Power Mobility Devices (PMD) Fraud “On the Run”

Medicare covers scooters and power mobility devices (PMDs) when beneficiaries need them to perform daily living activities at home. However, PMDs are sometimes provided when not medically necessary. PMDs have presented a major fraud and abuse issue for many years and continue to be a focus of attention, evidenced by its inclusion in the 2015 OIG Work Plan. However, recent actions by federal regulators and enforcement have put this problem “on the run.” In 2012, the HHS OIG noted eighty percent (80%) of 2011 PMD claims submitted to Medicare did not meet program requirements. That error rate means the government made more than $492 million in improper payments.

PMD Fraud and Abuse Problems Go Back Many Years

Historically, PMDs have had high incidents of fraud and improper payments. Since Medicare pays PMD claims without first checking them, there is a weakness in the system allowing for fraud and abuse. Criminals often disguise themselves as medical-supply companies and create fraudulent claims by providing PMDs to Medicare patients that don’t need them. In the last 15 years, Medicare has spent upwards of $10 billion just to procure power wheelchairs and “scooters” for around 3 million beneficiaries. This high expenditure resulted in significant law enforcement investigation. The DOJ, CMS, and HHS OIG began charging and convicting DMEPOS suppliers of defrauding the Medicare program and many of these companies lost their Medicare billing privileges. Examples of DME fraud cases related to PMDs included:

• A case amounting to $21 million in fraudulent billing for equipment never provided to beneficiaries and/or were medically unnecessary.
• A $368,000 fraud scheme involving the submission of false documents including prescriptions, written orders, face-to face examinations, and false prescriptions by referring physician PMDs for beneficiaries that did not qualify for them.
• In a “whistleblower” case, a DME supplier employed sales representatives who fraudulently forged and altered prescriptions and other physicians’ documents.
• The Scooter Store, the nation’s once largest seller of PMDs was the most significant case in recent years. The Scooter Store first entered into a settlement with DOJ to settle fraud allegations for a multi-media advertising campaign enticing beneficiaries to get medically unnecessary PMDs paid for by Medicare/Medicaid. They were also expected to give up reimbursement for pending Medicare claims totaling more than $43 million and entered into a CIA with the HHS OIG. Furthermore, in 2013, 150 agents from the FBI, HHS OIG, and the Medicaid Fraud Control Unit raided the Scooter Store, and shortly thereafter, the company went out of business. This case signaled the end of the line for many companies defrauding the government.

The CMS Demonstration Of Prior Authorization Of PMD

CMS has been proactive in recent years and began a demonstration of their Prior Authorization PMD program, sometimes known as “prior approval” or “pre-certification.” It was hoped the change would lead to reductions in improper payments for PMDs. Additionally, the Affordable Care Act provided CMS with many new tools to combat fraud, waste, and abuse in Medicare. The Demonstration was designed to:

• Improve methods for investigation and prosecution of PMD fraud;
• Help ensure a beneficiary’s medical condition warrants PMD coverage under existing guidelines; and
• Assist in preserving beneficiary ability to receive quality products from accredited suppliers.

The Demonstration was initially for beneficiaries with Fee-For-Service Medicare who reside in the seven states known to contain a high number of providers prone to fraud and error (CA, IL, MI, NY, NC, FL and TX). Last August, the Demonstration was expanded to 12 more states (AR, MD, GA, IND, NJ, KY, LA, MO, OH, PA, TN, and WA). Under the program, for suppliers who do not submit a prior authorization request, Medicare payments are reduced by 25 percent and this reduction is not subject to appeal. However, the 25 percent payment reduction does not apply to contract suppliers in competitive bidding areas.

2015 Work Plan

To continue the “crackdown” on PMD fraud and abuse, the OIG 2015 Work Plan lists several projects related to PMDs, including:

1. Determining whether potential savings can be achieved if certain PMDs are rented over a 13-month period rather than acquired through purchase;
2. Auditing the process used by CMS for competitive bidding for medical equipment items;
3. Determining if payments to PMD suppliers under Medicare Part B were in accordance with requirements; and
4. Determining if Medicare requirements for face-to-face examinations were made prior to prescription for a PMD.

Conclusion

With active regulatory and enforcement actions, the PMD fraud and abuse issue is finally coming under control. Medicare is now using competitive-bidding processes to lower what it paid for wheelchairs and has also required wheelchairs to be given out on a rent-to-own basis, instead of paid for all upfront. With CMS changing the way it handles wheelchair claims, the government reviews all wheelchair bills in 19 states before it pays them. The result from all of these efforts is an 80% drop in total spending on PMDs in 2013 in comparison to 2003 where PMD spending amounted to nearly $1 billion.