We have all seen the headlines telling story after story of fraud and abuse by the DME industry. The latest round of stories is from Houston where a large number of beneficiaries are allegedly being qualified for power wheelchairs that are not medically necessary. These allegations are backed by the fact that, in 2001, Medicare paid for approximately 3,000 power chairs in Harris County, Texas, but in 2002, Medicare paid for more than 31,000 chairs in Harris County.

Unfortunately, scams like the one in Houston affect all suppliers by increasing costs to the Medicare program and causing additional scrutiny of all claims submitted to the program. In addition, honest suppliers are often frustrated by competitors who are not playing by the rules. It seems that while honest suppliers struggle, those not playing by the rules flourish.

The Centers for Medicare and Medicaid Services (CMS) is aware of these scams and is taking steps to prevent dishonest suppliers from participating in the Medicare program. In response to the situation in Houston, on September 9, CMS announced a 10-point initiative aimed at putting an end to the fraudulent activities allegedly taking place there.

This initiative, named “Operation Wheeler Dealer,” is a sweeping clean-up campaign with efforts focusing on Houston but having ramifications for all suppliers. The highlights of Operation Wheeler Dealer include:

• An immediate moratorium on the issuance of new supplier numbers.
• Development of new Local Medical Review Policies (LMRPs) for motorized wheelchairs and power operated vehicles (POVs).
• Use of the inherent reasonableness process to review the prices paid by Medicare for power chairs.
• Education for suppliers in Houston.
• An extensive use of administrative penalties, such as the prepayment review process and the ability to suspend billing privileges.

No New Supplier Numbers
The most drastic step is the moratorium on the issuance of new supplier numbers. Effective September 10, 2003, the National Supplier Clearinghouse (NSC) began to aggressively scrutinize all new applications for supplier numbers, and, as a result, it does not expect to issue any new supplier numbers until early 2004.

The moratorium includes all applications for new numbers regardless of whether the application is for a new supplier or one looking to add a new location. The NSC will continue to accept and process applications, including conducting site visits. However, upon completion of the verification process, the application will be held until release of the number is authorized by CMS.

At first glance, the moratorium appears much more drastic than it is in reality. It will not affect the processing of re-enrollments or change of information forms. In addition, the average processing time for new applications prior to the moratorium was 6 to 8 weeks. Under this time frame, an application submitted to the NSC today would still not be processed and the number issued until early 2004.

While the processing of new applications will likely take longer than 8 weeks, the additional time should be minimal. The suppliers that stand to lose are those whose applications had already been submitted and whose site visits had already been conducted.

Keeping Current
During the moratorium period, CMS has said it will issue new regulations regarding the issuance of supplier numbers and institute new operational guidelines for the NSC to allow better screening of potential Medicare suppliers and keep substandard suppliers from obtaining supplier numbers.

CMS also has indicated that it will issue new LMRPs for power chairs and POVs. These new policies will likely be more detailed and give suppliers clearer guidance regarding the provision of power chairs and POVs.

Operation Wheeler Dealer also names power wheelchairs as the first item to be analyzed under the inherent reasonableness review process to evaluate prices paid by Medicare. A final interim rule regarding the inherent reasonableness process was issued on September 13, 2002, but as of this date, no price cuts have been issued pursuant to this process. The inherent reasonableness process allows for a price reduction of up to 15% of the price being paid by Medicare.

In addition, Operation Wheeler Dealer directly targets suppliers in Houston by requiring them to undergo mandatory education regarding medical necessity for power wheelchairs. This training will be overseen by the Dallas Regional Office of CMS.

Finally, CMS plans to aggressively combat fraud in Houston through steps such as immediately suspending a company’s supplier number if fraud is suspected, pursuing civil and criminal penalties for fraudulent suppliers, and requiring all power chair claims to go through a prepayment review process. This last process is unique in that it requires all payments for motorized wheelchairs in Harris County to be pre-approved by a special task force based in the Dallas Regional CMS office and not through the DMERC and its staff, as is the case in most prepayment review processes.

Although the prepayment review and education requirements are specifically being imposed on suppliers in Harris County, all suppliers should carefully review the current LMRPs for power chairs and take a close look at their billing practices. This is the time to be especially vigilant about checking all documentation prior to submitting a claim for a power chair. If the supplier has any doubt about a claim, it should be held pending receipt of additional medical necessity documentation. In this environment, simply having sloppy documentation could cause a supplier to be identified as a fraudulent actor, possibly leading to catastrophic results.

Denise M. Fletcher, JD, is an attorney with the Health Care Group of Brown & Fortunato PC, an Amarillo, Tex-based law firm. She is board certified in health law by the Texas Board of Legal Specialization and represents DME suppliers, pharmacies, and other health care providers throughout the United States and Puerto Rico. Contact her at (806) 345-6318 or at dfletcher@bf-law.com.