Feds fight Medicare fraud

Times Staff Writer

Federal officials are expected to announce in Los Angeles today a nationwide effort to combat fraudulent Medicare billing by medical equipment suppliers in 70 urban areas.

Such fraud in the federal healthcare program for the elderly has increased in recent years, particularly in the sprawling urban areas of Southern California and south Florida where many of the most vulnerable Medicare recipients live.

In one case, 84-year-old Alice Christoff, who is legally blind and cannot walk, says she went shopping for a new electronic wheelchair last year only to have a saleswoman foist upon her a series of products she didn’t need or want, including costly -- but subpar -- electronic wheelchairs, a hospital bed and hydraulic bathroom lift. All of it was billed to Medicare, at a cost of more than $28,300.

“I don’t understand anything about medical equipment,” said Christoff, a retired accountant in Santa Maria. “When she said I had to have it, I just said OK.”

As part of their effort to stop such fraud, officials from the U.S. Department of Health and Human Services plan to require medical equipment suppliers to be vetted by approved accrediting agencies, some of the same ones that vet pharmacies and hospitals. Moreover, suppliers would have to set their prices through a competitive bidding process. The rules will begin to take effect this spring.


Decrying the new rules as too heavy-handed, some of the country’s 116,000 medical equipment suppliers say they may quit serving Medicare patients.

Under the current process, suppliers apply to the government to participate in the program, undergo an inspection and meet general standards for running a legitimate business -- proof of address, phone number and inventory, for example.

Patients pay about 20% of the government’s listed price, and suppliers bill Medicare for the rest.

Until last year, suppliers usually were screened and inspected only once, when they applied for a Medicare billing number. Many posed as legitimate businesses but billed Medicare for equipment that they never delivered, that wasn’t prescribed or that patients didn’t need, Medicare officials said.

Last year, Medicare began requiring suppliers to renew their applications every three years and undergo more frequent inspections. But with abundant advance notice, many suppliers fooled inspectors into believing they were operating legitimately or closed up shop before inspectors arrived.

“It’s relatively easy for people to present the facade of meeting all those [federal] standards,” said Kimberly Brandt, Medicare’s director of program integrity. “They know when the inspector is going to come, they know what he’s looking for, so they can make it look like they meet all of those things.”

Southern California recently has proved a hot spot for such illicit operations. For the year preceding April 2007, 123 California suppliers had their Medicare billing privileges revoked. Of those, 108 were in Los Angeles, Orange, Riverside and San Bernardino counties. Eighty-three were in Los Angeles County alone. That is almost double the 42 suppliers revoked statewide in fiscal year 2002.

In L.A. County alone, home to nearly 5,000 suppliers, Medicare investigators have uncovered $300 million in potentially fraudulent billing during the last two years, Brandt said.

Many of the victims are non-English-speakers, Asian and Latino Medicare recipients unfamiliar with federal paperwork and rules, Brandt said.

Marcelino Arroyo, 74, of Santa Ana was caught up in what Medicare officials said is a typical scheme. Spanish-speaking solicitors -- in this case, over the telephone -- persuaded Arroyo to accept a free ride to a Los Angeles clinic, promising free medical supplies.

Arroyo, a retired strawberry picker, wasn’t ill, but the supplier told him he might need the supplies someday.

At the clinic on Whittier Boulevard, which he said looked more like a run-down house, staffers in white coats drew his blood and placed sensors on his chest and arms.

He was never sent any results. Instead, he says, the supplier sent two electronic wheelchairs and billed Medicare more than $10,400. Arroyo reported the fraud to Medicare and started warning his friends.

“They promised all these free things and did not tell me who was going to be billed. I believed them,” Arroyo said in Spanish. “They shouldn’t be allowed to lie to people.”

Under the new Medicare rules, suppliers will have to pay to apply to one of 10 accrediting organizations. Fees will range from $1,500 to $10,000, Brandt said.

During accreditation, suppliers will face stricter background checks and more frequent inspections with short notice, Brandt said. If those checks raise suspicions of fraud or the potential for fraud -- for instance, if a manager has had a felony conviction during the last five to 10 years -- the supplier could be bounced from the program, Brandt said.

“This saves the government money; it saves the beneficiaries money, and they’re assured of quality and access,” said Kerry Weems, acting administrator of the U.S. Centers for Medicare and Medicaid Services.

Federal officials previously announced 10 other cities subject to the new requirements, bringing the total to 80, including the metropolitan areas surrounding Bakersfield, Fresno, Sacramento, San Diego, San Francisco, San Jose and Visalia.

Many suppliers would rather see the government lower listed prices for Medicare equipment than impose more onerous requirements, said Bob Achermann, executive director of the Sacramento-based California Assn. of Medical Product Suppliers, which includes about 300 suppliers statewide.

James H. Roache, the owner of Advanced Pharmacy and Respiratory Care Solutions in Laguna Hills, said he plans to stop his Medicare participation and will probably lose 20 customers once the new rules take effect. Roache, a pharmacist, considers accreditation too expensive.

But Christoff, the retired accountant, says the Medicare changes might save the government money.

After Christoff returned several subpar chairs she was sent, her supplier billed her for the better wheelchair she sought but never received, then sent the bill to a collection agency. Christoff and her 91-year-old husband said they then hired an attorney and filed a complaint with Santa Barbara County prosecutors. The matter is pending.

Christoff now is relying on an outmoded chair she bought in 2005. She tries to elevate her legs at night, but without the wheelchair she originally ordered, which would have electronically elevated her legs, she’s developed a nagging ulcer on her foot that will not heal, she said.

“What happened to that chair is what I’d like to know,” she said. “I would like to have it.”