Government spotlight still on DME suppliers for fraud, abuse


HHBR Washington Correspondent

WASHINGTON – Despite the changing reimbursement landscape for the home health industry, some things have not changed, according to healthcare attorney Deborah Randall of Arent Fox (Washington). She says one of those things is the government’s fraud and abuse spotlight that remains fixed on durable medical equipment (DME) suppliers and, to a growing extent, hospice.

At a recent American Health Lawyers Association conference in Washington, DC, Randall highlighted a series of risk areas that are high on the government’s radar screen. For example, she said suppliers must continually check their employees to determine if they have ever been excluded. "Many suppliers don’t know this, but I have actually had a couple of people run into trouble with this," she said.

According to Randall, the Office of Inspector General (OIG) recognizes there are differences between agencies, DME companies, and hospices. "I think they do that sometimes better than others," she said. "When you look at the risk areas, I think it is daunting to know what to pay attention to."

Randall said she tries to categorize all the risk areas for DME and hospice in terms of four groups. First, there are what she calls the garden variety risk areas. "This is your basic billing for the dead beneficiary, upcoding claims, standard practice fraud and abuse," she said.

The next area is industry specific. "These are the ones I would concentrate on if I were doing a due diligence," said Randall.

The third group is what Randall calls "criminalized administrative" areas. "Some of these things should not be in a fraud and abuse document," she said. "They are survey and certification issues and operational issues."

Randall said the fourth area is the OIG’s wish list. "These are risk areas that are identified for both DME and hospice where the OIG is concerned, but it involves practices that I don’t think are illegal."

Randall pointed out that DME has 47 risk areas, and hospice has 28. But she says one common theme that runs through not only DME and hospice, but also home health, is the compliance guidance that runs through every single one. "This is what I call the play it again Sam’ refrain from the compliance guidance." According to Randall, every compliance guidance out there says there is a duty to self-report. But she said that things are not as clear as the compliance guidances would like them to be about the duties to self-report.

Randall challenges the obligation to self-report. "I think every single case has to be examined on its own merits, and there are specific provisions in DME that contemplate DME companies making refunds when beneficiaries go into nursing homes or die," she said. "Refunds are a normal part of the industry in healthcare, particularly in DME, and to some extent in hospice, and every overpayment is not criminal."

According to Randall, the most important item continues to be certificates of medical necessity (CMN). "If you look at the risk areas and the compliance guidance as a whole, there are zillions that relate to this topic," she warned. "There are incredibly arcane, detailed bureaucratic requirements that the poor beleaguered DME industry has to go through before it can get claims paid for."

Related to CMNs are cover letters, she said. "I think quite frankly that the compliance guidance is a bit misleading on this subject," she added. DME suppliers are allowed to give physicians Dear Doctor’ cover letters for wheelchairs, power operated vehicles, oxygen concentrators, and other items, but only for a period of time, she said.

But she warns that even now that cover letters are not regulated and CMNs can be faxed, many DME suppliers do not realize that the original CMN has to be kept on file.

Another specific DME issue highlighted in the compliance guidance is telemarketing. "There is in the Social Security Act what I believe is probably an unconstitutional provision that restricts specific marketing by DME companies," she said. "They can’t do telemarketing or make cold calls unless they have had prior contact with the patient or the patient has contacted them."

The last issue Randall pointed to is place of service codes. According to Randall, there is some misunderstanding in the industry, and it is obliquely stated in the compliance guidance, that DME cannot be supplied in a nursing home or in a facility that meets the definition of a nursing home. "I mention this because we were asked to testify in a trial against a lawyer who missed this particular issue," she said. "We were not comfortable doing it, but this is an issue that is very easily missed."

Included in the risk areas for DME are capped rentals, noted Randall. "This is a payment issue, and I do not think this is a criminal issue," she said. But, she said, the OIG has listed it in the compliance guidance.

Randall said supplier standards are another area where the DME industry often falls down. "It seems like a stupid little requirement," she asserted, "but DME companies have to provide a list of the supplier standards to patients, and half of them don’t know that."

High on what Randall calls the OIG’s wish list is billing for substantially excessive amounts of items. "I don’t really know how the OIG expects to regulate something like this when there is a physician prescription for a certain number of items, and the supplier provides a certain number of items," she asserted. "I think this type of second guessing is going to be very difficult."

Randall also highlighted the issue of co-location of items with a referral source, sometimes referred to as consignment clauses where DME companies locate items in the hospital or in the physician’s office. "My experience is that this is primarily just for convenience," she said. Randall cited suppliers who provide custom-made orthoses and maintain the base materials in a physician’s office, so the physician can fit the orthoses to the patient.

Likewise, if hospitals want to discharge a patient with a cane, and they use a particular DME supplier, she said, it does not make sense for the DME supplier to make a special trip to the hospital in the middle of rush hour in Boston to deliver a cane.

But Randall said there have been rumblings, and in some cases more than rumblings, that the government views this as an unethical or improper practice.

According to Randall, several specific areas that the government is going to be looking at with regard to DME are seat lifts, lower limb prostheses, osteogenesis stimulators, airway pressure devices, orthotics, ventilators, blood glucose strips. "Unfortunately for the industry, the list goes on and on," she said.