Marketing of power mobility products has always posed a challenge to suppliers, even under the best of circumstances, and recent fraud cases against some power mobility companies have placed such marketing increasingly in the limelight. In particular, the Centers for Medicare and Medicaid Services (CMS) 10-point response to the fraud cases in the Houston area—known as Operation Wheeler Dealer—has focused the government’s attention on the marketing and distribution of power mobility products. As a result, power mobility suppliers that are venturing into direct marketing are doing so at a time when the business is drawing increased scrutiny and risks. To stay on the right side of the law, suppliers need to understand and avoid the legal pitfalls surrounding direct marketing of power mobility products.

Pitfall 1: Deceptive Advertising
When implementing a marketing program for scooters and other power operated vehicles, suppliers should keep in mind that the government views Medicare beneficiaries as highly susceptible to dishonest marketing, and has little tolerance for misleading advertisements.The Office of Inspector General (OIG) considers advertisements offering “free” Medicare-covered items to be misleading. Other marketing practices may also be considered deceptive or misleading. For example, some companies promote Medicare-covered wheelchairs as a “charitable program.”

Pitfall 2: Phone Solicitation
The Medicare anti-solicitation statute prohibits suppliers from soliciting beneficiaries by telephone except in certain specific circumstances. A supplier may make a sales call to a beneficiary only if the beneficiary has given the supplier written permission to call, or if the call pertains to a covered item previously furnished by the supplier, or if the beneficiary has purchased a covered item from the supplier within the previous 15 months. A supplier may advertise on television and radio, in newspapers, and by direct mail, as well as market through other means such as distributing brochures and making presentations at retirement communities. However, one must avoid “cold calling” Medicare beneficiaries.

Pitfall 3: HIPAA
The privacy regulations issued under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) include restrictions on the use of individually identifiable health information for marketing purposes. HIPAA allows suppliers to market their own health-related products or services to their own patients. However, some marketing practices targeted on the basis of a patient’s health condition, treatment, or health insurance might still violate the privacy regulations. Carefully review any marketing programs targeted to populations on the basis of health or health-related information.

Pitfall 4: Kickbacks and Inducements
This is a line you do not want to cross. Under the Medicare/Medicaid anti-kickback statute, it is a felony for a person or entity to knowingly or willfully solicit or receive, or pay or offer to pay, any remuneration in return for referring an individual for the furnishing or arranging for the furnishing of any item for which payment may be made under a federal health care program, or in return for purchasing or leasing of any item for which payment may be made under a federal health care program. Therefore, offering or paying anything of value to a beneficiary to purchase a wheelchair is a violation of the anti-kickback statute. In addition, the “anti-inducement statute” prohibits offering or paying any remuneration to a beneficiary that the supplier knows or should know is likely to influence the beneficiary to order a Medicare-covered item from the supplier. Penalties for violating the anti-inducement statute include civil monetary penalties, plus civil damages of up to three times the amount of the claim.

The purpose of marketing is to persuade consumers to purchase. Because of this, a wide variety of marketing practices have the potential to violate these two statutes. Marketing programs must be designed with care to avoid running afoul of these statutes.

One practice that exposes a power mobility supplier to significant risk is the routine waiver of co-payments. Many beneficiaries cannot afford the 20% Medicare co-payment on a wheelchair. In these cases, a supplier can waive the co-payment only if the beneficiary’s specific financial condition justifies such waiver. In order to properly waive the co-payment, the supplier must obtain fairly detailed financial information from the beneficiary that objectively supports the decision to waive the co-payment. The supplier is prohibited from routinely waiving co-payments or waiving them based on an unsupported statement of financial need from a beneficiary. Some suppliers make no effort to establish financial need, and require only that the beneficiary sign a preprinted form stating that he or she cannot afford the co-payment. Some companies post these waiver forms on their Web sites, and at least one supplier includes a hardship letter in the packet of forms that every customer is instructed to download, sign, and return. Some suppliers go so far as to tell beneficiaries that “full payment of the 20% is not important.” Practices such as these expose suppliers to very large potential liabilities. Each supplier should adopt and implement an express written policy regarding waiver of co-payments, and the policy should include objective criteria for determining financial need.

Suppliers should avoid even the appearance of routinely waiving co-payments. Some suppliers run advertisements offering a “Free Scooter,” often qualified by a footnote (in very small print) reading “if you qualify.” The OIG may view this kind of advertising as an indication that the supplier is improperly waiving co-payments. The OIG may also consider ads like these to be misleading and abusive in themselves. A supplier may truthfully advertise that there may be little or no out-of-pocket cost to a beneficiary for a scooter if the beneficiary qualifies for Medicare coverage and has supplemental insurance. However, advertisements should never use misleading headlines and small print to create a false impression.

Suppliers must also make “reasonable collection efforts” to obtain co-payments from beneficiaries who can afford them. The OIG interprets “reasonable collection efforts” to be the same efforts the supplier would make to collect other amounts owed for items and services provided to patients.

Other more direct inducements, such as the offer of free items with the purchase of a scooter, must also be avoided. However, the OIG has stated that promotional gifts of “nominal value” (retail value of not more than $10 per item and no more than $50 per year in the aggregate to any single beneficiary) do not violate the anti-inducement statute. There is no “nominal value” exception under the anti-kickback statute, but the OIG has not punished suppliers for giving away coffee mugs, ballpoint pens, and similar items as promotional gifts when they meet the $10 per item and $50 per year limitations.

Power mobility suppliers that are developing a marketing campaign should be wary of these issues and develop a marketing campaign that avoids the pitfalls outlined above. Suppliers who choose to develop their marketing plans the right way will invariably discover it loses customers to less scrupulous suppliers. However, with increasing attention being paid to the marketing of power mobility products by the federal enforcement authorities, compliant suppliers may yet have the last laugh.

Clay Stribling, JD, is an attorney with the Health Care Group of Brown & Fortunato PC, an Amarillo, Tex-based law firm. He represents DME companies, pharmacies, and other health care providers throughout the United States and Puerto Rico. Contact him at (806) 345-6346 or cstribling@bf-law.com.