Wednesday, July 31, 2002

RALEIGH, N.C. - Three years ago, Paul Smith envisioned he'd sell Piedmont Mobility and retire comfortably in 2002. Instead, the 60-year-old continues to fight claims that his company, which was forced to close its doors in 2000 after numerous audits, owes Palmetto GBA more than $71,000.

"I'm starting over at 60 because of these jackals," said Smith, who's now a sales rep for a medical equipment company when he's not lobbying to get Palmetto, the Medicare carrier for Region C, axed or running for representative for Congress. "I've lost everything. My retirement accounts are empty. I have a 100% mortgage on my house."

For Smith, the "nightmare" started in 1999. With Piedmont Mobility's revenues topping $2.5 million, his company "started lighting up the computers over at Palmetto," he said. Four audits and two years later, the carrier accused Smith of providing power wheelchairs without ordering physicians and medical necessity. Palmetto stopped payment and began "pressing" him to cut a check for $59,000 (It had already withheld about $12,000). And that's without interest.

When HME News last spoke with Smith in 1999 he was threatening to lead other providers with similar experiences in a class action suit. "There are at least a handful in our region alone," he said (See story this page). The suit has yet to materialize, but Smith knows people are watching to see if he'll take it that next step.

"I spoke with a representative from the OIG for two and a half hours recently, and he asked me whether we were going to sue Palmetto," Smith said. "I told him, 'The thought has occurred to me,' but I knew better than to tell him for sure."

Smith's currently waiting for an administrative law judge to hear his case on appeal. At a hearing this spring, Smith said Palmetto changed its tune, attacking the delivery dates of the 16 claims in question rather than lack of ordering physicians and medical necessity, and the carrier prevailed. He said he admits in the "early days," the company's record keeping was "inadequate." Regardless, the law states providers can file claims when expenses are incurred, but CMS and the carriers interpret that to mean the date of delivery is the earliest billing date, Smith said.

"My problem is [Palmetto] had their reasons, and we proved them wrong," he said. "Then they changed the rules on us in the middle of the hearing."

Since 1999, Smith has discovered a few more details from Palmetto's audits. Those details helped him fight the carrier's original claims. Mainly, Smith discovered that during its audits, the carrier sent questionnaires to more than two dozen physicians, asking them if they had ordered power wheelchairs from Piedmont. Eight physicians answered no to the questionnaire, hence Palmetto's conclusion that eight of the claims had no ordering physicians.

But Smith contacted the physicians and obtained written documentation that proved they had, indeed, prescribed the wheelchairs. He said Palmetto made filling out the questionnaires "tricky" for physicians because it didn't include a copy of the original CMN, which they had.

"Maybe they didn't save a copy of it or couldn't find it," Smith said. "It's sloppy investigating on Palmetto's part. They're not looking for the truth. They're looking to nail the provider."

Since 1999, Smith has also discovered that Palmetto recommended its case to the FBI for further investigation. The FBI then turned it over to the U.S. attorney's office in Raleigh, N.C., and it declined prosecution.

Elizabeth Nkuo, corporate communications for Blue Cross Blue Shield of South Carolina, Palmetto's parent company, said the carrier is prohibited from providing specific information on any of its providers.

"We can tell you that we do not operate under any pressure to recoup money from a provider, and there is no contractual incentive for us to deny payment or to recoup money," Nkuo wrote in a prepared statement. "However, we do have a responsibility to identify and recoup improper Medicare payments once they are identified."

Attempts to reach Dr. Paul Metzger, medical director for Region C, were unsuccessful.

Ultimately, Smith said he'd like his $12,000, and he'd like to see Region C get another carrier. In the piles of paperwork he's amassed over the three years is written testimony from George Grob, deputy inspector general of the Department of Health and Human Services. Grob told Congress in September 1999 and again in July 2001 that the agency has discovered "serious problems" with some of the carriers, including fundamental problems with accounting, electronic data processing and fraud control. He testifies that HHS has even uncovered integrity problems, i.e altering documents and falsifying statements.

Smith feels Palmetto is one of those carriers with "serious problems," but he's been unable to find out whether the carrier is under investigation.

Attempts to reach Grob or Judith Holtz in HHS's press office were also unsuccessful. HME