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2013-01 Wrong Marketing Practices Can Lead to Payment Suspension

Wrong Marketing Practices Can Lead to Payment Suspension
by Jeffrey S. Baird, JD
January 21, 2013

AMARILLO, TX – For many years, I have defended civil and criminal cases brought by the Department of Justice (DOJ) and the OIG. While such cases can be traumatic for DME supplierS, as a general rule I have found: (i) the DOJ/OIG attorney is honest and fair; (ii) it takes two or more years for the case to be resolved; (iii) while the case is pending, my client is able to keep his doors open; and (iv) unless the DME supplier has done something terribly wrong, then its doors will remain open.

Unfortunately, I cannot say the same about dealing with Medicare contractors (DME MACs, ZPICs, RACs, the NSC, etc). With a “flip of the switch,� a contractor can immediately bring a supplier to its knees.

For example, the NSC can suspend/revoke a DME Part B supplier number and/or a ZPIC can instruct the DME MACs to cease paying a supplier. Of course, the DME supplier can appeal these actions. But even if the supplier wins on appeal nine months later, the damage has been done…….the supplier’s doors are likely closed.

In the past, the question of whether a supplier’s marketing practices were legal fell into the province of the DOJ/OIG. In the past, contractors did not look at marketing practices. The NSC would look at hours posted and insurance coverage, and the DME MACs and ZPICs would look at documentation. This has changed.

Now, the NSC is looking at marketing practices. In its inspections (scheduled or unscheduled), the NSC may ask if the supplier’s marketing reps are W2 employees or 1099 independent contracts. The NSC may inquire if the DME supplier is calling prospective customers who are Medicare beneficiaries.

The ZPIC will ask the same types of questions. A ZPIC investigator may visit (over the phone or face-to-face) with a DME supplier’s patients and ordering physicians. If the NSC does not like what it hears, it may suspend/revoke the supplier’s Part B number; if the ZPIC does not like what it hears, it may instruct the DME MACs to suspend payments.

Here is an example. Recently, a DME supplier received a letter from AdvanceMed that said, in part: “The purpose of this letter is to notify you of our determination to suspend Medicare payments to ________…..pursuant to 42 C.F.R. 405.371(a)(2)……This suspension is based on credible allegations of fraud.

The suspension of your Medicare payments took effect on _______…….Prior notice of this suspension is not being provided because giving prior notice would place additional Medicare funds at risk and hinder our ability to recover any determined overpayment……[T]he suspension of your Medicare payments is based on, but not limited to, evidence…….which indicates that _______ has been engaged in soliciting and billing for unnecessary and unwanted medical services. Since at least _______, _______ has been submitting claims to Medicare for medical items whose orders were derived from prohibited solicitations in violation of 42 C.F.R. 424.57(11). Evidence developed during an OIG investigation alleges that ______ contracted with several telemarketing firms to sell ________ in violation of 42 C.F.R. 424.57(11) and that ______ paid these telemarketing firms based on the amount of referrals generated in violation of the Anti-kickback statute.â€?

On March 2, 2012, I wrote an article for Medtrade Monday entitled “I’m Sounding a Warning.â€? In the article, I warned that (i) purchasing leads, if done incorrectly, can violate the Medicare anti-kickback statute and (ii) calling leads, without the proper consent, can violate the telephone solicitation statute.

The AdvanceMed letter is a “real world� example of what the government can do when it has a supplier in its “cross-hairs.� The recipient of the letter allegedly purchased leads in such a way that it violated the Medicare anti-kickback statute. Instead of waiting for two to three years for a DOJ/OIG investigation to wind its way to a conclusion, the ZPIC shut the supplier down “with a flip of the switch.�

The take-away from this is that the supplier must understand that it is “living in a glass house.� The supplier cannot hide anything. Everything it does is open to scrutiny. If the supplier is being “loose and fast� with its marketing practices, then it assumes the risk of receiving a letter such as the AdvanceMed letter quoted above. In short, the supplier must be compliant in everything it does.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato PC, law firm based in Amarillo, Tex. He represents HME companies, pharmacies, and other health care providers throughout the United States. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or jbaird@bf-law.com.