LOUDON, Tenn. — The former medical director of the Statistical Analysis Durable Medical Equipment Regional Carrier said this week that in some DME categories — such as orthotics, prosthetics and wheelchairs — as much as 40 percent of the Medicare funds were paid to fraudulent suppliers. And, he said, some manufacturers have contributed to the problem.

Doran Edwards, M.D., of Advanced Healthcare Consulting, a Medicare consultant to companies after the SADMERC was eliminated by CMS in favor of the Pricing, Data Analysis and Coding contractor, asserted that some DMEPOS manufacturers have outsourced production, reduced standards for equipment and lowered quality in order to maximize profits.

"Medicare can save billions in health care costs every year by closing coding loopholes that allow inferior and unregulated products to be sold as if they were approved durable medical equipment," Edwards said.

While CMS is addressing fraud by requiring DME providers to be accredited by Sept. 30, Edwards said, "the issue of abuse by companies who make and market defective equipment is not being dealt with as urgently as needed."

Edwards pointed out that in just a few years, there will be a three- or four-fold increase in the number of baby boomers of Medicare age.

"Without definitive action, the Medicare Trust Fund could be depleted as early as 2012 or as late as 2020," Edwards warned.

He added that "better coordination between CMS and the [Federal Drug Administration] will also enhance Medicare's ability to stop paying for products the FDA deems to be unsafe and a risk to patients (i.e., certain brands of electric heating pads)."

Currently, Edwards said, there is no communication between the two entities.

He also suggested that another solution to fraud and abuse would be a "robust HCPCS coding system" that would accurately define products and services.

Medicare's policies, he said, are based on the assumption that all providers are honest, and that has made the program an easy target for criminals and unscrupulous suppliers. "At present," he said, "a surprising number of codes for services and equipment are vague, making them prime targets for fraud and abuse."

He said that codes created for good quality, FDA-approved equipment are sometimes used for low-quality goods, a problem that is not caught until beneficiaries are harmed or Medicare auditors spot spikes in code utilization. "Even then, the abusive practice can be difficult to stop because the poorly defined code may technically allow the inferior products to use that code," Edwards noted. "All of this highlights the need for a combined approach with better policies, better code descriptions and strict enforcement on the front end of the Medicare approvals."

During his time with the SADMERC, Edwards addressed some coding problems, especially those associated with power and manual wheelchairs. New power wheelchair coding is now in place, but the proposed manual wheelchair codes are stalled on the CMS desk (see "New Manual Wheelchair Codes in Limbo with SADMERC Transition," HomeCare Monday, July 28, 2008).

Edwards strongly believes that they must be approved and that coding in other categories must be redefined, as well.

"It's time for a different approach," he told HomeCare.