Las Vegas The Office of Inspector General's draft compliance program guide for the durable medical equipment, prosthetics, orthotics and supply industries is a roster of potential minefields for providers, said Elizabeth Carder, general counsel for the National Association for Medical Equipment Services.

The guide (64. Fed. Reg. 4435) explores 48 risk areas in a level of detail that Carder called "astonishing." "Four other guides have been issued, and there is much more detail and analysis in the one for DME," she said.

The risk areas include suspect billing practices, medical necessity issues, kickbacks and referrals, and marketing practices. While some providers might argue that medical necessity should be determined by the physician, OIG disagrees, Carder said. According to OIG, items or supplies furnished by the DMEPOS supplier should be replaced or adjusted in a timely manner to reflect changes in a patient's condition.

Another risk area OIG highlighted is failure to maintain medical necessity documentation. Despite the Health Care Financing Administration's recent memorandum that enables providers to submit a claim based on a faxed certificate of medical necessity, Carder cautioned providers against relying on physicians to keep original CMNs. "There are huge implications for not having an original," she said. "If they ask and you don't have it, it could mean overpayment, a civil monetary fine, or you could be kicked out of Medicare and Medicaid."

Inappropriate use of cover letters is another risk area, she said. Although they are not considered attachments to CMNs and can be written confirmation of a physician's verbal orders, Carder suggested making the letter "look like a letter, not like a CMN template."

Improper patient solicitation also made OIG's list. A footnote in the compliance guide said that "many cases against DMEPOS suppliers have involved giving the beneficiary free gifts such as angora underwear, microwaves and air conditioners in exchange for providing and billing unnecessary items." Providers are not allowed to "cold-call" beneficiaries, but they can call existing patients or beneficiaries who have been patients within the last 15 months.

Carder offered some easy ways to implement some of the compliance guide's suggestions in case investigators do come knocking at the door. She recommended creating an anonymous complaint procedure; requiring new and existing employees to sign a code of conduct; sending employees to billing seminars; posting updates from Durable Medical Equipment Regional Carriers and other pertinent information; and spot-checking billing records periodically.

It's also a good idea to establish a one-page investigation protocol, Carder said. A benign beginning-such as, "It is common for companies that do a high volume of business with the government to be audited from time to time. If you are approached by an investigator ..."-is a non-threatening way to inform employees of the potential for investigation, she said.

All incidents should be reported to one person, Carder said. Employees should get the investigators' business cards and find out the general nature of their inquiry and to whom they want to speak. Employees should not give out any documents, she said. -K.S.

A/R Troubles Drag Down HealthCor Holdings Results Dallas Plagued by an inability to collect money owed, HealthCor Holdings charged $7.3 million to the provision for doubtful accounts for its first quarter, ended March 31, 1999. This charge is a significant increase over last year's provision of $2.3 million and contributed to a net loss of $11.5 million, compared with $5.5 million in 1998. Revenue for the quarter was $22.7 million, down from $32.6 million the previous year.

HealthCor had negative cash flow from operations and said it expects to report additional losses during the second quarter of 1999. Its overall liquidity position is expected to decrease throughout the year, officials said. There is a "substantial prospect" that the company will seek bankruptcy protection if its liquidity needs are not met by its principal holders, according to HealthCor's Securities and Exchange Commission filing. -K.S.