Waste, Fraud, & Abuse in DME

June 15, 2010
Committee on Ways & Means, subcommittees on health and on oversight
Hearing on Reducing Fraud, Waste and Abuse in Medicare

CLICK HERE to view video and pdf testimony 

Witness List

PANEL:
The Honorable Peter J. Roskam, a Representative in Congress from the State of Illinois
The Honorable Ron Klein, a Representative in Congress from the State of Florida
The Honorable Ileana Ros-Lehtinen, a Representative in Congress from the State of Florida
The Honorable Scott Murphy, a Representative in Congress from the State of New York

PANEL:
Lewis Morris, Chief Counsel, Office of Inspector General, U.S. Department of Health and Human Services
Edward N. Siskel, Associate Deputy Attorney General, U.S. Department of Justice, Chicago, Illinois
Kathleen M. King, Director, Health Care, U.S. Government Accountability Office
Kimberly Brandt, Director of Medicare Program Integrity, Centers for Medicare and Medicaid Services
 

Industry Response - AAHomecare

AAHomecare Disputes Claim that Bidding Program Is an Anti-Fraud Mechanism

American Association for Homecare staff attended the House Ways and Means subcommittee hearing today which focused on healthcare and Medicare fraud issues. In response to statements made during the hearing, the Association disseminated the following release to the national media.

WASHINGTON, June 15, 2010 --- 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.  

Industry Response - VGM

VGM June 15, 2010 - Oxygen Industry Again Attacked by OIG – Keep Working for Support of H.R. 3790

During today’s House Ways and Means hearing on Medicare Fraud, Waste, and Abuse, the oxygen industry was again scrutinized. Lewis Morris, Chief Counsel of the HHS OIG, made the following statement: “…in 2006, Medicare allowed approximately $7,200 in rental payments over 36 months for an oxygen concentrator that cost approximately $600 to purchase. Beneficiary coinsurance alone for renting an oxygen concentrator for 36 months exceeded $1,400 (more than double the purchase price).” While the primary focus of the nearly three-hour meeting was curbing fraud in the Medicare program, oxygen providers must once again go on the defensive and educat e their elected officials on the costs of providing services associated with the Medicare home oxygen benefit. A 2006 study (the same time period cited by Mr. Morris) by Morrison Informatics suggested that the average cost of providing equipment, supplies, and services for an oxygen patient exceeded $200 per month.

At several points during the hearing, panelists also touted the competitive bidding program as an effective means of curbing both fraud and wasteful spending through the Medicare program. At no point, however, was it discussed that the industry has effectively accomplished the same goals intended by the program (Click Here for details) or that the program would put thousands of companies out of business, costing more than 100,000 jobs (Click Here for details).