fraud has now become a favorite career path of many former drug
dealers. The FBI has interviewed drug dealers and asked them why they're
moving from cocaine to wheelchairs and walkers.

Why the Shift?

Malcolm Sparrow of Harvard's Kennedy School of Government says former drug
dealers give three reasons.

"There's more money, there's much less chance of being caught and if I do
get caught, I'll be treated like a white-collar criminal, not like a drug
dealer," Sparrow says.

There's also a fourth reason: They're less likely to be killed in a drive-by

buy Two for the Road Tim Delaney runs the white-collar crime program at the FBI's Miami office.
He has 27 agents working just on health-care fraud, and they stay busy.
Since March, when a new Medicare Strike Force went into operation in Miami,
120 people have been charged.

Many of those arrests are for scams involving durable medical equipment. DME
companies have been favorite fronts for people engaging in Medicare fraud
for a long time because they're easy to set up.

"It's a field where you can be a relatively recent immigrant new to America
and not know anything about the health-care system and open up your own
company and start billing," Delaney says.

Investigators say they see start-up companies that immediately bill the
government for tens of thousands of dollars a month for equipment and
services that Medicare beneficiaries never receive.

In South Florida, a federal investigation earlier this year found that
nearly half of the suppliers of durable medical equipment were not in
compliance with Medicare rules. The problem of DME fraud is so widespread
that federal authorities revoked Medicare approval from every single company
operating in South Florida and told them they would have to reapply for
billing privileges.

Patients Join the Scam

But as federal authorities began to crack down on that kind of fraud,
resourceful criminals moved into a new area. The new scam involves clinics
that administer drugs intravenously to people with HIV and AIDS.
Investigators call that "infusion-therapy fraud."

A single treatment of these drugs can cost thousands of dollars. The scam
involves billing the government for the expensive drugs, then administering
only saline solution — or nothing at all — to AIDS and HIV patients.

In one recent case, people behind the fraud went so far as to doctor blood
samples — lowering platelet counts — to convince medical personnel that an
expensive AIDS drug was needed.

A darker side of infusion-therapy fraud is that people with AIDS or who are
HIV-positive are often in on the scam.

"They're often paid kickbacks," Delaney says. "Hundreds of dollars to sit in
that chair and take that injection."

No Country for Old Men rip In many cases, though, Medicare beneficiaries are the victims, not the
perpetrators of the fraud. In one big case last year, an employee at the
Cleveland Clinic in Naples, Fla., stole billing records for more than 1,000

Before long, one of those patients — Tom Bisceglia — received a notice from
Medicare about treatment he had supposedly received.

"It was for wound treatments, apparently for wounds that wouldn't heal,"
Bisceglia says. "And they were treatments I never had done."

The Medicare reimbursement for the treatment was $6,000. Bisceglia testified
at a trial in which two people were convicted for identity theft and fraud.

In that case, the two people involved were cousins. That's not unusual.
Medicare fraud often involves networks of acquaintances and family members.

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"These kinds of frauds are conspiracies," says the Kennedy School's Sparrow.
"You can't do them alone. You require lawyers, clinics, administrators,
accountants ... You use an existing trusted network within which the

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loyalties are stronger than they are to the authorities."

A Trusting System

Medicaid and private insurance companies are also struggling with fraud. But
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there are a few factors that make Medicare almost a perfect target.

One is that it's a trusting system, set up to serve honest physicians — with
few safeguards designed to weed out false claims. Also, most claims are paid
automatically, so there's little or no person-to-person contact.

The companies Medicare hires to handle its claims say they are working to
improve fraud detection. But their main mission is not to root out fraud; it
is to pay claims quickly and smoothly.

One of the most surprising things about Medicare fraud is that no one
actually knows how big the problem is.

The federal government does track the "error rate," but Sparrow says that's
mostly a check of paperwork that misses outright fraud. In the early 1990s,
at the behest of the Clinton administration, he spent months studying the
issue and wrote a book, License to Steal.

In 1997, Congress responded with more than $100 million to combat
health-care fraud — money that pays for 400 FBI agents, including those on
the South Florida strike force.

But Medicare still winds up spending just 3/100 of 1 percent to ensure the
integrity of the program.

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wouldn't we spend 1 percent of the Medicare budget on program integrity?
Then we might get serious about controlling a problem that might be 15
percent or 20 percent of the budget."

If fraud and abuse account for 20 percent of the current Medicare budget,
that would amount to more than $70 billion.

by: Mike Moran - Friday, October 12, 2007

Here's some data I had left over from a Freedom of Information Act request I filed with the SADMERC earlier this year. If you click on the link below, you'll download a PDF that contains the 100 most lucrative HME branches in the United States for 2006, as measured by Medicare allowed charges. This is the most current data available.

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