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Home Medical Association Disputes Claim that Medicare's "Competitive" Bidding Program Is an Anti-Fraud Mechanism

Wednesday, June 16, 2010 General News J E 4
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WASHINGTON, June 15 The American Association for Homecare takes issue with the claim, made during a congressional hearing today, that Medicare's deeply flawed "competitive" bidding program for home medical equipment and services is an effective anti-fraud tool.

"To characterize the bidding program as a mechanism for stemming fraud is extremely misleading," said Tyler J. Wilson, president and CEO of the American Association for Homecare.

"The real solution to keeping criminals out of Medicare is better screening, real-time claims audits, and better enforcement mechanisms for Medicare. Last year, our Association proposed an aggressive 13-point legislative action plan to combat fraud, and many of those provisions are included in bills that have been introduced in Congress, including Sen. George LeMieux's anti-fraud legislation, The Prevent Health Care Fraud Act of 2009 (S. 2128), and its companion bill in the House, H.R. 4222. Also, two new requirements that took effect in October 2009 - supplier accreditation and surety bonds - will go far toward eliminating fraud."

"In setting the record straight, we want to make sure the government acknowledges that it has done a poor job in enforcement of up-front controls that would otherwise keep criminals from defrauding Medicare and tarnishing the name of legitimate home medical equipment providers," said Wilson.

The hearing today was conducted jointly by the House Ways and Means subcommittees on Health and Oversight. Testimony from the Government Accountability Office and the Department of Health and Human Services Office of Inspector General both suggested that Medicare's "competitive" bidding program might be an effective tool in preventing fraud.

"Decimating the population of home medical equipment providers through this bidding program is an imprecise way to address fraud in Medicare," said Tyler Wilson. "It will produce more problems than it will solve in terms of adversely affecting Medicare beneficiaries and the homecare providers who serve them."

The Association supports H.R. 3790, a bipartisan bill that would preserve access to homecare and provide a cost-effective alternative to a misguided Medicare "competitive" bidding program for durable medical equipment. H.R. 3790 replaces the Medicare bidding program with other types of cost-savings that will reduce reimbursements to home medical equipment providers but preserve patient access to medically required equipment and services in the home. The bidding program was implemented briefly in 2008 but Congress delayed the program with the expectation that the Centers for Medicare and Medicaid Services (CMS) would improve it. The durable medical equipment sector agreed to a reimbursement rate cut in order to pay for the savings the bidding program had been projected to save.

So far, the bill has 247 cosponsors in the U.S. House of Representatives with broad bipartisan support. More than half of both the Democratic and Republican delegations in the House support the bill.

Patient and consumer groups that support the elimination of Medicare's "competitive" bidding program for durable medical equipment include the ALS Association, the American Association for Respiratory Care, the American Association of People with Disabilities, International Ventilator Users Network, the Muscular Dystrophy Association, National Emphysema/COPD Association, National Spinal Cord Injury Association, and Post-Polio Health International, among others.

Proponents of the Medicare bidding program for durable medical equipment have perpetuated several myths about the program. However, the reality is quite different.

MYTH: The bidding program will be good for Medicare beneficiaries.

REALITY: It will, in fact, reduce access to medically required equipment and services.

MYTH: The program will eliminate Medicare fraud in the durable medical equipment sector.

REALITY: The solution to fighting fraud is better screening of providers, real-time claims audits, stiffer penalties, and better enforcement mechanisms for Medicare - steps that the home medical providers support.

MYTH: The bidding program helps businesses by creating a more competitive environment.

REALITY: Because Medicare is the largest third-party purchaser of home medical care, its market power will effectively coerce providers to bid at unsustainable reimbursement rates to ensure the opportunity to serve Medicare beneficiaries. But ultimately, the below-market rates achieved through bidding will force thousands of businesses to close, reducing competition in the long term.

MYTH: Providers will be competing on quality and price.

REALITY: The bidding program will ration care. Home medical equipment providers already compete on the basis of quality and help move people smoothly from hospitals to cost-effective care at home.

MYTH: The bidding program will make healthcare more cost-effective.

REALITY: The home is already the most cost-effective setting for post-acute care. As more people receive good equipment and services at home, the U.S. will spend less on longer hospital says, emergency room visits, and nursing home admissions.

The American Association for Homecare 13-point anti-fraud legislative action plan includes the following specific recommendations:

Mandate Site Inspections for All New Home Medical Equipment Providers

A July 2008 GAO report underscored the need for CMS to ensure that its contractors are conducting effective site inspections for all new applicants for a Medicare supplier number.

Require Site Inspections for All HME Provider Renewals

All renewal applications should require an in-person visit by the National Supplier Clearinghouse (NSC), the contractor that CMS uses to ensure integrity in the Medicare program.

Improve Validation of New Homecare Providers

Additional validation of new providers should be included in a comprehensive and effective application process for obtaining a Medicare supplier number.

Require Two Additional Random, Unannounced Site Visits for All New Providers

Two unannounced site visits should be conducted by NSC during the first year of operation for new HME providers.

Require a Six-Month Trial Period for New Providers

The NSC should issue a provisional, non-permanent supplier number to new suppliers for a six-month trial period. After six months of demonstrated compliance, the provider would receive a "regular" supplier number.

Establish an Anti-Fraud Office at Medicare

CMS should establish an office with the sole mandate of coordinating detection and deterrence of fraud and improper payments across the Medicare and Medicaid programs.

Ensure Proper Federal Funding for Fraud Prevention

Increase federal funding to ensure that NSC completes site inspection and other anti-fraud measures.

Require Post-Payment Audit Reviews for All New Providers

Medicare's program safeguard contractors should conduct post-payment sample reviews for six months worth of claims submitted to Medicare by new providers.

Conduct Real-Time Claims Analysis and a Refocus on Audit Resources

Medicare must analyze billings of new and existing providers in real time to identify aberrant billing patterns more quickly.

Ensure All Providers Are Qualified to Offer the Services They Bill

A cross-check system within Medicare databases should ensure that homecare providers are qualified and accredited for the specific equipment and services for which they are billing.

Establish Due Process Procedures for Suppliers

CMS should develop written due process procedures for the Medicare supplier number process, including issuance, denial and revocation of the Medicare supplier number. The procedures must include, for example, an administrative appeals process and timelines.

Increase Penalties and Fines for Fraud

Congress should establish more severe penalties for instances of buying or stealing beneficiaries' Medicare numbers or physicians' provider numbers that may be used to defraud the government.

Establish More Rigorous Quality Standards

Ensure that all accrediting bodies are applying the same set of rigorous standards and degree of inspection to their clients.

More about the Association's anti-fraud action plan can be viewed at www.aahomecare.org/stopfraud.

The American Association for Homecare represents durable medical equipment providers, manufacturers, and others in the homecare community who serve the medical needs of millions of Americans who require oxygen equipment and therapy, wheelchairs and assistive technologies, medical supplies, inhalation drug therapy, and other medical equipment and services in their homes. Members operate more than 3,000 homecare locations in all 50 states. Visit www.aahomecare.org/athome.

SOURCE American Association for Homecare
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