This is an archive page. The links are no longer being updated.
Date: Tuesday, Jan. 20, 1998 FOR IMMEDIATE RELEASE Contact: HCFA Press Office(202) 690-6145
Under the regulation published today, suppliers of DME (including wheelchairs, canes and other medical supplies) would be required to obtain surety bonds of at least $50,000. In addition, the proposed regulation would ban DME supplier telemarketing; require suppliers to have a physical office and a listed phone number; codify a requirement that suppliers reenroll in Medicare every three years; prohibit suppliers from reassigning a supplier number; and apply criminal and civil sanctions for misrepresentations on billing number applications.
"We know that the supply of durable medical equipment has been an area of special vulnerability to fraud and abuse, and that's why we targeted it in our Operation Restore Trust initiative," said HHS Secretary Donna E. Shalala. "Now we are taking new steps nationwide to greatly reduce that vulnerability. We need to assure that those who sell durable medical equipment for Medicare beneficiaries are legitimate and responsible businesses, not fly-by-night companies, inexperienced individuals without adequate resources, or even criminals who will defraud and abuse the Medicare program."
Today's regulation is the latest in a series of ongoing efforts to protect Medicare from fraud and abuse. Earlier this month, HHS announced the requirement of surety bonds for home health agencies, another area identified as specially vulnerable to fraud and another target of HHS' five-state Operation Restore Trust initiative. Operation Restore Trust was launched by President Clinton in 1995 as a special demonstration project coordinating federal and other efforts against fraud in the five states with highest Medicare populations.
"Surety bonds are highly effective at stopping DME fraud, and stopping fraud is one of our highest priorities," said Nancy-Ann Min DeParle, administrator of the Health Care Financing Administration. DeParle cited experience in Florida, where a surety bond requirement
and other reforms led to a 62 percent reduction in providers with Medicaid DME billing numbers. "Surety bonds will help protect Medicare at the national level the same way they are helping to protect Medicaid in Florida."
"Surety bonds are needed to weed out unscrupulous providers," said HHS Inspector General June Gibbs Brown. "These actions will help protect Medicare by ensuring that suppliers are legitimate business enterprises, not rip-off artists."
As part of Operation Restore Trust, a survey on DME vulnerability to fraud and abuse was conducted last year by the Inspector General at HCFA's request and was released in December. IG findings indicated that enrollment in Medicare as a DME supplier was too easy, making possible participation by those who were unqualified to reliably supply beneficiary needs, and opening vulnerability to fraud and abuse. The IG study found, for example, that a significant number of DME suppliers did not have physical business addresses, or were located in private homes, or had no actual supply of equipment to provide.
At the same time, Medicare spends a significant amount on durable medical equipment: about $6 billion in FY 1997.
The surety bond requirement applies to payment for any durable medical equipment furnished on or after January 1, 1998. The requirement is published today in the Federal Register as a proposed rule, with a 60 day public comment period.
Other recent HHS actions to fight DME fraud and abuse in Medicare have included: