March 9, 2012
Last August, a Los Angeles jury found Christopher Iruke and Connie Ikpoh, co-pastors of the Arms of Grace Christian Center Church, guilty of defrauding Medicare of more than $14 million. The church had set up a durable medical equipment supply company that specialized in selling motorized wheelchairs.
For a half decade until their arrest in February 2011, the pastors submitted claims to Medicare based on fraudulent prescriptions and documents purchased from employees at local hospitals, who were also indicted in the scheme. According to trial evidence, Medicare was billed as much as $6,000 for wheelchairs that cost $900 wholesale. Besides being wildly overpriced, the chairs were often medically unnecessary and, in some cases, never provided. Last month, Ikpoh was sentenced to three years in jail.
How Medicare Wastes Almost $50 Billion a Year
Suppliers of durable medical equipment like motorized wheelchairs can play a critical role in the lives of many seniors. Yet the frequency of fraud in the industry has turned its supply into Medicare’s most vilified program, subjected for two decades to repeated Congressional hearings and government reports alleging rampant overutilization, overpricing and fraud.
Nine percent of power wheel chair claims were medically unnecessary. Another 78 percent had physician documentation that differed from the paperwork submitted by suppliers.
An HHS Inspector General’s report issued last July found that nine percent of power wheel chair claims were medically unnecessary. Another 78 percent had physician documentation that differed from the paperwork submitted by suppliers, which could indicate that providers were “upcoding” the prescription to sell more expensive chairs. “In most cases, physicians’ records had insufficient documentation to support the medical necessity of power wheelchairs,” the report stated.
Despite the scrutiny, and numerous government prosecutions like the one in Los Angeles, durable medical equipment sales was one of the fastest growing cost centers in all of healthcare in 2010. According to the latest Center for Medicare and Medicaid Services (CMS) report on total national healthcare costs, spending on durable medical equipment rose 7.3 percent to $38 billion in 2010, a year when overall health care spending rose just 3.9 percent.
Within Medicare, where the category accounts for less than 2 percent of spending, anti-fraud efforts begun during the Bush administration succeeded in holding costs relatively flat over the last several years. Yet the Obama administration, CMS and some advocates for seniors remain concerned about rampant overutilization, and are determined to further restrict its growth. The agency in June will begin requiring suppliers to submit paperwork and obtain prior authorization before approving the purchase of motorized wheelchairs.
“Prior authorization is a tool used by many insurance companies, but it has never before been used by Medicare,” said Melanie Combs-Dyer, deputy director of provider compliance at CMS. “This will give us a new tool.”
The industry is hiring some of Washington’s most high-powered lobbyists to postpone or change CMS’s competitive bidding rollout
The agency is also implementing a competitive bidding program in 91 of the largest markets in the country that will cover ten categories of durable medical equipment, which in addition to wheelchairs includes portable oxygen generators and tanks, diabetic supplies and in-home hospital beds. A pilot project in nine test markets that included South Florida, a hotbed of durable medical equipment overuse and fraud, resulted in a 32 percent reduction in Medicare’s costs, according to a recent Government Accountability Office report.
The industry, to no one’s surprise, is fighting back with leading companies and trade associations hiring some of Washington’s most high-powered lobbyists to postpone or change CMS’s competitive bidding rollout. They enlisted former Congresswoman Nancy Johnson, originally from Connecticut, to oppose the bidding program. She chaired the House Ways and Means health subcommittee until she lost her 2006 re-election bid. Johnson’s current clients include The Scooter Store, which is the best known supplier in the field because of its ubiquitous cable television ads touting how easy it is to get Medicare to pay for motorized wheelchairs.
The industry’s trade group, the American Association for Healthcare, initially lobbied for cancellation of competitive bidding. Last year it garnered 168 co-sponsors from both sides of the aisle on a bill that would repeal the program, which was authorized in the 2003 Medicare Modernization Act. When repeal went nowhere, industry supporters offered a replacement measure that would modify the bidding program, which AAH officials say is flawed.
There is no evidence that patients have been cut off from suppliers or suffered in the pilot cities
“A year ago, we wanted the whole thing to go away,” said AAH president Tyler J. Wilson. “Maybe that was wishful thinking. Now we’re looking to help Medicare get to a reasonable price where beneficiaries don’t suffer and the Medicare homecare system doesn’t come apart at the seams.”
In a letter sent to Capitol Hill in early February, AAH charged that “hundreds of patients and providers have reported problems and complaints about getting physician-prescribed home medical equipment and services. This program has clearly failed and needs to be replaced as soon as possible,” Wilson wrote.
CMS says there is no evidence that patients have been cut off from suppliers or suffered in the pilot cities. The agency’s monitoring detected no increase in the use of emergency rooms, longer hospital stays or use of skilled nursing facilities, which could be triggered by a failure to obtain needed equipment. A special 24-hour hotline, heavily advertised in local media, received fewer than 60 complaints in the nine cities. “The number of true concerns was so minimal that we didn’t have to deploy it,” said Jonathan Blum, deputy director of the Center for Medicare at CMS.
Local suppliers counter that the impact will be felt by beneficiaries in the form of higher out-of-pocket costs and delays in services like getting wheelchairs repaired or in-home oxygen tanks replaced. Those services are now embedded in the price of the products and will be reduced or eliminated in firms’ desperation to submit winning bids.
“We’re already seeing a shift in people being willing to pay cash,” said Stephen Ackerman of Spectrum Medical in Silver Spring, MD. “Nobody has the guts to say Medicare is becoming like the Medicaid system, while people who can reach into their own pockets if they want better products and better service.”
Correction: The first posting of this story inaccurately described durable medical equipment as the fastest growing part of Medicare, which rose 0.5 percent in 2010, a year when overall Medicare spending rose 5 percent.