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Editor: Katharine Van Tassel
Akron Univ. School of Law

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Friday, December 17, 2004

Hey, Buddy. Wanna Power Wheelchair Cheap?

Tdx5 CMS got whacked a couple of times this week over its handling of Medicare fraud in connection with power wheelchairs.  First, as reported here previously, DHHS' Office of Inspector General recently issued its semi-annual report to Congress, in which it touted its vigilence in dealing with the emerging issue of power wheelchair fraud and gently prodded the CMS to do more to curb abuses:

OIG published two related inspections on Medicare’s reimbursement for wheelchairs. One report found that the program paid significantly higher rates for power wheelchairs compared with suppliers and consumers.  The second report, an analysis of power wheelchair reimbursement, found that Medicare is spending an estimated $178 million for wheelchairs that do not meet Medicare’s coverage criteria. OIG recommended that CMS take steps to improve compliance with Medicare’s coverage criteria for power wheelchairs.

GAO was a bit more pointed in its report, "CMS’s Program Safeguards Did Not Deter Growth in Spending for Power Wheelchairs," GAO-05-43 (Nov. 2004), released Dec. 15:

Over a 6-year period beginning in 1997, CMS’s contractors repeatedly communicated with CMS about escalating spending for power wheelchairs
and conducted program safeguard activities to respond to improper payments for this benefit, but CMS did not lead a coordinated effort to address the underlying problems. For example, in 1997, a CMS contractor tasked with analyzing Medicare data warned the agency about rapid increases in power wheelchair spending. Further, in 1998, and again in 2000, reacting to the continuing rise in power wheelchair spending, medical directors at the four DME regional carriers sent joint memorandums to CMS officials outlining steps that could be taken and sought CMS’s support. For example, the medical directors expressed concerns about the certificate of medical necessity (CMN)—a document completed by physicians to provide information with which contractors make payment decisions. They noted that the CMN for power wheelchairs does not provide sufficient information for determining if claims for power wheelchairs should be paid, but CMS did not respond by revising the CMN at that time. During this period, contractors also took other actions, including conducting medical reviews of claims and investigating suspected instances of power wheelchair fraud. However, the amount of funding CMS allotted to them for medical review declined in relation to the rise in Medicare payments. Additional problems related to the power wheelchair benefit surfaced during this period. For example, inspectors had difficulty enforcing two of the broad standards used to screen suppliers before they obtain or renew their Medicare billing privileges.

Because supplier standards do not adequately describe what constitutes an acceptable physical location and sufficient inventory, CMS’s contractor had difficulty interpreting and enforcing these two standards. In addition, Medicare standards for suppliers do not address certain misleading or abusive marketing practices that were a factor in increased utilization of power wheelchairs in Texas. Finally, CMS officials did not address weaknesses in the site visits that are used to assess suppliers’ compliance with Medicare standards. For example, the predictability of visits made it relatively easy for illegitimate suppliers to prepare for, and pass, site inspections. Since September 2003, CMS has led an effort to improve the processes for responding to improper payments for power wheelchairs. The agency’s actions are in different stages of completion and focus on preventing fraudulent suppliers from entering the Medicare program; clarifying the coverage policy; ensuring appropriate pricing for power wheelchairs; educating physicians and beneficiaries on coverage rules; conducting detailed claims reviews in Texas, where power wheelchair fraud was prevalent; and coordinating with law enforcement agencies. Although CMS has made progress, it has not completed a revision to the CMN, clarified guidance on appropriate marketing to beneficiaries, or directed its contractor to conduct less predictably timed site visits to suppliers on a routine basis. Further, CMS’s response to power wheelchair spending highlighted the lack of a process within the agency to rapidly respond to indications of potentially improper DME payments.

GAO offered its recommendations to increase CMS capacity for spotting and responding to fraud in similar situations:

To help ensure that improper payments are identified and addressed in a timely manner and that Medicare pays properly for power wheelchairs and other items of DME, we recommend that the Administrator of CMS take four actions. We are recommending that CMS (1) establish a process to more quickly respond to indications of potentially improper DME spending, (2) finalize revisions to the CMN to make it a more effective tool for claims adjudication, (3) develop a more prescriptive supplier standard on appropriate marketing practices, and (4) amend the supplier inspection process to require that out-of-cycle inspections be routinely conducted.

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