Supplies giant beats audit, loses a bundle

Monday, March 31, 2003

BALTIMORE, Md. - When he discusses his year-long battle to overturn a Medicare audit, you can hear the disdain in Marty Mintz’s voice, and you soon realize it’s not without reason.

“It was a tremendous waste of taxpayer money, a tremendous waste, absolutely atrocious,” said Mintz. “We didn’t do anything wrong.”

An administrative law judge agreed in February, but only after Mintz spent many thousands of dollars defending himself.

A year or so go, Medicare hit his company, Northern Pharmacy & Medical Equipment, with a “routine” audit. Auditors examined claims filed on behalf of 100 mostly ostomy and diabetes patients, declared that 40 lacked the necessary documentation of medical necessity and alleged an overpayment of $26,380.78. The Medicare Integrity Unit extrapolated that over 3070 patients and said Mintz owed a whopping $343,854.

To preserver his cash flow, Mintz took out a bank loan to repay money back, and began to fight back.

He appealed. A Medicare Part B hearing officer found no problems with 21 of the 40 beneficiaries in question and reduced the alleged overpayment to $11,870. The recalculated the extrapolation totaled $144,025.

With respected to 16 of the 19 beneficiaries in question, the hearing officer ruled unfavorably because no “original” physician orders were produced during the audit. The hearing officer issued this ruling even thought Northern contacted the prescribing physicians who documented in writing that the supplies in question were reasonable and necessary.

Mintz appealed again, this time to an administrative law judge, who overturned the 19 claims still in question. In issuing his decision, the judge wrote:

“The appellant provided sufficient documentation to show that the services provided to the beneficiary were reasonable and necessary to treat or improve the beneficiary’s illness or injury. The appellant was there for not overpaid for services provided to the beneficiary.”

That’s what Mintz and his attorney Judson Lipowitz contended all along. Northern lacked original documentation in some cases because it was many years old and lost or misplaced, not because the company committed fraud, Lipowitz said.

“If you are talking about a case where there is truly a fraudulent claim, I don’t’ have any sympathy for the provider in that case,” said Lipowitz, a partner in the Baltimore law firm of Azrael Gann + Franz. “But when you are dealing with honest reputable healthcare providers, you can’t throw out the umbrella of reasonableness, which is what happened here.”

That Medicare targeted Northern does not come as a complete surprise. Northern is the largest ostomy supplier in Maryland and one of the largest in the country. Any provider doing a huge volume in any one product category attracts scrutiny, said attorney Jeff Baird with Brown & Fortunato in Amarillo, Texas.

“There is a natural reaction of, ‘What’s going on here,’” Baird said.

What’s going, Mintz said, is a lot of hard work in a product category many providers ignore because of Medicare’s partly reimbursement. Northern makes money providing ostomy products by generating a lot of volume.

“These guys see you driving a car that is better than theirs and they say, ‘Shoot, he’s making some money,’” Mintz said. “They forget that we work 80 hours a week and they work 40. They forget the investment we have. They forget all the risk. It was ridiculous.” HME