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Bid winner had fraud claims

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By Carol Gentry
7/30/2010 © Health News Florida

After Congress overturned a competitive-bidding program for home-health equipment two years ago because of problems, Medicare officials promised they’d be careful in their second attempt.

Yet the Centers for Medicare and Medicaid Services (CMS) has awarded 17 bidding contracts to a company that settled Medicare fraud charges twice in the past eight years.

The company, Orlando-based Rotech Healthcare, paid $2 million in August 2008 to settle civil charges that it covered up Medicare over-billing in three states to avoid penalties related to an earlier fraud settlement.

The previous one, which took place while the company was in bankruptcy in 2002, involved overbilling in four states, including Florida.

Rotech said at the time of the previous settlements that it had done nothing wrong. It has not responded to several inquiries in recent weeks from Health News Florida.

CMS spokesman Peter Ashkenaz, who noted he is not allowed to comment on specific bidders under the confidentiality rules of the program, said the agency “thoroughly examine(s) all bids.”

“Only suppliers that are currently in good standing with Medicare, licensed, accredited, meet financial standards, and submit winning bids can be offered contracts," Ashkenaz said.

“One of the benefits of competitive bidding is that it allows us a better ability to monitor contract suppliers and take corrective actions as appropriate,” he added.

The Accredited Medical Equipment Providers of America (AMEPA), which has fought the competitive-bidding program fiercely, says there is irony in the choice, given that fraud-fighting was one of the reasons CMS gave for conducting the bidding.

“The Rotech situation is a sad one, and it confirms what we’ve been saying: that CMS is violating all their own rules and policies and procedures,”said AMEPA spokesman Sean Schwinghammer. 

Florida is a major player in the competitive-bidding program, as Health News Florida has reported, because even in the pilot stage it will affect hundreds of thousands of Medicare beneficiaries and equipment suppliers in the state.

Two of the nine metro areas in the U.S. selected for the pilot -- to begin Jan. 1 -- are South and Central Florida. One bidding area includes Miami-Dade, Broward and Palm Beach counties, while the other covers Orange, Lake, Osceola and Seminole counties.

Once the kinks are worked out of the program during the pilot, competitive bidding is supposed to spread nationwide. Two years ago, the first bidding attempt had so many kinks that Congress halted it and ordered CMS back to the drawing board.

As opposition from the industry built, Rep. Kendrick Meek, D-Miami, sponsored a bill to repeal the bidding system and attracted more than 200 co-sponsors. But he has been unable to find a sponsor in the Senate, and contract winners are to be made public in September. Meek is running for the Democratic nomination for U.S. Senate.

The second try at bidding was even more successful than expected in cutting costs, Medicare official Jonathan Blum said earlier this month. He told reporters that costs for equipment will be lowered about one-third, both for taxpayers and Medicare beneficiaries who pay a deductible or co-payment. Over 10 years, it’s expected to save $17 billion, he said.

The bidding system covers many common items that seniors need at home, including oxygen equipment, diabetic supplies and wheelchairs.

Rotech announced in a press release last month that it had accepted 17 contracts that CMS offered.

In 2008, industry publications cited information on the Rotech settlement from the Houston law firm that represented the whistleblower, a former executive who oversaw billing for 12 states.

The complaint had been filed by Sheila Bell-Messier of Texarkana, TX, in 2004, who received $540,000 of the $2 million settlement. Rotech also paid her legal fees of $1.2 million, according to various accounts. 

--Carol Gentry, Editor, can be reached at 727-410-3266 or by e-mail. Letters to the Editor are welcome.