Senate requests $500k surety bond for HME

I'm sure you'll be hearing a lot more about this in the coming days and weeks and with good reason. It could knock a lot of small providers out of business.

Here's what AAHomecare reported this morning about the proposal:


ALEXANDRIA, Va. — A Senate bill introduced last week would impose a $500,000 surety bond requirement on providers of durable medical equipment (DME) under Medicare and would put thousands of small homecare companies out of business, says the American Association for Homecare.

A law passed in 1997 requires a $50,000 surety bond for DME providers as a deterrent to fraud and abuse. However, the federal government has never actually implemented the surety bond requirement for the DME sector. The Centers for Medicare and Medicaid Services has proposed that the amount increase to $65,000.

The bill introduced last week, S. 2603, called the “Medicare Fraud Prevention Act of 2008,” would increase the $50,000 surety bond requirement by a factor of 10. The bill would also increase civil and criminal fines for Medicare fraud and abuse. The bill is sponsored by Senators Mel Martinez (R-Fla.), John Cornyn (R-Texas), Norm Coleman (R-Minn.), Lamar Alexander (R-Tenn.), David Vitter (R-La.) and Jim DeMint (R-S.C.).

“The impact of a half-million dollar surety bond requirement would be devastating on law-abiding small providers,” said Tyler J. Wilson, president of the American Association for Homecare. “This provision would put a lot of home medical equipment providers out of business without fixing the fraud and abuse problem. No one is more concerned about getting criminals out of Medicare than the homecare sector, but this is clearly a case of throwing the baby out with the bathwater. Why would the government increase the surety bond by 1000 percent before it has even implemented the original amount?”

Insurance experts say a $500,000 surety bond would require that DME providers put up collateral to back the half-million-dollar bond, on top of the $10,000 to $20,000 cost of the bond.

Express your outrage

The news out there is bad, but it's not all bad.

While the New York Times ran a biased expose (Nov. 30) about how Medicare pays too much for oxygen, the Missoulian (Missoula, Mont.) ran a more balanced article on the home respiratory industry, and NBC News ran a two-part series (Dec. 10, 11) that spotlighted Medicare's huge fraud problem ($60 billion a year), CMS's inability to control it, and the fact that these brazen criminals give all honest Medicare providers (not just HMEs) a black eye.

The HME industry really needs to take advantage of reports like those run by NBC Nightly News and the Missoulian. Show them to lawmakers and regulators; express your outrage; demand that something be done--something that targets the crooks not the entire industry.

Can you believe it? $60 billion a year! It's enough to turn your stomach. I wonder how much that would decrease if CMS invested, for example, an additional $3 billion into program intergrity efforts and other strategies to combat fraud and abuse? I bet the pay back would be significant. So significant, I suspect, that Congress would not have to cut oxygen reimbursement for standard concentrators by 40% (as they are now contemplating) to eliminate a 5% cut to physician reimbursement in 2008.

NBC News reports on Medicare fraud

Tune into NBC Nightly News this evening, Dec. 5, for a report on Medicare fraud and abuse by correspondent Mark Potter. Unlike a New York Times story that ran Nov. 30, this report looks like it might be fair and balanced. Potter places the blame where it belongs: on the crooks, not legitimate HME providers.

To get a first-hand account of what Potter found while reporting on fraud, click here.

NPR tackles DME fraud—again

You might remember that on Oct. 11, National Public Radio ran a story on DME fraud in South Florida that did not include the industry's perspective. That ommisson outraged a bunch of providers who complained to NPR about the unbalanced report. NPR took those complaints to heart, and on Nov. 6 ran a follow-up story that includes the industry's perspective on DME fraud.

Click here to listen to the story or to read a transcript.