REDDING, Calif.--A California HME provider who sued the Department of Health and Human Services over K0011 wheelchair documentation--and won in federal court--is now taking on the Medicaid program over a little-known law that appears to invalidate Medi-Cal fee schedules.

Tom Lambert, president of Maximum Comfort in Redding, said some Medi-Cal auditors are telling providers they are violating state law by submitting power wheelchair claims that exceed state law limits, even though the claims adhere to Medi-Cal fee schedules and, in many cases, have been pre-approved. The agency is asking for the money back, to the tune of $469,000 in Lambert's case.

A source who asked not to be named said at least 12 providers of power wheelchairs have been assessed between $50,000 and $500,000 in repayment for alleged overbilling dating back to 2004. Letters received by providers from Medi-Cal clearly state that the repayment is not being sought because of fraudulent claims, but because of unintentional overbilling.

The repayment notices couldn't have come at a worse time. Providers in California are still recovering from lengthy delays in receiving reimbursement when Noridian Administrative Services took over as the Jurisdiction D Medicare contractor early this year. And the state of California is more than a month behind in its payments because legislators could not agree on a budget until a week ago.

"I'm getting calls from providers from all over," Lambert said. "We need to try to get a moratorium on [audits and recovery actions] so we can sit down and re-educate everyone. We're dealing with two sets of instructions here. They can't have it both ways."

At issue is Title 22, a state law passed in 2003 that establishes upper billing limits for HME. According to Bob Achermann, director of the California Association of Medical Product Suppliers, the law was enacted as a way of combating Medi-Cal fraud.

"This was done at a time when the state was paying $4 for heel protectors and they were costing providers eight cents," Achermann said. "[Legislators] thought that the only thing they could do was to put a cap on what a provider could charge."

While CAMPS fought the effort and succeeded in getting a carve-out for rental HME, Achermann said, Title 22 was nevertheless enacted. It essentially places a ceiling on what providers can bill Medi-Cal; what that ceiling is, however, is a point of debate. Lambert said he understands the ceiling is 100 percent above invoice for power wheelchairs and accessories and 67 percent above invoice for all other HME. Achermann said the limit is 100 percent across all HME.

Either way, those limits appear to be in conflict with the published Medi-Cal fee schedules.

"If a dealer buys a power wheelchair, the average cost is $1,500 to $1,800 and he'd bill about $4,800 under the fee schedule," explained Lambert. "But the maximum under the state law would be $3,000 to $3,600, so by billing under the fee schedule, you're violating the law."

Providers contend they either knew nothing about Title 22 or thought it was superseded when, in 2004, California adopted a fee schedule that was no more than 80 percent of that allowed by Medicare. For Lambert, as for other dealers, the discrepancy came to light during a recent audit when the auditor, after reviewing Lambert's invoices and documentation, informed him he was in violation of Title 22.

Lambert, who had been audited the previous year without incident, questioned the auditor's assertion. The only way to adhere to the Title 22 regulation would be to do manual pricing and submit catalogs or invoices with each claim, he said.

"What they are saying is that we should be doing manual pricing [and] submit our invoices with these requests so they can figure out what [the reimbursement should be], but that's not required. No one is asking for it," Lambert said.

In fact, he and other stakeholders pointed out, Medi-Cal's own Web site clearly states that no manual pricing and no catalog or invoice is required if there is a code for the product. Products with codes are simply billed electronically. Further, when the 2004 changes were made, providers were instructed to bill the allowables, they said.

Lambert also questioned why the fee schedules themselves do not adhere to state law. "If you have a state law, the bureaucrats don't have the authority to do it another way," he said. "But who do you listen to? We are following [Medi-Cal's] directions to the 'T' and getting into trouble because of it ... I don't think that since I was doing it by the book, I should have to repay $469,000."

Achermann agrees that the whole issue is confusing and perhaps even unfair. To date, CAMPS has heard complaints from half the providers who have so far been hit with repayment notices. "We think the auditors are using some [unusual] interpretations of the provision," he said. "We don't think they are interpreting it correctly."

Achermann did not rule out further discussions with the California Department of Health Services on the matter.

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