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CMS' Round Two Announcement Puts the Accent on Fraud
ATLANTA--Poised for months to hear the details about Round Two of national competitive bidding, home medical equipment providers were knocked off their pins last week when CMS' long-awaited announcement appeared to spin the project as an anti-fraud initiative.

While the regulation includes an accreditation component, competitive bidding was mandated by the Medicare Modernization Act of 2003 mainly as a cost-cutting initiative, stakeholders pointed out. But Tuesday's announcement--made at a press conference held in Los Angeles, the site of an ongoing anti-fraud demonstration project--focused instead on the bidding program as a fraud-and-abuse deterrent.

"Through the certification process, beneficiaries will be given another layer of protection from fraud," said CMS Acting Administrator Kerry Weems. "We welcomed this program when it was created by the Congress because we believed it could help lower costs for our beneficiaries and help us in our efforts to keep the small number of dishonest providers from taking advantage of American seniors."

Weems went on to tell members of the press that "many DME suppliers are just empty storefronts. Well, if you're going to be part of the program, we're not going to accredit an empty storefront."

The stage was set by a CMS media advisory sent Monday headlined: "Federal Government Announces Expanded Program to Provide Medicare with More Tools to Fight Fraud, Abuse." The advisory explicitly said the Round Two competitive bidding announcement would be held at a "news briefing to announce expansion of Medicare's anti-fraud and abuse efforts in Los Angeles County and in 69 other communities."

The anti-fraud agenda captured the interest of consumer press across the country, including the Los Angeles Times, the Chattanooga Times Free-Press and the Austin American Statesman, which explained competitive bidding to their readers as a deterrent to fraud, as well as a money-saver.

The Los Angeles Times article, which appeared in the newspaper's Jan. 8 edition, presaging the press event, particularly outraged some in HME since it focused on an 84-year-old blind woman who cannot walk and was reportedly victimized by a provider who talked her into acquiring $28,300 worth "of products she didn't need or want."

Acknowledging that government efforts to deal with fraud in the industry are long overdue, stakeholders said they felt the Times article and others misled the public about the intent--and the effects--of competitive bidding.

"I found my blood pressure rising by the minute" after reading the Times article, said Miriam Lieber of Lieber Consulting, Sherman Oaks, Calif. "When will the press learn that not every HME provider is a fraud? As the 70 new competitive bidding MSAs were released, it seemed ironic that the article painted competitive bidding as an opportunity to prevent fraud rather than a chance to eliminate two-thirds of the industry."

Lieber said she believes the non-trade media did not understand the issues and quite possibly even mixed up the announcement of Round Two bidding with the current anti-fraud demonstration project in L.A. "They either mixed up the stories or didn't know the stories," she said. (See HomeCare Monday, July 9, 2007.)

CMS intentionally announced the expansion of competitive bidding "at the Los Angeles anti-fraud event because of the very important consumer protection messages that need to get out to all beneficiaries, but especially those in the new competitive bidding areas," said Ellen B. Griffith, a CMS spokeswoman.

"As the home health industry said after the event, it is vitally important that Medicare protect honest suppliers from competition from the unscrupulous, and the educated beneficiary is one of the best sources of information about fraud," Griffith added.

She said there were two main messages CMS wanted to get across to beneficiaries in making its announcement.

"Beneficiaries need to know how to protect themselves from unscrupulous suppliers of durable medical equipment, prosthetics, orthotics and supplies," she said. "Under the competitive bidding program, only accredited suppliers of DME will be permitted to bill Medicare for items of DMEPOS, and only contracting suppliers will be able to bill Medicare for items within the eight categories of DMEPOS furnished to beneficiaries in the designated competitive bidding areas."

The second point CMS wanted to make, Griffith said, was that "beneficiaries, who pay 20 percent of the Medicare payment rate for items of DMEPOS, need to know that CMS is taking steps to make sure that for these commonly prescribed items, they are not paying more than they would have paid if Medicare payment rates were closer to the rates in the competitive marketplace."

But stakeholders said the fraud-and-abuse angle obscured what competitive bidding is really about.

Mark Higley, vice president of development for Waterloo, Iowa-based VGM Group, said he was disappointed that CMS' public announcement of the next 70 MSAs "clearly suggested that the competitive acquisition process was intended as a cure-all for fraud and abuse in the HME industry.

"Competitive bidding may very well reduce HME provider services, lower the quality of innovative products offered to Medicare beneficiaries and increase overall Medicare expenditures (via increased acute care service needs) ... but it is not a panacea for the elimination of fraud," Higley said.

Walt Gorski, vice president of government relations for the American Association for Homecare, said the association was surprised at the anti-fraud emphasis, but noted that it was easier to present competitive bidding to the public couched as a deterrent to fraud and abuse.

"CMS sees utility in classifying competitive bidding as an anti-fraud and abuse mechanism," he said. "It is virtually impossible to criticize an anti-fraud and abuse technique."

Wayne Stanfield, president and CEO of the National Association of Independent Medical Equipment Suppliers, said he was surprised at the tactic as well. Instead of combating fraud and abuse, he said, competitive bidding was designed to save Medicare money.

"Also, if you look at the figures, which make little to no sense, they say they are going to save $1 billion annually with the competitive bidding expansion--but Medicare is a $400 billion annual expenditure. So they're going to save one quarter of one percent, which is pretty much nothing."

In any case, providers and others pointed out, CMS has had the option of many vehicles by which to combat fraud.

"As an industry, our message to CMS is that there are plenty of ways--much more productive ways--to control fraud and abuse. Competitive bidding has little to do with curbing fraud and abuse," said Don Clayback, vice president, The Med Group, Lubbock, Texas.

"It may [cut down on fraud], but it's so much easier to become accredited with these new expectations that it may not," said L. Jack Clark, RRT, founder and principal of Mid Georgia Respiratory in Macon, Ga. "I get the sense from my three decades of experience in the home care arena that probably people that are shysters generally look for the easy ways to be a shyster and aren't going to worry about another hurdle like the one accreditation would offer them."

Meanwhile, the industry is left to do damage control. As Gorski noted, since the CMS announcement follows several press reports on Medicare fraud and abuse from such venerable entities as the New York Times, National Public Radio and NBC, it makes the situation even more difficult for the honest provider.

"I think the constant drumbeat of fraud is very negative for the field," he said. "It harms the integrity of the HME supplier whose interests are aligned with the beneficiary."

Shortly after the CMS press conference, AAHomecare issued a statement questioning why it has taken Medicare so long to impose effective measures to prevent fraud. "It's important to note that Medicare has failed to effectively exercise its already ample authority to combat fraud and abuse. It is time for CMS to shine a spotlight on its own processes with respect to its ability to ensure the integrity of Medicare," the association said.

Several questions should be asked of Medicare officials, AAHomecare said:
--What is Medicare's accountability in the program's inability to prevent bad actors from obtaining a Medicare supplier number and the program's inability to identify billing irregularities?
--Why has Medicare failed to protect taxpayer dollars by enforcing its current mandates?
--How many fraudulent suppliers have been caught in their first year or are turned away when applying for a supplier number in Medicare?

"All I know is that while they are trying to eliminate fraud, basically what they are doing is torturing and terrorizing the good providers," said Lieber. CMS has upped its burdensome requests for additional documents and employs "scare tactics with demonstration projects where [providers] have to re-enroll as if they were already found guilty," she said.

That, plus competitive bidding and threatened reimbursement cuts, is causing some providers to ask whether it is worth it to stay in the business. "I am counseling people to really look at their core business," Lieber said. "We can't rely on the government anymore."

The reports are also unfair to beneficiaries because they do not let people know exactly what the implications of competitive bidding really are, Lieber said. All the extra service that providers routinely offer will disappear under competitive bidding, she said.

"We are one of the only medical communities left that actually does provide service," she said. "No more. Somehow, we need to let them know that all the good that we do right now isn't going to continue if they keep cutting ... We can't afford to continue doing business the way that we are doing it."

"I am very bullish on the industry, and I think it's going to continue to grow. Let's not be pessimistic. I think we have the right to be optimistic. Simply, the landscape has changed; we're having to play by new rules. Change is always traumatic, but if we are proactive and aggressive and as long as we're not scared of our own shadow, I think the well-run HME business--whether it's a major or a regional or a mom-and-pop--is going to do very well."
--Jeff Baird, chairman of the Health Care Group, Brown & Fortunato, P.C., Amarillo, Texas.

NPI, Accreditation Conferences Discussed at Open Door; Round Two Timetable--Not
BALTIMORE--Not using your National Provider Identification number? Then you will likely start seeing rejection of claims as early as this week, CMS officials said Wednesday during a CMS Open Door conference call.

HME providers were to start using the NPI number on their claims beginning Jan. 1, reminded Stewart Streimer, acting deputy director for the Center for Medicare Management. Providers can still use their legacy number along with the NPI in the primary fields only, but beginning May 23, only the NPI number will be acceptable in the primary fields, he said.

"If you are submitting claims without the NPI in the primary field, you are probably not seeing rejections yet. The bulk of those rejections will start coming early [this] week," Streimer warned. He urged providers to make sure their provider enrollment is current "so the NPI can work successfully."

He also suggested that providers who have successfully used the NPI number along with the legacy number start sending small batches of claims with the NPI number only to see if they will flow through the system without any problem.

While there was no new information for HME providers on this first call of the new year, Joel Kaiser, deputy director of DMEPOS policy for CMS, did address the dearth of information available when the second round of competitive bidding was announced last week.

With the first round, he said, the announcement included critical details such as HCPCS codes, ZIP codes and a timeline for bidding and implementation.

"At this point in time in Round Two, we aren't quite there yet," he said. "But the important thing is that we need to get suppliers started getting accredited and getting their businesses ready." He said the information about the products included in the bid and ZIP codes included in the bidding areas, as well as implementation details, will be released "in just a couple of months."

As for the Round Two timetable, Kaiser said, "We will have a detailed timeline when we are ready to have a detailed timeline."

CMS officials also clarified some accreditation deadlines for HME providers: Those applying for a provider number through the National Supplier Clearinghouse between now and Feb. 29 must be accredited by Jan. 1, 2009. Providers who apply for a provider number after March 1 must already be accredited. CMS has already announced that all providers who wish to continue billing Medicare must be accredited by Sept. 30, 2009.

Anticipating more questions about accreditation, CMS said it would hold quarterly conferences on the issue, with the first one scheduled for Jan. 22. Providers must register for the conference at http://www2.eventsvc.com/palmettogba/012208.

While much of the call was a reiteration of information that has been in CMS communications and in the press for months, it was still news to some providers, a point made clear in the question-and-answer segment of the Open Door session.

"What are the requirements to participate in competitive bidding?" a caller asked.

The question apparently took CMS officials aback, because the response was a bit delayed. Finally it came: "You need to register for a user ID. Other than that, I think you are eligible."

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