CMS slow to catch Harris County racket

Monday, May 31, 2004

WASHINGTON - At the height of the Wheeler Dealer power wheelchair scandal in Houston, one out of every four claims for power wheelchairs in the United States was coming out of Harris County, according to testimony delivered by Herb Kuhn, director of CMS’s Center for Medicare Management.

Kuhn’s testimony before the Senate Finance Committee, and findings by the GAO, provide remarkable detail to a scandal that has cast a black cloud over the power wheelchair market.

The rumblings of trouble began sounding in Harris County in March 2002 when a fraud analyst identified highly aberrant billing behavior by a single supplier. Meanwhile, PalmettoGBA’s analysts began to notice that some suppliers were billing for power wheelchairs and accessories multiple times on behalf of the same beneficiary.

By January of 2003, Palmetto had referred many cases of suspected fraud to the Dallas office of the OIG. While cases of alleged fraud reported by the DMERCs had risen nationally by 54% since 1999, by 2004 that rate had increased by 500% in Harris County.

The GAO in its testimony criticized CMS for not acting on DMERC referrals for fraud in 2002.

“While Palmetto kept CMS informed about its investigations, its efforts to develop suspected fraud cases in 2002 still did not convince CMS officials that it was time to take decisive action.”

In Harris County, Medicare paid for more than 31,000 power wheelchairs in 2002, a tenfold increase over 2001. Despite those overwhelming numbers, CMS defended itself against criticism that it did too little too late.

“Even with this significant increase,” Kuhn said at the hearing, “it is difficult to identify a pattern of abuse at the moment it is occurring due to lags among billing, claims submission, claims payment and aggregation of data.”

In May 2003, Harris County suppliers billed Medicare $59.8 million. By August, that figure had dropped to $33.3 million and by December 2003 to $4.9 million.

In the first quarter of 2004, 4.5% of all K0011s claims were submitted from Harris County, but only 0.1% of the national claims were paid to Harris County. At the racket’s height, 17% of all K0011 claims paid went to Harris County.