PENNY THOMPSON is not asking for perfection from the home medical equipment industry. She's also not promising perfection from the Health Care Financing Administration, where she serves as director of program integrity.

What she wants is for everyone to try to get along.

"We have many technical issues to address, but first we must agree on a philosophy about how to proceed," she told industry leaders at the National Association of Medical Equipment Services' 1999 Legislative Conference in Washington.

To encourage a culture of cooperation between HCFA and the HME industry, Thompson suggests that each should try to work on the following:

partnership HCFA can't succeed without the full cooperation of providers, she noted. "And we need to never lose sight of that. We don't review most claims, yet they're correct 93 percent of the time. That's a sign providers and doctors are working well with HCFA."

According to Thompson, HCFA's central goal is to "pay it right." And this has profound implications, she said. "We have to worry about when we pay and shouldn't have-and when we didn't when we should have."

Forging a true partnership mentality with HME providers, she said, will allow HCFA to address both sides of the reimbursement equation.

Performance Measurements HCFA needs to know who makes errors, where they occur and why. But while this is a useful gauge of a provider's performance, she pointed out, "it doesn't tell us how to improve. We need more specific measures to develop intervention and to measure its effectiveness."

HCFA also needs to assess the quality of decision making at the medical review contractors' level, Thompson said. "We need to measure their performance and see where we need to give more guidance."

Troublesome activity is brewing in Washington on this front, Thompson warned her audience. "They are looking at engaging recovery audit firms that could be paid on a contingency basis," she said. "The implications are scary in terms of provider audits. HCFA is one of the few agencies against this. We have to be careful not to create bounties and open the opportunity for mischief. We want to prevent problems."

Paperwork Because she recognizes that government regulations have to fit into the business environment, Thompson said she is always willing to hear when required paperwork may be unnecessary.

The caveat? She asks that at the same time, you suggest alternatives or solutions that achieve the same goals.

proportionality HCFA's goal is to not be like the Internal Revenue Service, declared Thompson. While the IRS has improved its performance in recent years, she said, its reputation for taxpayer harassment may never be erased.

"I always tell my staff and contractors that this is the danger of being a government agency," she said. "If you do something that bad, it stays with you. When you act outside common sense, it is devastating to an agency."

Of course, not all errors are equal, Thompson continued. Her goal when assessing problem performance is whether the error or requirement at hand goes to this central question: Is good service being provided to eligible beneficiaries by a quality provider?

According to Thompson, HCFA staff is working on a program memorandum about the concept of letting the punishment fit the crime. "We want to tell providers what to expect. HCFA has a tool box of corrective actions it can take, including education, denying the claim, taking back an overpayment, studying a provider's statistical error rate and making a fraud referral."

Priorities The ongoing imperative for HCFA, said Thompson, is creating a balancing act between eliminating fraud, eliminating error, limiting administrative burdens, opening access to products and services, and making proper payments.

This is not a small feat, but "we have to look at all the balls," she said.

Privacy Much legislation and regulation is also coming down the pike on this issue, reported Thompson. "Again, it will have substantial implications but ultimately will be good. It's extremely important that patients have confidence that their information is used well and by only the right people," she said.

Prevention Education and outreach are critical to preventing error-but education will not prevent fraud, said Thompson. And that's why HCFA needs to find a way to reward and not just penalize. "We need to find a way to support suppliers who are engaged in the process."

Hampering this effort, she admitted, is the fact that HCFA does not know much about most HME providers. They meet minimum standards and send in bills, most of which are not reviewed. "But we don't know about their quality assurance, billing techniques, compliance programs or any outside operational reviews."

Hence the creation of the Supplier Plus program. Despite the minimum standard for all, suppliers can voluntarily meet higher standards, she noted. When they do and tell HCFA about it, then HCFA will not scrutinize claims in the same way. "There can be an end-of the year reconciliation, and we cannot bother each other in between," Thompson said.

In the near future, she promised, "We will be issuing provider enrollment regulations and then asking for comments about higher standard suggestions, assurances that standards are in place and what different claims processes could be put in place."

As of January 2000, provider enrollment is now under her control, giving her the opportunity to "raise the bar a bit."

Penalties The first and strongest response against fraud, Thompson said, must come from program administrators and providers themselves. "We together are in the business of putting law enforcement out of business," she declared.

The good news, she reported, is that the number of cases referred to law enforcement is few, as is the number of cases law enforcement works. However, both figures are higher than they have been in the past.

Patients The ultimate test of everything HCFA does is how well it is serving patients, Thompson concluded. "They've paid. They're entitled. Are they better off or worse off? This is the question I ask myself every day.

"If HCFA and providers agree or disagree," she continued, "we need to remember that this is what we're all trying to get to."

And those are certainly good words to work by.