The purchase option, fraud and the best of both worlds

Thursday, October 28, 2010

Most wheelchair providers I've talked to support a delay in the elimination of the first-month purchase option for standard power wheelchairs. More than a handful of industry and consumer groups, and numerous lawmakers support the idea, too.

That's what made David Daniel's e-mail so surprising.

Daniel, CEO of Medi-serve in Tulsa, Okla., contacted HME News in September to ask: Why is the industry trying so hard to delay the elimination of the first-month purchase option?

The way Daniel sees it, on Jan. 1, 2011, when standard power wheelchairs become 13-month capped rental items and providers stop getting paid in one lump sum, the crooked providers who keep giving the industry a bad name will throw in the towel. He explains:

"Taking away the purchase option will stop most of the fraud and abuse, since those that are doing it will get caught before the 13th month. So they won't continue to engage in that kind of behavior."

Daniel goes on to say that he can't, in good faith, lobby his representatives and senators to delay the elimination of the purchase option "when I know that it is one of the primary sources of most of the fraud and abuse in our industry."

"It takes away my credibility," he wrote.

Industry stakeholders argue that the delay is needed to give providers time to adapt their business models and to give the credit market time to, hopefully, loosen up (the downturn in the economy has made banks hesitant to lend money, which, in turn, has made it difficult for providers to buy equipment).

I asked Seth Johnson, one of those stakeholders, about Daniel's theory on the purchase option and fraud. Johnson argues that making standard power wheelchairs capped rental items could inadvertently increase, not decrease, fraud. He explains:

"If you spread payments out over 13 months, Medicare ends up paying 5% more than they do today, so it would be more profitable."

Johnson added:

"The other area that we are concerned about is that, based on the way the coverage policy is written for power mobility devices and the unique documentation differences for standard power wheelchairs vs. other DME, unless they provide significant guidance and make revisions to the policy, we believe CMS could have a greater inability to track the utilization of power wheelchairs--who has what product, etc."

Maybe a delay in the elimination of the purchase option is the best of both worlds, only because it means that standard power wheelchairs will become capped rentals eventually, making Daniel happy; and providers won't get blindsided by a change that affects the way they do business, making Johnson and other stakeholders happy.

Additionally, a delay means CMS would have time to provide guidance and, if necessary, make revisions to its policy, reducing the unintended consequence of increased fraud, making the agency, I'm sure, happy, too.