Medicare:

CMS's Program Safeguards Did Not Deter Growth in Spending for Power Wheelchairs

GAO-05-43: Published: Nov 17, 2004. Publicly Released: Dec 15, 2004.

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Medicare spending for power wheelchairs--one of the program's most expensive items of durable medical equipment (DME)--rose more than fourfold from 1999 through 2003, while overall Medicare spending rose by about 11 percent for the same period, according to the Centers for Medicare & Medicaid Services (CMS). This spending growth has raised concerns that some of the payments may have been improper. In May 2003, the Department of Justice indicted several power wheelchair suppliers in Texas alleged to have fraudulently billed Medicare. GAO was asked to examine the early and more recent steps taken by CMS and its contractors to respond to improper payments for power wheelchairs.

Starting in 1997 and over the next 6 years, CMS's contractors repeatedly communicated with CMS officials about escalating spending for power wheelchairs, and the contractors took steps to respond to improper payments for this Medicare benefit. In 1997, one contractor warned the agency about rapid increases in power wheelchair spending. In 1998 and in 2000, medical directors at the four contractors that pay DME claims suggested steps that could be taken and sought CMS's help in curbing power wheelchair spending growth. However, while contractors continued to conduct in-depth medical reviews of claims for power wheelchairs and to investigate cases of suspected fraud, CMS did not begin to assume an active role in addressing the identified problems until September 2003. Problems included Medicare supplier standards that did not provide adequate guidance on appropriate marketing practices and the predictability of visits to screen suppliers, which made it relatively easy for illegitimate suppliers to prepare for, and pass, site inspections. Since September 2003, CMS has taken steps to prevent fraudulent suppliers from entering the Medicare program, clarify coverage policy, ensure appropriate pricing for power wheelchairs, provide education on coverage rules, conduct detailed claims reviews where power wheelchair fraud was prevalent, and coordinate with law enforcement agencies. Although CMS has made progress, it has not implemented a revised form to collect better information for power wheelchair claims review, clarified guidance for suppliers on appropriate marketing, or required its contractor to routinely conduct less predictably timed site visits. Further, CMS's response to power wheelchair spending highlighted the lack of a process within the agency to rapidly address indications of potentially improper DME payments.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To help ensure that improper payments are identified and addressed in a timely manner and that Medicare pays properly for power wheelchairs and other items of DME, the Administrator of CMS should strengthen the standards for Medicare DME suppliers to include prohibiting certain misleading or abusive marketing practices.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

    Status: Closed - Not Implemented

    Comments: While CMS officials indicated that the agency agreed with this recommendation and was exploring whether or not its current authorities allow it to effectively address direct-to-consumer marketing beyond telephone solicitation, it never took further action. CMS is enforcing the provisions of section 1834(a) (17) of the Social Security Act that prohibit unsolicited telephone contacts by suppliers, but there are no prohibitions on other forms of direct to consumer marketing, such as through the internet. The agency has never requested a legislative remedy that would aid CMS in pursuing an amendment to the supplier standards to prohibit misleading or abusive marketing practices.

    Recommendation: To help ensure that improper payments are identified and addressed in a timely manner and that Medicare pays properly for power wheelchairs and other items of DME, the Administrator of CMS should implement a revised CMN that incorporates key elements of power wheelchair coverage criteria to help DME regional carriers properly adjudicate claims.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

    Status: Closed - Implemented

    Comments: In August 2005 CMS published an interim final rule that implemented a requirement that a physician or treating practitioner conduct a face-to-face examination of a beneficiary before prescribing a power wheelchair or power scooter and eliminated the need for the CMN. CMS stated that it eliminated the CMN because it did not help physicians better document their patients' clinical needs for power wheelchairs, did not serve to ensure that beneficiaries always received appropriate equipment, and did not serve as an effective deterrent to fraud and abuse. Rather than having to transcribe information separately onto a CMN, physicians and treating practitioners will now submit copies of relevant, existing documentation from the beneficiary's medical records and a written prescription before a supplier provides the beneficiary with a power wheelchair. While the interim final rule removed the requirement for a CMN, it is consistent with the intent of GAO's recommendation to provide sufficient information to allow Medicare contractors to correctly adjudicate power wheelchair claims.

    Recommendation: To help ensure that improper payments are identified and addressed in a timely manner and that Medicare pays properly for power wheelchairs and other items of DME, the Administrator of CMS should develop a process within CMS to focus on trends in Medicare spending and disproportionate or suspicious Medicare payments; develop strategies to address the trends that may indicate possible improper payments for DME; and take timely action, when warranted.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

    Status: Closed - Not Implemented

    Comments: The Centers for Medicare & Medicaid (CMS) officials indicated that the agency agreed with this recommendation and is implementing new steps to analyze program data and detect improper payments and potential areas of fraud and abuse. CMS opened Los Angeles and Miami satellite offices to focus on identifying fraud and abuse in Southern California and Florida. According to agency officials, the Los Angeles and Miami satellite offices have fostered an environment where new strategies, new data uses and new operational plans have been developed and implemented to combat fraud differently than it has been done in the past. CMS indicated it will continue to explore ways to more effectively combat fraud, including the establishment of additional satellite offices. CMS has established a set of individuals within its program integrity group to analyze claims data and identify problematic trends. The group has focused on some particular providers and services, such as billing by independent testing facilities in Southern California, and is working with its contractors and its new Southern California satellite office to address the vulnerabilities. In addition, the CMS issued a Final Rule on Conditions for Payment of Power Mobility Devices, including Power Wheelchairs and Power-Operated Vehicles and a National Coverage Determination (NCD) on mobility assistive equipment (MAE). Despite these efforts, it is not clear that CMS has taken sufficient action to focus on trends in Medicare spending and disproportionate or suspicious Medicare payments and taken timely action, when warranted.

    Recommendation: To help ensure that improper payments are identified and addressed in a timely manner and that Medicare pays properly for power wheelchairs and other items of DME, the Administrator of CMS should, in addition to conducting the currently required initial and reenrollment site visits, direct NSC to routinely conduct out-of-cycle site visits to suppliers that are suspected of billing improperly and to maintain data on these visits and their results.

    Agency Affected: Department of Health and Human Services: Centers for Medicare and Medicaid Services

    Status: Closed - Implemented

    Comments: The Centers for Medicare & Medicaid Services contracts with the National Supplier Clearinghouse (NSC) to conduct these site inspections. NSC conducts site inspections primarily during enrollment and every three years thereafter. However, because the timing of inspections is predictable, a supplier intent on committing fraud can anticipate a site inspection and create the illusion of legitimacy, fully understanding that an inspector is not likely to return for 3 years. As a result, out-of-cycle site inspections have been effective in identifying suppliers that are non-compliant or potentially engaged in fraud. NSC conducts some out-of-cycle inspections, but its contract does not require it to do so, and this activity could be terminated or curtailed at any time. Out-of-cycle site inspections can be so valuable that GAO recommended that CMS direct its contractor to routinely conduct them for suppliers suspected of billing improperly. As a result, CMS included language in the new contract that will require the contractor for NSC to conduct random, out-of-cycle site visits as resources permit.

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