Medicare Fraud – Ambulance Company Fined $800,000

BARNWELL, S.C. — Williston Rescue Squad Inc. has agreed to pay the U.S. $800,000 to resolve allegations it committed Medicare fraud and violated the federal False Claims Act in ambulance transports, the Justice Department announced this week.

Medicare reimburses providers only for nonemergency ambulance transports if the patient is bed-confined or has a medical condition that requires an ambulance. The settlement resolves allegations that the rescue squad billed Medicare for routine, nonemergency ambulance transports that were not medically necessary and created false documents to make the transports appear to meet the Medicare requirements.

Barnwell County Councilman Lowell Jowers said the settlement should not have any impact on Barnwell County doing business with the rescue squad.

Jowers said the squad’s “top three” management people had been replaced since the incidents occurred in 2008 to 2011.

Barnwell County contracts with Williston for nearly $1 million per year for emergency medical transports throughout the county. The contract is set to renew in June.

“Back in 2011, the government identified various billing concerns at the Williston Rescue Squad, which arose from claims submitted from the WRS Transport division from 2008 to 2011. These claims related primarily to the transport of dialysis patients,” rescue squad director Phil Clarke said in an e-mailed statement.

The settlement resolves a lawsuit filed by Sandra McKee under whistleblower provisions of the False Claims Act. McKee is a clinical social worker at a facility that regularly received patients transported by Williston’s ambulances. Under the False Claims Act, citizens can bring suit on behalf of the U.S. and share in any recovery. McKee will receive $160,000 as her share of the government’s recovery.

“Williston fully cooperated with the government, which resulted in a Medicare fraud settlement agreement in which there was no admission of liability by Williston,” Clarke said. “However, to resolve the government’s concerns and to bring closure to the process, Williston agreed to make certain payments to the government.”

Medicare fraud is stealing, and it is crippling America’s health care system, said Stuart F. Delery, the principal deputy assistant attorney general for the Civil Division, in a Monday news release.

Augusta Chronicle


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Scooter Store Medicare Fraud

scooter storeLast week’s raid by 150 agents on The Scooter Store’s corporate headquarters in New Braunfels — presumably as part of an investigation into Medicare and Medicaid fraud — capped a tumultuous couple of months for the provider of power-mobility devices.

But trouble has been part of the company’s legacy.

Its most recent bout began in December when two U.S. senators sent a letter to the Centers for Medicare & Medicaid Services (CMS) wanting to know why The Scooter Store had received as much as $87.7 million in Medicare overpayments from 2009 to 2011 but only had to pay back $19.5 million.

Then, in January, a CBS News report questioned whether power wheelchair companies were “ripping off the government.” One ex-Scooter Store employee told the network the company’s goal is to “bulldoze” doctors into writing prescriptions for power wheelchairs.

A few weeks later, CMS announced cuts in Medicare reimbursements for equipment starting July 1, drawing howls from suppliers. Providers of power wheelchairs, scooters and accessories will see payments slashed by more than one-third on average.

The Scooter Store, known for its ubiquitous television ads, responded by axing 150 workers, the second mass layoff in a matter of months. It let go 220 employees in September.

In a 2010 interview, well in advance of the current turmoil, the privately held company pegged annual revenue in the $350 million-to-$400 million range.

Last week’s raid involved agents from the FBI, the U.S Department of Health and Human Services’ Office of Inspector General and Texas attorney general’s office. It marked the second such raid at the company in just under 10 years.

All of this has many locals wondering what the future holds for one of Comal County’s largest employers. The company employs about 1,200 people at its headquarters and 1,800 overall.

“It’s certainly not comforting,” New Braunfels City Manager Michael E. Morrison said.

The city earlier this month demanded The Scooter Store return nearly $1.4 million of $3.5 million in economic incentives it was awarded in 2009 for promising to create 500 jobs in New Braunfels. The company hasn’t lived up to its end of the bargain; so the city is exercising a “claw-back provision” in the contract.

“What I’m most concerned about are the folks who are employed,” Morrison said. “These folks have families, they have obligations. I’m pretty sure it’s safe to say they don’t know what their future is. I think any of us in the same position would be incredibly worried.”

Scooter Store CEO Martin “Marty” Landon declined to comment when reached by phone Thursday. The company promised to send a statement via email, but the San Antonio Express-News never received it.

History of fraud probes

The power-mobility industry long has been a target of federal probes into Medicare fraud. Authorities want to determine whether unscrupulous firms have billed for providing power wheelchairs to elderly people who don’t have a legitimate medical need for the devices.

A 2011 report by the U.S. Department of Health and Human Services’ Office of Inspector General (OIG) found 80 percent of claims for power wheelchairs did not meet Medicare coverage requirements and should not have been paid for by Medicare.

It’s easy to understand why the industry is ripe for fraud.

“The reimbursement is so great,” said Jeffrey B. Hammond, who teaches health care law at Faulkner University in Montgomery, Ala., but calls New Braunfels home.

“Think about fee-for-service medicine this way: You would have to pile up an enormous amount of $70 office visits to make up for a $9,000 wheelchair,” he said. “The margins are just great.”

In 2003, the FBI visited with a couple of dozen Scooter Store employees in their homes. Authorities were investigating whether the company had defrauded Medicare, the Express-News reported.

A current employee who declined to be identified recalled federal agents also raided the company’s offices on a Saturday in 2003, though that appears to have escaped notice.

Scooter Store officials always have denied wrongdoing and staunchly defended their business practices.

Over its 22-year history, the company said in a statement this month, The Scooter Store has provided “freedom and independence to more people with limited mobility than any company in the nation.” It has served more than 500,000 customers.

The Scooter Store was founded by petroleum engineer Doug Harrison and his wife, Susanna, in 1991.

When a cousin broke his back in a car accident in the late 1980s and was confined to a wheelchair, the couple began thinking about ways to help the disabled. With the advent of the federal Americans with Disabilities Act, the Harrisons realized that buildings, sidewalks and other places would become handicapped-accessible.

The Harrisons sold their house and left high-paying jobs to start The Scooter Store. Their gamble paid off.

Annual sales topped $200 million by about the end of its first decade. Doug Harrison told the Express-News in 2001 that he wanted to see annual sales reach $800 million, though it’s not clear if the company ever achieved that mark.

Harrison resigned from The Scooter Store last year to “pursue other interests,” a little more than a year after Florida-based private-equity firm Sun Capital Partners acquired a minority ownership stake for an undisclosed sum. He would remain one of its largest shareholders, the company said at the time.

While The Scooter Store specialized in the senior market, it expanded into the more lucrative market of “complex” power wheelchairs for the severely disabled in 2007 by launching Alliance Seating & Mobility.

The feds sue

The Scooter Store maintained extensive records to stay in compliance with Medicare regulations, company officials told the Express-News in 2001.

Nevertheless, in 2005 the U.S Justice Department sued The Scooter Store for allegedly making false Medicare claims and defrauding the government.

The government accused the company of engaging in a mass-marketing campaign to “entice” Medicare beneficiaries to obtain power wheelchairs paid for by Medicare, Medicaid and other insurers.

“Instead of the ‘zippy’ power scooters that were advertised, The Scooter Store sold the beneficiaries expensive power wheelchairs that they did not want, need and/or could not use,” the Justice Department said in a 2007 statement.

A Scooter Store ad on its website in 2005 had the following guarantee: “If we pre-qualify you for a new scooter or power chair and Medicare denies your claim, The Scooter Store allows you to keep your scooter or power chair at no cost.”

The Scooter Store settled the case in 2007 by agreeing to pay the government $4 million and forgo $13 million in Medicare payments.

As part of the settlement, The Scooter Store entered into a five-year “corporate integrity agreement” that required the company to report any Medicare overpayments within 30 days of identification.

That became an issue last year when an independent auditor discovered The Scooter Store was overpaid between $46.8 million and $87.7 million combined in the third and fourth years of the agreement.

The Scooter Store never refunded any of the overpayments, the OIG said a year ago when it gave notice of its intent to exclude the company from participating in Medicare.

Following the notice, The Scooter Store, while disputing it breached the corporate integrity agreement, agreed to repay $19.5 million under a five-year payment plan.

That led two U.S. senators to write CMS in December asking why it agreed to accept an amount “significantly less” than what it overpaid The Scooter Store.

In the agency’s reply last month, CMS said it accepted the amount based on The Scooter Store’s analysis of the auditor’s report. CMS said the agreement doesn’t absolve The Scooter Store from further liability related to the billed claims.

One of the senators, Connecticut Democrat Richard Blumenthal, issued a statement following last week’s raid on The Scooter Store.

“This raid is a welcome step toward cracking down on waste and fraud in Medicare payments for motorized wheelchairs involving The Scooter Store,” he said. “I have urged action to stop abusive overpayments for such devices — costing taxpayers hundreds of million of dollars and preying on seniors with deceptive sales pitches.”

The corporate integrity agreement expired last May. However, the OIG still is evaluating The Scooter Store’s compliance for the last year of the agreement.

In the spotlight

The Scooter Store attracted unwanted attention in January when CBS News interviewed former employees who said the company’s main goal is not to help patients but to “bulldoze doctors into writing prescriptions” so it can boost profits.

Once a doctor has written a prescription, CBS News reported, Medicare rarely checks whether the chairs actually are necessary. The company had a program specifically to get chairs for people that doctors already deemed ineligible, according to three former employees interviewed by CBS News.

Scooter Store officials declined an on-camera interview with CBS News, but said its screening process eliminates 88 percent of those seeking reimbursements through Medicare or private insurance.

CMS, meanwhile, has been implementing programs designed to rein in fraud and cut costs.

Last summer, the agency started a three-year demonstration program that requires providers get “prior authorization” from Medicare before patients living in seven states receive a power wheelchair or scooter.

The states, which include Texas, have “high populations of fraud- and error-prone providers,” CMS said in a statement at the time. The program eventually could be rolled out in all states.

The American Association of Homecare, which represents durable medical equipment suppliers but not The Scooter Store, contends the rules could delay deliveries for some or that others never receive approval.

After the latest round of layoffs this month, The Scooter Store announced it was “better aligning its resources to accelerate its new vision of helping seniors age gracefully at home.”

The company plans to offer additional products and services to aid its customers, but it didn’t give any details.

“They’re going to have to try to find … other lines of business because what was high (profit) margin is now becoming much lower margin,” said Hammond, the Faulkner University law professor.

Whether The Scooter Store’s efforts to expand its offering are at risk of being derailed in the aftermath of last week’s raid remain to be seen.

For their part, authorities are keeping a lid on precisely what they were looking for.

What Medicare Does Not Cover

Senior Couple On ComputerHelen Johnson gave a welcoming smile to the group of older men and women who had assembled at the senior center in the Maryland Eastern Shore town of Snow Hill on a recent evening. All of them were caregivers for spouses or parents with debilitating illnesses.

“We’re very concerned about you,” began Johnson, 74, who organizes support programs for a nonprofit agency serving the elderly. “You spend so much time tending to your loved ones, you don’t have time for your self.” But Johnson’s comforting message masked worries of her own. There was the gnawing pain in her arthritic knee, which gets so bad by late afternoon that she can’t stand up for more than a few minutes at a time. There was her dread of the drive home after dark, which has become difficult as her eyesight has weakened. And perhaps most wearying, there was the knowledge that despite her dislike of working evening hours, she had no alternative.

Nearly a decade after reaching retirement age and qualifying for Medicare, Johnson cannot afford to give up her job. Even with the paycheck it brings, her income is only a few notches above the federal poverty level. Her situation is so common that it presents an uncomfortable — and not always acknowledged — challenge for policymakers seeking to rein in spending on Medicare: Nearly half of Medicare recipients have incomes at or below 200 percent of poverty — $21,780 for an individual, $29,420 for a couple.

At a time of growing concern about federal deficits and the national debt, few dispute the need to take on Medicare. The health insurance program for seniors and others with certain disabilities already accounts for 15 percent of the federal budget — behind only Social Security and defense spending. And that share is expected to rise as health-care costs continue their upward spiral and more baby boomers retire, threatening the long-run solvency of Medicare.

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Yet several of the most prominent solutions under discussion largely derive their savings by shifting a greater share of the cost onto beneficiaries. The Republican plan sponsored by Rep. Paul Ryan (R-Wis.) and passed by the House of Representatives in April, for instance, would substantially reduce federal spending on Medicare by capping the government’s contribution to the program and transforming it into a system of “premium supports” granted to seniors to partially subsidize their purchase of private insurance plans, with seniors responsible for any additional costs. This would more than double out-of-pocket health-care spending by a typical senior to $12,500 per year, according to estimates by the Congressional Budget Office.

And the ability of many seniors to shoulder that burden appears questionable. Only 5 percent of Medicare beneficiaries have incomes of $80,000 or above, a figure that includes any income from a spouse. As for the 47 percent who are at or close to poverty, on average they are already spending nearly a fourth of their budgets on health care, according to an analysis of Medicare survey data by the Kaiser Family Foundation.

“There’s this impression that there’s a great deal of wealth among the Medicare population, this image of wealthy seniors playing golf and enjoying their retirement years,” said Tricia Neuman, director of the Kaiser Family Foundation’s Medicare Policy Project. “But while some are lucky to do so, many are living on a fixed income, struggling to make ends meet . . . with really limited capacity to absorb rising costs.”

Back to work

Johnson, a single woman with a master’s degree in education who spent a lifetime working for social service agencies, is in one of the toughest categories. Virtually her only retirement income is a monthly Social Security check of roughly $1,450. If she had to rely on that alone, her income would be just above 150 percent of poverty — too low to cover her bills but too high to qualify her for federal and other assistance programs that could offset her Medicare premiums and other health costs under either current law or the Ryan alternative. That plan also offers extra help only to seniors at or below 150 percent of poverty. (The Ryan plan would not apply to Johnson because it exempts current seniors, taking effect only as Americans 55 and younger reach retirement age.)

Johnson said she started feeling the pinch within a few years of her retirement in 2000. Her only son, beset with troubles of his own, was not in a position to help.

She said she started by eliminating the little luxuries: “no more dinners out with the girls; no more new clothes.”

Then she dipped into her savings, all but depleting the roughly $30,000 in her 401(k) account to cover big-ticket expenses such as a forest green Toyota Camry to replace her old car and a new water pump and windows for her house, a four-bedroom bungalow her father built virtually by hand in the mid-1940s. She also took out a home equity loan to pay for a new roof, a debt on which she still owes $7,000.

And she never completely stopped working, initially putting in a day a week for her last full-time employer, a nonprofit agency based in Salisbury, Md., called Maintaining Active Citizens, or MAC.

Yet even bills that seemed manageable when she first retired started ballooning: $75 a month for a phone and DSL connection, where once she spent $34; $102 for a light bill that used to be closer to $50. Meanwhile, nearly a fifth of her Social Security check was needed for her Medicare and supplemental coverage premiums.

Four years ago, Johnson concluded that she simply had to work more hours.

The three-day-a week-job coordinating MAC’s caregiver project has boosted her income by about $1,000 per month.

“It’s helped me tremendously,” she said. “There’s not as much pressure to keep robbing Peter to pay Paul — you know, send a bill and pay only part of it, keep track of the gray periods when you don’t have to pay in full yet.”

But the respite feels precarious. Funding for the caregiver project expired at the end of last month. MAC’s executive director, Margaret Bradford, thinks she can patch together enough resources to continue employing Johnson while she applies for a new grant, but there’s no guarantee it will be approved.

And the job is of no use if Johnson can’t stay healthy enough to work. After years of bronchial trouble, she has developed chronic obstructive pulmonary disease, which can leave her breathless and tired. The medication she takes to control it has also caused her to gain substantial weight, exacerbating her arthritis.

‘I don’t want to be here’

But Johnson, a farmer’s daughter who put herself through the University of Maryland one night class at a time, isn’t ready to give up.

The stereo in the exercise room at the Peninsula Regional Medical Center in Salisbury was playing Fleetwood Mac: “Don’t stop thinking about tomorrow. Don’t stop, it’ll soon be here.”

Beads of sweat moistened Johnson’s brow as she strode on a treadmill set to 0.9 mph.

A nurse monitored Johnson’s heart rate and blood oxygen levels to ensure she was not overdoing it. The three-day-a-week pulmonary rehabilitation program is designed to teach patients strengthening exercises in a controlled setting.

This was Johnson’s eighth session, and she was not precisely enjoying it.

“My hands are going numb and my knee hurts,” she said, huffing slightly. “To be honest, I don’t want to be here. . . . But I see this as allowing me to stay mobile. We’re trying to find the solution to help me keep going.”

And if they fail?

“I face up to the fact that it might get a whole lot worse,” she said. “But I just pray and hope for the best. You can’t worry too far ahead because you’ll make yourself sick. So I’m just enjoying what I have and take things one day at a time.”