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1991.11.01 :  Medicare Durable Medical Equipment

Contact: Bob Hardy (202) 245-6145
November 1, 1991

       A Departmental initiative to curb fraud and abuse and
promote efficiency connected with the purchase and rental of
durable medical equipment by Medicare beneficiaries was announced
today by HHS Secretary Louis W. Sullivan, M.D.
       Under the initiative, the Health Care Financing
Administration is today proposing new regulations and procedures to
check DME fraud and abuse.  In addition, HHS is developing a group
of legislative proposals to insure appropriate DME payments.  And
the HHS Inspector General will also continue vigorous investigation
of DME fraud and abuse.
       "The overwhelming majority of the suppliers of durable
medical equipment are ethical, legitimate businesses.  But some
have defrauded elderly Americans and the Medicare program.  This is
intolerable and we are going to stop it.  We are aggressively going
after the offenders and cracking down on the scams and other
methods they use to bilk the system," Secretary Sullivan said.
       An immediate step in implementing the initiative will be
publication in the Federal Register of a proposed regulation that
prohibits medical suppliers from engaging in the costly practice of
"carrier shopping" for the highest Medicare payments. 

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  For wheelchairs, other durable medical equipment, oxygen
equipment, prosthetics, orthotics and supplies, the current system
allows suppliers to bill the Medicare carrier serving the area where
the point of sale occurred.  This has led some large suppliers and
tele-marketers to establish business fronts in states where the
payment rates are higher or where processing rules are more liberal.

  Under the proposed regulation, claims would be paid according
to the rate set where the beneficiary lives and uses the equipment. 
In addition, four regional carriers would be established to review
DME claims.  This will eliminate the ability of suppliers to engage
in carrier shopping, reduce duplicate payments, promote efficiency
and allow standardization of many claims processing rules.

  "We are closing the loopholes and streamlining the DME payment
process to make it easier to find and eliminate fraud and abuse.  We
are committed to protecting Medicare beneficiaries and the Medicare
program from illegal and unscrupulous practices," said HCFA
Administrator Gail R. Wilensky, Ph.D.

  Today's regulation also would require suppliers to certify that
they meet a basic set of standards before they can be issued a
Medicare billing number, which can later be revoked if the standards
are not maintained.  Suppliers also would be required to disclose
ownership information. 

  In addition to the regulation announced today, a number of
activities to curb fraudulent or abusive practices related to DME
are being undertaken as part of the DME initiative.  Activities
underway include:
 
o    Changing Medicare fee schedules to even out the area     
     differences in payment for medical equipment and   
     supplies.

o    Standardizing medical review for the highest-volume      
     DME products where there is frequent fraud and abuse under
     the Medicare program.

o    Implementing a number of administrative changes by       
     Medicare carriers to prevent gaming the system, ensure   
     accurate claims processing and thwart over-utilization.     

o    Giving Medicare carriers authority to adjust DME payment
     rates to correct grossly deficient or excessive payment
     amounts.

o    Continuing OIG investigations of fraudulent and abusive      
     practices by some DME suppliers, owners of these firms and   
     their employees.


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  Dr. Sullivan said that further efforts to protect the elderly
and the Medicare program from DME fraud and abuse will include:

o    Proposed legislative changes to institute more reasonable
     Medicare payment amounts for certain DME items and to assist
     in curbing abuse, such as 

      --  using a competitive bidding process to furnish          
          oxygen and oxygen products.

      --  establishing civil monetary penalties for suppliers    
          who falsely certify that they met program standards    
          or who fell out of compliance after initial         
          certification.

     --   allowing carriers to use a prior authorization          
          process for selected items or supplies.

o    In-depth reviews of the appropriateness and cost-   
     effectiveness of payments for certain DME items,    
     conducted by the Inspector General.
          
o    Education and outreach activities for physicians,  
     beneficiaries, suppliers, and consumers about DME fraud 
     and abuse.
                              

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