News Briefs

CMS starts plan to boost compliant claims

The Centers for Medicare & Medicaid Services (CMS) has implemented a contingency plan to accept noncompliant electronic transactions. This plan will ensure continued processing of claims from thousands of providers who were not able to meet the deadline and otherwise would have had their Medicare claims rejected, CMS said.

"Implementing this contingency plan moves us toward the dual goals of achieving HIPAA [Health Insurance Portability and Accountability Act] compliance while not disrupting providers’ cash flow and operations, so that beneficiaries can continue to get the health care services they need," said CMS Administrator Tom Scully. CMS made the decision to implement its contingency plan after reviewing statistics showing unacceptably low numbers of compliant claims being submitted.

"Medicare is able to process HIPAA-compliant transactions," said Tom Grissom, director of CMS’ Center for Medicare Management, "but we need to work with our trading partners to increase the percentage of claims in production."

The contingency plan permits CMS to continue to accept and process claims in the electronic formats now in use, giving providers additional time to complete the testing process. A CMS spokesperson points out that implementation of this contingency plan does not affect the transactions and code sets requirement that all claims be submitted electronically. Institutional providers with 25 or fewer employees and noninstitutional providers with 10 or fewer employees are the only providers that still will be able to bill Medicare on paper after Oct. 16.

Study: More than half of HHAs not ready for HIPAA

As of May 2003, only 43% of home health agencies responding to the Alexandria, VA-based American Association for Homecare’s (AAHomecare) 2003 Financial Performance Survey Report indicated that they were in compliance for the Health Insurance Portability and Accountability Act (HIPAA) October deadline for electronic transactions. Home health companies spent an average of $5,700 on Information technology (IT) compliance with 25% of respondents spending more than $17,000.

The annual survey of financial and management practices of home-care companies is based on data from the previous year’s operations. This is the 14th Survey Report released by AAHomecare and features new sections on HIPAA IT compliance and delivery and clinical personnel efficiencies.

"This report is the leading industry benchmark for the financial and operational management of home-care providers. It provides an opportunity for our diverse membership to see how they measure up against industry averages with companies of similar size and market segment," said Kay Cox, AAHomecare president and CEO.

"The comparative information in this survey is an essential tool for management teams within the homecare industry," she stated.

Key findings in the survey this year include:

  • Hospital ownership of firms was 28% in 2002. In past surveys, the proportion of hospital ownership has ranged anywhere from 25% to 35%, putting this year’s results at the lower end of the range.
  • In 2002, overall accounts receivable days outstanding averaged 83 days, which is down by 2% over the prior year. The percentage of receivables for a period of 120 days remained high at 24%.
  • The 8% of participating companies that reported making an acquisition experienced an overall growth rate of 22% (up from 16% in 2001). However, their average growth rate for continuing business was 9%, closer to the industry average.

The entire study, including additional profit statistics and a wide range of additional industry financial data, can be purchased by visiting the AAHomecare web site ( or by calling Allison Barton-Kramer at (703) 535-1883. The cost is $250 for AAHomecare members, $500 for nonmembers.

CMS begins effort to stop wheelchair benefit abuse

The Centers for Medicare & Medicaid Services (CMS) announced an initiative to substantially curb abuse of the Medicare program by unscrupulous providers of power wheelchairs and other power mobility products who prey on Medicare beneficiaries.

At the same time, the Department of Health and Human Services Office of Inspector General (OIG) said it is investigating the proliferation of durable medical equipment (DME) fraud cases involving inflated billings to Medicare, charges for equipment and supplies not delivered, and the falsification of documents to qualify beneficiaries for wheelchairs and other equipment that they often did not need.

"Spending on power wheelchairs has increased nearly 450% over the last four years, an unprecedented growth in this benefit," said Tom Scully CMS administrator. "While many of these wheelchairs are provided by ethical suppliers and go to beneficiaries in need, we know that a great number of unscrupulous suppliers are promising free wheelchairs to beneficiaries who don’t need them. We are taking immediate action to stop these scams," he added.

Acting Principal Deputy Inspector General Dara Corrigan warned Medicare beneficiaries to be suspicious of offers of "free" scooters and other enticements from unscrupulous suppliers. "DME fraud is a major and increasingly serious problem that costs taxpayers billions in lost and wasted dollars and deprives vulnerable beneficiaries of the care and support they need. The perpetrators of these fraudulent schemes face serious consequences, including fines, jail time, and exclusion from doing business with Medicare and other federal health programs." she said.

CMS plans to start its nationwide cleanup campaign in Texas, where recent reports from the CMS Dallas Regional Office and a Houston newspaper have highlighted a growing and very serious financial threat that improper spending on wheelchairs poses to the Medicare program.

In Harris County, TX, alone, Medicare paid for more than 31,000 power wheelchairs in 2002, compared to a little more than 3,000 power wheelchairs in 2001. HHS agencies will work with the Department of Justice in attacking the problem.