Florida provides a role model for HCFA
Florida provides a role model for HCFA
A look at Florida’s surety bond program
The Health Care Financing Administration (HCFA) is carefully studying Florida’s Medicaid anti-fraud measures, which reportedly will save state taxpayers nearly $192.5 million over two years. In particular, HCFA is taking a careful look at the state’s $50,000 surety bond requirement, which was implemented in December 1995 and expanded the following year. (See cover story.)
"Our agency director [Douglas M. Cook] has been to Washington numerous times to explain what we have been doing," says Sandy Berger, a spokeswoman for the Florida Agency for Healthcare Administration in Tallahassee.
The one-year surety bond requirement was put in place for all new Medicaid durable medical equipment (DME) suppliers, private transportation companies, non-physician owned clinics and home health care agencies statewide. It was expanded in September 1996 to include all current Medicaid-enrolled DME suppliers, private transportation companies, non-physician-owned clinics, and independent labs in Dade and Broward counties, where there has been a lot of fraudulent activity in the past.
DME providers drop 62%
Combined with an additional requirement that called for existing DME, home health and transportation providers to re-enroll according to the state’s newly implemented, more-stringent enrollment process, the number of DME suppliers dropped 62%, the number of home health providers dropped 41%, and the number of transportation providers dropped 58%. Berger says there was no reported impact on access to care.
"We felt like there was an overabundance of providers in these areas, and this tended to eliminate anyone who had a fraudulent history or was a smaller provider who didn’t think they were going to get enough business to warrant it," she notes.
She is quick to point out that the reductions were not exclusively due to the surety bond requirement but were a cumulative effect of several of Florida’s fraud-reduction efforts.
For that reason, Mark Hobratschk, associate director of government relations for the Health Industry Distributors Association, in Alexandria, VA, says he doesn’t expect similar results on a national scale if HCFA’s surety bond proposal becomes a requirement.
"The numbers in Florida seem high, but it’s my understanding there were several factors at work at once," he says.
These factors include the re-enrollment requirement, new background checks of owners, and more in-depth on-site visits.
However, DME providers have been placed under closer scrutiny than other providers, Berger admits.
"We have required DME providers to extend their one-year surety bond indefinitely," she says. "We have proposed legislation [H.B. 759 and 757 and S.B. 2232 and 2234, all before committee in the House and Senate] that will require DME providers to become [state] licensed." Berger notes that the legislation is designed to maintain quality safeguards and standards while providing an up-front fraud deterrent. The bills include an Oct. 1, 1997, implementation date and are not expected to receive opposition.
Jim LaFeir, RN, the president of Care Partners, a home infusion agency in Davie, FL, says the surety bond requirement would have threatened to put his agency out of business.
"We were grandfathered [into the surety bond program], but if we hadn’t been, it would have killed us," he says.
LaFeir says that making a flat-rate surety bond requirement is unfair to the smaller providers.
"To make a blanket requirement is not really appropriate," he says. "They should look at the services you’re providing, the volume of service, revenue, and other things. Fifty thousand dollars is my payroll for an entire month."
Although the agency was not required to post a surety bond, the requirement has collared its ability to expand.
"We don’t do DME at this point, but it stopped us from doing it," says LaFeir. "We have considered the possibility of going into the DME market, but right now there’s a lot of expansion we can’t do because of the surety bond requirement. We were going to have an infusion clinic, and we can’t do that because of the surety bond."
That’s not to say LaFeir is outraged at Florida’s crackdown, even though the state has made it difficult for small providers such as Care Partners to expand.
"We run a really strict business, and I feel like we’re being punished for the wrongs of other people," LaFeir says. "But at the same time, it has corrected a situation where people were really out of control down here."
Home IV Care in Eustis, FL, also was grandfathered in and therefore not mandated to acquire a surety bond. Mary Gaffney, the agency’s clinical support coordinator, understands why Florida took the steps it did to reduce fraud. She’s quick to note, however, that it’s not just the blatantly fraudulent agencies that will get caught.
Last month, for example, Home IV Care was dealing with a private-pay patient in a nursing home. The nursing home had a contract with an infusion agency for pharmacy supplies. This agency placed a midline catheter in the patient, after which the patient’s family requested Home IV Care supply the IV fluids. The contracted agency responded that it would charge $800 for placing the midline if it did not supply the IV fluids, but just $300 if it was allowed to supply the fluids. Although the patient was not on Medicaid, Gaffney says this is a prime example of what the state is trying to stop in its own health care program.
"There’s no reason to charge a patient $500 more because they’re not getting the IV solutions from you," she says. "It isn’t illegal to do what they’re doing, but it is in a gray area, and morally and ethically it wasn’t the right thing to do."
Subscribe Now for Access
You have reached your article limit for the month. We hope you found our articles both enjoyable and insightful. For information on new subscriptions, product trials, alternative billing arrangements or group and site discounts please call 800-688-2421. We look forward to having you as a long-term member of the Relias Media community.