HEALTH CARE thoughts: The Durable Medical Equipment (DME) mess
by Tom aka Rusty Rustbelt
HEALTH CARE: The Durable Medical Equipment (DME) mess
So you go to an orthopedic surgeon with a complaint of back pain, and the surgeon orders a lumbar back brace for support.
Can you stop at a counter and buy the brace on the way out the door? Probably not.
Years ago some members of Congress (Stark, Waxman, et.al.) thought it would be harmful if physicians profited from their prescriptions, but not harmful for others to do so, and thus has flourished a huge DME industry, ranging from hospitals and national chain pharmacies to mom-and-pop operations. (When I ran ortho centers we subbed out DME, too much hassle and compliance risk.)
Some DME providers get greedy and there has been a significant amounts of fraud in this area, most recently dealing with the ubiquitous motorized wheelchairs and power chairs of television fame.
But the latest DME fraud trend is really disturbing. DME fraud is being committed by phony “providers” who tend to be involved with organized crime, immigrant organized crime, computer hackers and identity thieves. These businesses do not exist, have no customers, provide no merchandise and steal billions from the feds with phony billings. Reading the indictments is enlightening.
(A few years ago nearly 50% of all of the diabetic supplies FOR THE ENTIRE COUNTRY were being billed from Miami – Dade County. Huh? Impossible of course. Miami appears to be a hot bed for immigrant crime.)
The feds caught on somewhat and set up a task force in southern Florida, and now are using the task force in Houston and possibly elsewhere.
Something here aggravates me. Getting a physician Medicare ID number, or adding a physician to an established group, takes a lot of time and a lot of paperwork, even though the physician is licensed and board certified. Apparently though any ambitious criminal can get a DME provider number with almost no hassle and start firing in billings. After a few months the operation closes down, takes the cash and billing starts for a new phony provider.
Medicare needs better management.
Tom aka Rusty Rustbelt
I like this, no I do.
For back awhile when everyone was saying how appalling the overheads and expense ratios of the private insurance companies was, there were one or two small voices who said that, well, yes, they were, but a goodly part of those higher expenses was to pay for the anti-fraud checks, something which Medicare had very little of. So while Medicare had low expenses, it had high fraud rates, private insurers had higher expenses ratios and, perhaps, less fraud.
Which system, on balance, actually provided the most health care for the least money was, well, so far at least, unknown.
My mother needed an oxygen machine a few years ago, and the price medicare was paying per month would have bought the machine in 3 months. When I talked to the guy at the supplier he assured me that the manufacturer made different machines under the same brand name and model number good ones for the DME industry and Junk for the web. On the other side of course is the whole power wheelchair mess, where Medicar buys the wheel chair, rather than a lease purchase basis with say 24 month payoff. If a person dies before the 24 months the chair goes back to the seller for rehab.
Of course this system is protected by local DME vendors who give to their congress persons to keep them from attacking.
Another provision of the Health Care Bill… Starting in 2011, the law prohibits existing physician-owned hospitals from expanding and prevents new ones from being built….
This is another undue punishment for the public. Yes, the intention is to prevent “profiteering” from physician owned hospitals. Unfortunately, it will have very bad unintended consequences. There are already more hospitals being closed than those that are being build. So there is already less and less patient access to medical care than they needed. Just wait until an natural or man made diaster hit the US.
Why is this country have so much resistance against any form of ownership by private individuals. Any patient that needs medical care, regardless of their ability to pay already gets protection under the law. They will be treated. This is a sadistic provision….
Given the predatory business model of the private insurers (post diagnosis recission etc) less fraud may be better described as not letting DME’s in on the action. But even if their anti-fraud efforts were virtuous it is hard to see how that could make up for the big gap between Medicare’s admin costs of around 3% and private insurance MLRs that are currently in the 70s and 80s.
Plus you would have to look at the differences in the covered groups. You would think that a high percentage of people reliant on durable medical treatment would be out of the work force on disability or retired and so more likely to be in Medicare anyway. If you have severe diabetes, or emphysema bad enough to require oxygen, or some disease that requires home infusion, or mobility problems actually bad enough to justify a medical prescription for a scooter, you are unlikely to say the least to still be working the road crew or even standing behind a cashier station enjoying employer paid insurance. This I think would make an apples to apples comparison of fraud difficult. Because as a claims examiner for a private insurer managing an employer plan the first question I would be asking is “How does this person continue to work in a way that justifies putting them on a group plan?” And reasonable accommodation under ADA only carries you so far.
Pax can you give me a page or section reference? Because I don’t remember running across that provision.
Now certainly the HR 676 Single Payer Bill had that restriction and a whole bunch more, the end result of that legislation would have been a national health care system significantly to the left of even the British NHS, and probably most western european systems. But I don’t remember seeing that in any of the versions of the Senate Bill which formed the basis of the law as passed.
“Medicare needs better management”
I dare say it does, starting from the top. And I suspect it probably has that in the person of Dr. Berwick whose expertise is in cutting costs while improving outcomes. Too bad his nomination was blocked from an up or down vote resulting in a year and a half gap in leadership, requiring a recess appointment.
Berwick has been on the job exactly a month, I for one am willing to cut him some slack, oh say a week or two prior to piling on because he hasn’t fixed a $737 bn a year program.
It is Sec 6001.
You might want to note that this restriction is only for hospitals that want to bill services to Medicare, and most of the opposition seems to be led by ‘rehab hospitals’. From my brief skim the goal of rehab hospitals is to get mostly older patients healthy enough to live at home rather than some skilled nursing facility or regular custodial care. Too it is worth noting that Medicare reimburses for care delivered through hospitals at a higher rate than for these alternatives which in some cases are not eligible for Medicare at all. Rusty can fill in the gaps here but as I understand it one of the biggest drivers of cost for Medicare are constant attempts by all kinds of custodial institutions to reclassify everything they can as being Medicare reimbursable, whether that is in truth really medically necessary. Creating a situation where providers can simply recruit nursing home residents into rehab that in the end might not work but will generate nice fees may not be optimal. It is interesting that a large number of these operations are proposed for Texas, not exactly known as a tight regulator of any private enterprise.
In practice this restriction falls mainly on specialty hospitals rather than general hospitals or surgery centers, and the issues seem a little more nuanced than simply “why are they taking a dump on capitalism”
This gave me a nice intro that was not directly from a trade group (unlike most of the other search results): http://www.law.uh.edu/healthlaw/perspectives/2010/(CC)%20Stark.pdf
When an administration changes there is some shift in emphasis and policy, but the entrenched bureaucrats keep chugging along.
No criticism of Berwick intended. When he leaves the bureacrats will still be chugging along, perhaps with a few changes.
Ambulatory surgery centers and physician specialty hospitals have been controversial for a a while.
The ASCs are too many and too entrenched to stop, but the acute care hospitals want to stop the specialty hospitals.
Someday soon I will write a piece about this, the rationale of the physicians and the rationale of the acute care hospitals.
Yes Rustbelt:
I never really liked the ASC’s popping out all over the places, especially when I was in Texas. They cherry picked the patients with the best insurance that milk the patient for all it’s worth.
But again, capitalism does work, compared to couple years ago, most of these ASCs goes down, consumers aren’t that stupid… 1) The patient find out. 2)Most Doctor I know are ethical, responsible beings, they simply stopped referring patients to those cash cow centers…
What I am really trying to say the healthcare bill is so poorly written, that it creates more problems than it intended to solve.
I really think the moderates in this country needs to speak up to their representatives and start asking them to serve the American People instead the taxpayers shouldering the responsibility. May be we really need to elect more artists, doctors, nurses, engineers, teachers etc to represent us. This country really needs a new science renaissance… This country is being legislated to death by lawyers…
Just look at the 1099 requirement provision (This healthcare act is part of the financial bill) It hurts individuals, small businesses, the IRS, but benifits the credit card companies and very large businesses.
Tom–A DME provider is a business person. No training, special skill involved. So, one of these guys gets a business license and applies to CMS for a DME number and gets it. No questions asked because the person has a license and a physical, street, mailing address, phone, fax etc. No verification requested because none is required by the law. On paper, he’s no different from any other DME provider. CMS itself doesn’t process claims for DME or other medical services. Claims processing is contracted out to health insurance carriers all over the country. But, fraud investigations are CMS’s jurisdiction. And, as I have previously explained, budget cuts have greatly reduced available staffing for investigations. Of course, the insurance carriers could be looking for patterns–like the one cited in Miami. They won’t if not required to. Not their job. Nancy Ortiz
Lyle–I don’t think the manufacturers “give the good stuff” to DME’s. I suspect he was well aware of the advantage he gained through Medicare and didn’t want you to just buy a machine and submit the claim to Medicare or another insurer, which you can do. They usually pay a portion of the cost of the machine if you buy it directly. But, I think they changed this provision within the last few years–not sure though. NOrtiz
I agree that its very unlikely that a company would put its brand name on inferior equipment. The point is that the DME has folks who likley know the score and like to milk medicare.
Every so often congress wants a lot of DME put out to bid but the DME industry cries their usual tears about jobs and small business and gives its congressional campaign contributions to get the issue quashed. This issue does show how much featherbedding occurs in medicine. Another example is in lab tests where a few places offer lab tests direct to the public for about 50% of the price charged by hospitals, however you pay and file a claim versus letting the bill come 2 months later.
Needs some numbers Tim, not ‘hmmmmm…I wonder if they are closely related?”.
Yes, I know what a DME provider is, I just question why this sloppy assed system – could we at least ascertain that a provider exists?
The responsibility form fraud detection in Medicare is the province of the DHHS-OIG and the DOJ, and they have shifted resources and added people.
By how will the OIG ever catch up when we are giving provider numbers to criminal organizations?
Watch for my future piece on ASCs and specialty hospitals.
I already did a piece on the crazy 1099 requirement (both political parties are looking for a way to repeal that mess).
Tom–You know a lot about health care and how it’s provided. Not many people–especially Congress people–know as much as you. They know who complains about under reimbursement, slow pay on Medicare claims, and so on. But, a lot of this stuff will never be detected. That is something we need to explain to Congress. For them, allegations of fraud in Medicare are just rhetoric aimed at winning elections. They haven’t got a clue how the program is really administered or what problems are out there simply being ignored. Or much else about the federal government, believe it or not. We’ll have to do a better job in hollering about this and hope we will. Nancy Ortiz
Lyle–Tell me! I have filed a few DME claims outside the preferred provider system of my health insurance. Filed for one about a year ago. Haven’t heard on it yet. Still, my husband needed it, we bought it and he used it. Just lucky we could aford it. I just don’t like being jerked around, is all. However, putting stuff out to bid is a morass. Then, you have to go through about 18 months of hassle just to get another contract on line when the old one expires. So, no easy solutions. Nancy Ortiz
“But even if their anti-fraud efforts were virtuous it is hard to see how that could make up for the big gap between Medicare’s admin costs of around 3% and private insurance MLRs that are currently in the 70s and 80s. “
Tsk, apples to pears again. The private companies overheads include the cost of collecting the premiums. Medicare numbers do not. And while the tax system is relatively efficient as a method of collecting said premiums, that’s only if you ignore the deadweight costs of the system….usually estimated at between 20 and 30% of the amount raised.
One of the most basic internal controls is that we don’t pay a bill until we verify all of the crucial elements of the bill, including that the service was provided / the goods were delivered. That is sophomore level accounting.
Tom,
Here is 2-cents and a great topic.
As a DME business owner I’ve gone through the Medicaid and Medicare process and assure you it is a “Broken Mess”.
first let me applaud Nancy Ortiz and reaffirm here comment.
“They haven’t got a clue how the program is really administered or what problems are out there simply being ignored. Or much else about the federal government, believe it or not. We’ll have to do a better job in hollering about this and hope we will. Nancy Ortiz
Ok,
Here is the scope, the real deal, no holds barred view from me!
The Medicare and Medicaid system has been plagued with fraud and corruption, I suspect for at least a decade. The system is so large that fraud went unnoticed for years. It’s kind of like “Eating an Eleaphant”. If you take a few bites no one will notice but if you continue to gorge on the animal eventually it will fall over and die.
When I applied for becoming a DME provider I had to submit paperwork to no less than 3 different clearing houses. Problem is one clearing house doesn’t know what the other houses are doing. this is all in the name of Govnt. efficiency. What a joke!
The system is trying to right itself and has placed a so-called RAC program in place. This program lets a contractor review claims and the contractor gets a percentage of the overbilling or fraud monies that can be recovered. Ok another bad program. Just for starters they only allow review of the past 3 years of records. The second reason is unless you have dedicated long term resources such as doctors or nurses on staff and access to all medical billing codes, you cant implement RAC as it’s defined. Thus any small-business interested in trying to recover monies using the program and search for fraud can’t even get their effort off the ground.
Let’s put this in perspective. Not only do you have a disfunctional medical system ie. Medicare and Medicaid. You also have a disfuntional fraud review and compensation system. The way I see it. They are batting 2 for 2.
I would like to mention, I’m not writing this to complain just to convey what is really happening and to make the tax-payers aware of how disfunctional the RAC program is.
Tony Zelinko
http://www.bontemedical.com
http://www.bontemedical.com/blog
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There are really many scam companies that offer DME but there are also reliable companies that you can buy medical equipment. You can call at 1-866-683-5992 for this.
Regards, Globelle Goff 1-866-683-5992
The original conclusion on this topic is incorrect. It takes 60 days for Trailblazer to process a completed application for a physician or medical group practice. Documents include the 855A, 588, PAR Agreement, CLIA, and the other supplemental docs. DME, notwithstanding the same/similar documents is taking 12-18 months for Medicare to process new providers even after the DME have been deemed accredited.