Aggressive power wheelchair marketing tactics part of a Medicare fraud scheme.

A fugitive owner of a Los Angeles-based durable medical equipment company was sentenced to nine years in prison following a more than $1 million power wheelchair fraud case, a Department of Justice (DOJ) press release announced on March 25.

Leonard Nwafor, owner and operator of Pacific City Group Inc (aka Pacific City Medical Equipment) will also serve three years of supervised release following his prison term, pay $526,243 in restitution and $25,000 in fines, and forfeit more than $526,000 in stolen Medicare funds.

He was convicted in September 2008 of conspiracy to commit health care fraud, as well as health care fraud. He has since fled and become a fugitive enemy of the government.

According to DOJ, Nwafor submitted $1,109,438 in fraudulent claims to Medicare and consequently received $526,243 in payments. All claims were for expensive, high-end power wheelchairs and wheelchair accessories that beneficiaries didn’t need.

Nwafor’s main scheme focused on recruiting beneficiaries through “marketers”, who approached potential recruits on the streets, community events, and at home. The marketers either forced or paid these beneficiaries in order to extract Medicare information and get more referrals, a witness claimed. Nwafor billed Medicare for power wheelchairs — at $7,000 each — on behalf of more than 170 beneficiaries who didn’t use them.

Nwafor and his co-conspirators went to great lengths to carry out their fraudulent scheme. One witness testified that an individual purporting to be from Medicare, but who was actually associated with Nwafor, threatened to terminate the Medicare benefits of the beneficiary and her husband unless they accepted two power wheelchairs that the beneficiary and her husband did not need.

He also used names of LA physicians on fake prescriptions, which he presented to support his fraudulent claims to Medicare. His accomplice Ajibola Sadiqr had pleaded guilty and is due to be sentenced in April.

The Medicare Fraud Strike Force (HEAT), supervised by the Criminal Division’s Fraud Section and the US Attorney’s Office for the Central District of California, is behind the filing of the case against Nwafor. Since its inception in 2007, the agency has gone after more than 500 individuals who have scammed Medicare for a total of about $1.1 billion.

Think the Recovery Audit Contractors are sticking to big-money providers? Think again.

Medicare’s audit bounty hunters may not yet have specified home health agency or hospice topics for review, but that doesn’t mean you have nothing to worry about from the new Recovery Audit Contractors.

Some observers thought that RACs’ permanent program reviews would stick to examining providers with big pockets — hospitals and perhaps physicians. RACs have hit those providers hard, but the four national contractors have also gotten 24 durable medical equipment topics approved for review, too.

RACs’ willingness to target DME when the sector represents such a small piece of the larger Medicare pie may mean they’re prepared to hit HHAs and hospices soon too.

“I think it is just a matter of time,” says hospice consultant Heather Wilson with Weatherbee Resources in Hyannis, Mass. “Home health and hospice were excluded from the RAC demonstration project, but they are explicitly included as a target in the permanent RAC program.”

Because RACs get paid on a contingency basis, they have an incentive to go after “every type of provider allowed,” Wilson tells Eli’s Home Care Connection.

RACs have to branch out from the hospital, physician, and DME supplier areas they’ve already covered, notes attorney Robert Markette Jr., who’ll be speaking more on the topic in this upcoming audio. Home care is a next logical place for reviews.

Hospices May Make Juicier Targets

“Hospice … could become a target of RACs much more quickly than the home health agencies,” predicts RAC expert Mark Sharp with BKD in Springfield, Mo. That’s because unlike HHAs, hospices have a higher claims review limit, meaning RACs can review more of their claims.

RACs can review 10 percent of a hospice’s average monthly paid Medicare claims (maximum of 200) per 45-day period, per NPI, notes law firm Arent Fox on its Web site.

In contrast, for HHAs, RACs can review  just 1 percent of average monthly Medicare services (maximum of 200) per 45-day period, per NPI,  Arent Fox says. And for DME, they can review 1 percent of average monthly paid Medicare services per 45-day period, per NPI.

So why would RACs go after DME and not HHAs if their claims review limit is the same? “Since the home health claims tend to be smaller … this limit does not allow the RACs to have a lot of opportunity to identify material improper payments,” which means lower contingency fees for the RACs, Sharp explains. Thus, it may not “make it worth their efforts.”

Suppliers, on the other hand, can have a “more voluminous” number of claims, “with some claims being significantly larger in dollars than home health,” Sharp notes. And numerous recent high-profile fraud busts in the HME industry probably don’t help, Markette adds.

Use Manual For Bundling Backup

Even though HHAs and hospices aren’t singled out for RAC scrutiny right now, some of the DME topics still will have an impact on them. That’s because Region D RAC Health Data Insights recently received CMS approval for these issues: “DME while in Hospice,” “Hospice Related Services ” B,” and “Medical Supplies and Home Health Consolidated Billing.”

All three reviews will be looking for things that should have been bundled into the hospice or HHA payment but received separate payment. This could cause suppliers, therapists, physicians, and others to come knocking on HHA and hospice doors for payment for claims dating as far back as Oct. 1, 2007.

HHAs and hospices are getting a first taste of RAC audits through these tangentially related topics, Markette observes.

Do this: That means now is a good time to brush up on the bundling rules for Medicare payment. If you’re a home health agency, you don’t have to pay every invoice for therapy or supplies that comes your way under HHA consolidated billing. “When you get a letter, don’t just say ‘we’ll cut you a check,’” Markette advises.

HHAs have to pay for supplies and services provided under arrangement during a patient’s episode, CMS explains in the Medicare Claims Processing Manual, Chapter 10, Section 20. “However, providing services either directly or under arrangement requires knowledge of the services provided during the episode,” CMS explains. “An HHA would not be responsible for payment to another provider in the situation in which they have no prior knowledge … of the services provided by that provider during an episode to a patient who is under their home health plan of care.”

In other words, if the therapist, supplier, or other provider didn’t get a contract with you prior to furnishing services, they are on the hook for payment, not you.

That means “before they provide services to a Medicare beneficiary, these providers or suppliers need to determine whether or not a home health episode of care exists for that beneficiary,” CMS instructs in the manual. They can ask the beneficiary, check with Medicare contractors, and/or check the Common Working File, the manual says.

In addition to the financial reasons for not paying, you could be courting compliance problems if you pay for services or supplies that weren’t medically necessary. If you plan to pay, you should ask the provider or supplier to justify the services first, Markette counsels.

Tip: Home care providers should prepare now for how to respond to such invoices, if you haven’t already, Markette suggests.

The above article is an abridged version of a longer article available to subscribers on Eli’s Home Care Connection. Subscribe to a free trial and get a sample letter HHAs can use to avoid compliance problems caused by after-the-fact invoices for bundled items or services.

CMS’s onerous new rules for durable medical equipment supply closets in physicians’ offices are on hold.

Under a controversial transmittal issued last August, DME suppliers would have to transfer their equipment to physicians if they kept a supply closet at the doctor’s office. Then docs would have to bill for the equipment under their own supplier numbers.

Now CMS has withdrawn the transmittal that contains those rules. “CMS is rescinding this change request to consider other implementation dates,” the agency says in an e-mail message to providers.

The rules would be “impractical for physicians and Medicare beneficiaries,” the American Association for Homecare notes. And “such an arrangement would have likely violated the physician ownership and referral statute — known as the Stark law.”

“The rule would have created serious disruptions in services for Medicare beneficiaries,” the trade group says. “We are very pleased with the decision that CMS has made.”

© Home Care Connection.

You can’t contact a new bene without his written consent, except in this instance.

We meant what we said and we said what we meant, the HHS Office of Inspector General essentially said when it reissued a 2003 fraud alert earlier this year. The OIG doesn’t want DME suppliers telemarketing Medicare beneficiaries except in these instances, the fraud alert explains:

• “the beneficiary has given written permission to the supplier to make contact by telephone;
• the contact is regarding a covered item that the supplier has already furnished the beneficiary; or
• the supplier has furnished at least one covered item to the beneficiary during the preceding 15 months.”

While the OIG’s fraud alert is meant to shield benes from DME suppliers hungry for Medicare dollars, it could slow patients’ access to medically necessary equipment, point out Reed Smith health care attorneys Elizabeth B. Carder-Thompson and Debra A. McCurdy in this recent blog post. Why the holdup?

Suppliers sometimes contact the bene after they they get the physician’s verbal or written order. But the fraud alert says that’s a no-no. The ”physician’s preliminary written or verbal order is not a substitute for the requisite written consent of a Medicare beneficiary,” the alert admonishes.

But now the OIG is changing its tune a bit in some recent ”Telemarketing FAQs.” Simply put, it’s OK for the supplier to call the bene for the first time if the physician has already told the bene he’s going to suss out a supplier for him. The supplier can’t call the bene if the physician doesn’t indicate that he’s going to contact a supplier. (See FAQ’s 3 and 4 to read these instructions in OIG-ese.)

Wow. With both benes and doctors involved, that’s a lot of flawless communication that needs to happen. Experience with both groups makes me think “Good Luck with that!” Let’s hope that all involved understand the rules, so that benes can get quick access to the DME their doctors say they need.

AUDIO TRAINING EVENT: Filing Frames, Lenses and CLs as DME: Get Paid & Protect Your Ophthalmology or Optometry Practice.

Industry points finger at confusing, overly complex documentation rules.

You may think the seat can’t get any hotter for durable medical equipment suppliers, but the HHS Office of Inspector General just turned the heat up another notch. Three out of five 2007 wheelchair claims the OIG inspected did not meet Medicare documentation requirements, the watchdog agency says in a new report. Two out of five claims had multiple errors per claim, the OIG says.

Out of $189 million the Centers for Medicare & Medicaid Services and Medicare beneficiaries paid for power wheelchairs in a six-month period during that year, $112 million was improper due to faulty documentation, the OIG says based on a 375-claim sample.

Biggest offenders: Complex rehab power wheelchairs had a higher documentation error rate, the OIG says. So did standard power wheelchairs submitted by low-volume suppliers.

Next: Check out this onerous list of documentation requirements …

The specialty evaluation report was another hot spot. It was “one of the documents most often not submitted by complex rehabilitation power wheelchair suppliers,” the OIG says. The OIG wants CMS to improve compliance with Medicare’s power wheelchair documentation requirements by conducting more review of wheelchair claims, recovering overpayments, taking “further actions” against suppliers that don’t meet documentation requirements, and increasing education.

Not so fast: The authorities shouldn’t be pointing a finger at suppliers for this problem, insists the American Association for Homecare. “The regulatory documentation requirements are confusing, onerous, and must be improved,” the trade group maintains.

“The OIG study does not illustrate a problem with provider compliance but rather it reflects the obstacles providers face with Medicare documentation and its paperwork requirements,” AAHomecare President Tyler Wilson says in a release.

“The paperwork requirements are confusing, shifting, and inconsistent.”

Wheelchair suppliers must have numerous types of documentation for wheelchairs, AAHomecare points out, including:

• a seven-element doctor’s prescription,

• supporting documentation from the patient’s medical record supplied by the physician,

• an onsite home assessment report,

• a detailed product description, and

• a specialty evaluation for complex rehabilitation power wheelchairs.

“The inequity and inefficiencies of this system are evident when, as the OIG found, only 7 percent of claims for complex rehabilitation wheelchairs meet Medicare’s documentation standards,” Wilson observes.

Plus: CMS has already slashed Medicare wheelchair payment rates by 35 percent in the past five years, AAHomecare says. “The OIG report actually confirms what wheelchair providers and physicians have said for the past three years,” Wilson says. “The Medicare documentation requirements for power wheelchairs are inconsistent, far too complex, and must be improved.”

Despite the industry’s vigorous defense and the looming competitive bidding program, the report could put wheelchair rates squarely in lawmakers’ sights when they’re looking for funding for other provisions in the health care reform package, observers worry.

© Eli’s Home Care Connection.

DME compliance tool available on CD: The right way to classify, organize & bill for DME.

Are the NPIs on your claims valid?

DME suppliers may start the new year off with severely restricted cash flow if they don’t pay attention to a new claims edit taking effect in January.

“Contractors are now comparing the [National Provider Identifier numbers] of ordering physicians listed on DME claims against a national list of Medicare-approved physician NPIs in the Medicare Provider Enrollment Chain and Ownership System (PECOS) database,” warns the American Association for Homecare.

We’ve got the link to the transmittal. Just click ‘read more.’

Back in April, the Centers for Medicare & Medicaid Services announced its new edits on ordering physician NPIs. Currently, contractors are just giving suppliers warnings about the invalid NPIs. But in January, Medicare will start denying payment for those claims.

Up to 60 percent of DME claims are currently receiving warnings, AAHomecare says. “These warnings will turn to rejections beginning January 4,” the trade group cautions.

Resource: The April 24 Transmittal No. 480 (CR 6421) detailing the new edits is online here.

© Eli’s Home Care Week.

This Friday’s audio: What hospitals need to know about the OIG’s 2010 Work Plan.

‘Supplying’ DME? Make sure your health system understands what ‘freedom of choice’ means.

If your hospital holds wheelchair clinics or allows a DME supplier to come to your site and fit patients with prosthetic or orthotic devices before discharge, you might have a freedom of choice problem on your hands.

CMS requires that Medicare and Medicaid beneficiaries have freedom of choice among providers and suppliers that are paid by the government programs. The OIG has even indicated that one factor in determining whether to impose sanctions under the Civil Monetary Penalty Act and the anti-kickback statute is whether a patient’s freedom of choice is preserved: For instance, according to the instructions for requesting an advisory opinion from the OIG regarding referral arrangements, a requesting party should address whether the arrangement “may result…in [a]n increase or decrease in patient freedom of choice among health care providers.”

Your job, if you are involved in providing DME to these patients — even if you’re not technically a “DME supplier” — is to make sure they know they have the freedom to choose the supplier from whom they get their device.

Here’s how to spot freedom of choice compliance problems in two common scenarios at hospitals, according to Duane Abbey, president of Abbey & Abbey, Consultants, Inc., who recently gave a workshop titled “Classify, Organize and Bill for Durable Medical Equipment.”

1. Wheelchair Clinics

Large hospitals often hold “wheelchair clinics,” in which a DME supplier/vendor brings in different types of wheelchairs for patients to test. While the hospital’s PT/OT staff helps to custom fit and evaluate the appropriateness of the different wheelchairs, patients themselves typically make a decision about a wheelchair and order it from the DME supplier.

The hospital itself does not sell any of this equipment. So what’s the problem?

“You run into a slight problem because the clinic is for only one supplier,” said Abbey. “Then that supplier has an inside track on actually selling the wheelchair to patients.” The result is a freedom of choice issue.

2. Fitting Before Discharge

When hospital inpatients require some sort of special prosthetic or orthotic device, a typical situation involves a DME supplier coming to the hospital, assessing the patient, acquiring the necessary device, and then fitting it at the hospital, generally just before the patient is discharged, said Abbey.

If the inpatient is receiving true DME before discharge from one particular supplier who could appear to have special access to your patients, “there is a freedom of choice issue here too,” said Abbey.

In addition, if your business office manager wants to know how to bill for these devices and associated services since the DME supplier is charging the hospital for the device, service, travel, and shipping, tell him the DME supplier has to bill for them, according to Abbey.

AUDIO TRAINING EVENT: What hospitals should know about the 2010 OIG Work Plan.

Are you going with the ‘closet’ option? Do this first.

If a patient comes into your hospital with a broken leg, you can’t very well send him home without crutches. But providing patients with the DME they need after their hospital visits raises many compliance concerns, including Medicare beneficiary “freedom of choice,” DME supplier classification, and advanced beneficiary notices.

So before you hand out those crutches at your hospital, take a look at where you stand regarding these 4 compliance hot spots, which Duane Abbey, president of Abbey & Abbey, Consultants, Inc., discussed in a recent workshop titled “Classify, Organize and Bill for Durable Medical Equipment.”

1. Free to Choose…

“Freedom of choice is a major compliance issue if you are dispensing true DME,” Abbey says. “True” DME can withstand repeated use, is primarily and customarily used to serve a medical purpose, and includes wheelchairs, crutches, canes, walkers, nebulizers, commodes, etc. It is also considered generally not useful to a person in the absence of illness or injury, and is appropriate for use in the home.

“You have to be so careful of freedom of choice,” said Abbey. “If you are dispensing true DME, you need to make sure and give patients a form that says, ‘You have freedom of choice; you don’t have to get this piece of DME from us.’” This can create problems for hospitals because of the fast pace and demand of ERs.

For instance, if you have a Medicare patient in the ER who needs crutches and it’s 2:00 a.m., “their freedom of choice is not that great. They need those crutches now,” Abbey pointed out. So if you provide the crutches you still have to make sure the Medicare beneficiary knows she has a choice of supplier.

2. Become a DME Supplier?

This raises yet another issue for hospitals and their ER departments. “If you’re a hospital,” he said, “it may be necessary for you to become a DME supplier.” CMS provides guidance here on on how to fill out the necessary forms. “Otherwise you may be doing some interesting little things to get around the need to bill the DME regional carrier,” he said.

Alternative: If you don’t want to be a DME supplier, one way to avoid it is to use a DME “closet” or consignment approach, in which the hospital allows a local DME supplier to put some crutches on site, and it’s the DME supplier who bills for them. “As long as you don’t have competing suppliers who want to use the space,” you should be fine, Abbey said, pointing to OIG Advisory Opinion 02-4, which addressed this issue in 2002.

3. DMEPOS Complications

The category of DMEPOS (DME, Prosthetics, Orthotics, and Supplies) also presents a major compliance issue, according to Abbey. The OIG, which on July 6, 1999 issued model compliance guidance for DMEPOS, is constantly monitoring it. To get a handle on the complexity of this issue, advised Abbey, “the thing you need to do, even before reading it, is count the number of footnotes. The entry is not that long, but it has 180 footnotes, which are in 8-point type. Be prepared to look at the detailed footnotes.”

Billing for items or services not ordered is a common compliance issue with DMEPOS. You must have a physician or qualified practitioner order something, and you may also need certificate of medical necessity (CMN). But you certainly need the ordering physician’s NPI on the claim form. “CMS is not always getting that,” Abbey warned.

Another common compliance problem is delivering or billing for certain items or supplies prior to receiving a physician’s order and/or an appropriate CMN. Out in the world this happens often, Abbey said: The physician says the patient needs a walker, and the patient goes to the DME store, which gives him the walker before the physician has signed the CMN or given the order. Avoid this situation.

4. Advanced ABNs

Advanced Beneficiary Notices, or ABNs, were implemented on October 1, 2002, and the forms continue to be updated and changed. Abbey said things to watch out for include the relationship of ABNs to Notices of Non-Coverage (NONCs) and to Hospital Issued Notices of Non-Coverage (HINNs).

The ABN is a form you are responsible for issuing to the patient who is receiving DME when you suspect it might be deemed not medically necessary and thus not covered by Medicare. Deciding when to issue an ABN is fraught with difficult questions, Abbey said. For example, who makes the decision about whether a patient needs a walker? What kind of walker is it? There are all kinds of walkers, and the question is which ones are medically necessary? “These are tough questions,” he concluded.

If you are dispensing an item that’s not ever covered, you don’t need an ABN, but an ANOC or an HINN. “The dividing line is tenuous, so if there’s any doubt about whether it’s covered, at least issue an ABN. That will give you some protection,” he said.

You can also use the Advance Determination of Medicare Coverage process as well, in terms of finding out if what you’re doing is going to be covered by Medicare. The ADMC is discussed in Chapter 10 of the NHIC, Corp’s manual concerning DME.

AUDIO TRAINING EVENT: What hospitals must know about the 2010 OIG Work Plan.