Over the years, a number of hot products have hit the HME market, such as wheelchair lifts, lymphedema pumps, and gel mattress pads. Many HME suppliers promoted these products directly to Medicare beneficiaries, who then asked their physicians to order the products for them.

The upside for the HME suppliers was that promoting these products to the beneficiaries created a huge demand that increased sales. The downside was that the Centers for Medicare & Medicaid Services (CMS, formerly the Health Care Financing Administration) noticed an increase in reimbursement, investigated, and then clamped down on reimbursement for these products on the basis of either a lack of medical necessity or fraudulent marketing practices.

Scooters (often referred to as power-operated vehicles or POVs in CMS documents) fall into the category of current hot products. Because of the healthy profit margin involved in selling some POVs, a growing number of HME companies are promoting them directly to Medicare beneficiaries through direct mail, newspaper, and television advertisements.

However, as with other hot products, the spike in POV reimbursement created by this aggressive marketing has attracted the attention of the Department of Justice, the Office of Inspector General (OIG), the four Durable Medical Equipment Regional Carriers (DMERCs), state Medicaid programs, and qui tam (whistle-blower) relators.

Medicare beneficiaries demand and deserve the active, fulfilling lifestyle POVs help facilitate. Therefore, it is sound business judgement for an HME supplier to become proficient in selling scooters and other POVs. However, in accomplishing this, the HME supplier needs to follow some basic guidelines that will help it avoid unnecessary legal land mines created by increased regulatory attention to this product line.

The revised Regional Medical Review Policies for POVs provide that Medicare will cover a POV only when the following five criteria are met:

1) The patient’s condition is such that without the use of a wheelchair the patient would be unable to move around in his or her residence.

2) The patient is unable to operate a manual wheelchair.

3) The patient is capable of safely operating the POV’s controls.

4) The patient can transfer safely in and out of the POV and has adequate trunk stability to be able to safely ride in the POV.

5) The POV is ordered by a physician who practices in one of the following specialties: physical medicine, orthopedic surgery, neurology, or rheumatology.

In addition, the revised POV policy greatly increases documentation requirements for HME suppliers by adding the following language: “For an item to be considered for coverage and payment by Medicare, the information submitted by the supplier must be corroborated by documentation in the patient’s medical records that Medicare coverage criteria have been met. The patient’s medical records include the physician’s office records, hospital records, nursing home records, home health agency records, records from other health care professionals, and test reports. This documentation must be made available to the DMERC upon request.”

The two basic issues the DMERCs look at in an audit are whether the HME supplier can produce the basic required documentation and whether the HME supplier can establish medical necessity. In order to come through such an audit relatively unscathed, the supplier should adopt the following steps:

• Maintain a written order prior to delivery and a properly completed and executed Certificate of Medical Necessity (CMN).

• Prior to delivering the POV, obtain copies of the beneficiary’s medical records, the most important of which are the physician’s progress notes. Although the DMERCs will consider a letter from a physician attesting to medical necessity in a postpayment review, they do not consider such a letter as a replacement for indispensable physician progress notes.

• If the beneficiary’s medical records may not substantiate medical necessity, then prior to the delivery of the POV, ask the beneficiary to sign an Advance Beneficiary Notification (ABN) form, agreeing to be responsible for the cost of the POV if Medicare denies coverage. CMS prohibits routinely asking for an ABN, but requesting an ABN is acceptable if you have a particular reason for making the request. In addition, you may wish to obtain a professional wheelchair evaluation prior to delivery to support medical necessity.

Of course, avoiding fines and givebacks in a postpayment audit represents only half of the legal land mines that go along with selling scooters to Medicare beneficiaries. The other half is 42 USC 1320a-7b(b), the Medicare/Medicaid antikickback statute. It provides in part that whoever knowingly and willfully offers or pays any remuneration directly or indirectly, overtly or covertly, in cash or in kind to induce someone to get or recommend a product or service paid for by the federal health care program is guilty of a felony.

In addition, the beneficiary inducement statute, 42 USC 1320a-7a(a), prohibits certain inducements to Medicare beneficiaries, including offers to transfer remuneration to any individual eligible for certain federal or state health care program benefits. Remuneration, as defined by the statute, includes the waiver of any part of coinsurance and deductible amounts, and transfers of items and services for free or for other than fair market value. It does not include the waiver of coinsurance and deductible amounts if the HME supplier does not routinely waive coinsurance or deductible amounts, and the supplier waives the coinsurance and deductible amounts after determining in good faith that the beneficiary is financially needy. It is also not remuneration if the reasonable efforts of the supplier’s collection staff fail to get insurance or deductible amounts.

Finally, in addition to the Medicare/Medicaid antikickback and inducement statutes, more than 10 years ago, the OIG issued a Special Fraud Alert on the subject of routine waiver of Medicare co-payments and deductibles. It stated that such routine waivers could subject HME providers to liability under the antikickback statute and the False Claims Act, and gave some examples of “suspect marketing practices,” including:

• Advertisements that state “Medicare accepted as payment in full,” “Insurance Accepted as Payment in Full,” or “No Out-of-Pocket Expense.”

• Routine use of “financial hardship” forms that state that the beneficiary is unable to pay the coinsurance/deductible. When these forms are used routinely, the DMERCs assume the HME supplier is not making a good faith attempt to determine the beneficiary’s actual financial condition.

In advertising to beneficiaries, the HME supplier must avoid language expressing or implying that it will accept, as payment in full, payment from Medicare. Such an advertisement violates the Medicare/Medicaid antikickback statute, the inducement statute, and the OIG’s Special Fraud Alert addressing the routine waiver of co-payments and deductibles, and could make the HME supplier subject to a civil money penalty of not more than $10,000 for each item or service. The beneficiary should be expected to make the co-payment unless the beneficiary can demonstrate to the HME supplier that he or she does not have the financial ability to pay the 20%.

The HME supplier should also avoid advertising to beneficiaries that if the HME supplier “prequalifies” the beneficiary, but coverage is denied by the DMERC, then the HME supplier will provide the POV free of charge. This is an offer of financial remuneration to the beneficiary that is likely to be viewed as a violation of the Medicare/Medicaid antikickback statute and the inducement statute.

In the same vein, the HME supplier must avoid advertising to beneficiaries that if the beneficiary purchases a POV, then the HME supplier will provide a manual wheelchair free of charge. Again, this is an offer of financial remuneration to the beneficiary that is likely to be viewed as a violation of the antikickback statute and the inducement statute.

As our population ages and Baby Boomers become Medicare-eligible, the demand will only grow for full, active lifestyles. Scooters and related items will help fulfill this demand. But before expanding your presence in this market, take precautions to stay on the right side of the law.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at the law firm Brown & Fortunato, PC, Amarillo, Tex. Contact him at (806) 345-6320 or at jbaird@bf-law.com.