Part B Consumers Beware: ‘Pitfalls, Problems and Penalties’

In a report that included recommendations for improvements to the Medicare enrollment system, the Medicare Rights Center also focused on the existence of issues that often plague Medicare enrollees and how to avoid these pitfalls so as to escape often severe and long-lasting penalties. Besides identifying how consumers may sidestep these issues within the complicated program, the report, entitled “Medicare Part B: Enrollment: Pitfalls, Problems and Penalties,” also called for a streamlining of the enrollment system as it noted that the aging of the American population was occurring “at an unprecedented rate.”

Pitfalls and Problems

To premise the review of the Medicare Part B enrollment process, the authors noted that, “an often reported fact is that 10,000 Baby Boomers turn 65 and become Medicare-eligible each day,” yet, “less well known and commonly misunderstood, are the rules concerning how to enroll in Medicare.” To highlight the issues faced by many enrollees, the Medicare Rights Center reviewed more than 15,000 calls received by the Medicare Rights’ national hotline in 2013 and found that almost one-quarter of the calls were from individuals that were experiencing some type of challenge regarding enrollment. Of those callers, 38 percent were “navigating a specific hurdle,” 28 percent did not understand the enrollment periods, and 13 percent were not able to determine whether they were eligible for enrollment in Medicare. Another area that the report identified in terms of what types of challenges that consumers were experiencing during enrollment was transitions from existing coverage to Medicare. In sum, the Medicare Rights Center found that the majority of issues for enrollees fell into one of these three categories: (1) navigating coordination of benefits rules; (2) understanding enrollment time frames; and (3) dealing with late enrollment penalties. 


In addition to coverage gaps due to failure to enroll in a timely matter, “higher out-of-pocket costs in the form of lifetime late enrollment penalties (LEPs) may also apply.” While some may be able to appeal LEPs through a process called equitable relief, in which those who can prove they were provided misinformation from a federal source about enrolling in Medicare are granted immunity from those penalties, it is estimated that in 2012, approximately 740,000 Medicare beneficiaries paid Part B LEPs.

Fixing the System

In addition to educating consumers regarding the rules of Part B Medicare enrollment, the Medicare Rights Center also recommended steps to take in order to improve the process itself. Among the suggestions for streamlining the complicated process, the report included the following: (1) increasing education for soon-to-be enrollees; (2) simplifying enrollment periods; (3) increasing avenues for consumer relief; and (4) filling gaps in knowledge. With regard to the final suggestion, the report noted that “the true impact of enrollment changes on newly Medicare-eligible seniors and people with disabilities is difficult to discern,” and as such, “Congress should take steps to analyze the true scope of these issues.”

Kusserow on Compliance: 13 Highlighted Items in the 2015 OIG Work Plan Relating to Hospitals

The HHS Office of Inspector General (OIG) released its annual Work Plan for 2015 on October 31, 2014, setting forth planned audits and evaluations with indicators for whether the work was in progress at the start of fiscal year (FY) 2015 or will be new going forward in FY 2015 and beyond. There is a considerable overlap in the OIG’s 2014 reviews with its 2014 Work Plan. The OIG directs a vast majority of its resources toward safeguarding the integrity of the Medicare and Medicaid programs. As in previous years, the hospital sector has a number of initiatives included in the Work Plan. The following highlight some of these:

  1. Reconciliations of Outlier PaymentsCMS reconciles outlier payments based on the most current cost-to-charge ratio from hospitals’ associated cost reports. The OIG plans to assess whether CMS reconciled payments in a timely manner.
  2. New Inpatient Admission Criteria—In FY 2014, CMS implemented criteria for inpatient admissions known as the “2-Midnight Rule.” The OIG will review its impact on hospital billing, Medicare payments, and beneficiary copayments, as well as determining billing inconsistencies and financial incentives for inappropriate billing.
  3. Medicare Costs Associated with Defective Medical Devices—The OIG will review Medicare claims to assess costs that result from additional utilization of medical services associated with defective medical devices.
  4. Analysis of Salaries Included in Hospital Cost Reports—There continue to be concerns about the cost of executive salaries at hospitals. The OIG will review compensation in its cost reports in allowable provider costs to the extent that it demonstrates reasonable remuneration. Note: Medicare does not have limits on the salary amounts that can be reported by the hospital in the cost report.
  5. Medicare Oversight of Provider-Based Status—Medicare rules allow facilities owned and operated by hospitals to bill as hospital outpatient departments; however, the additional payments for services delivered at provider-based facilities may increase beneficiaries’ co-insurance liabilities. The Medicare Payment Advisory Commission (MedPAC) expressed the opinion that Medicare should seek to pay similar amounts for similar services. The OIG will assess the extent to which provider-based facilities meet CMS’ criteria and the impact provider-based status has on Medicare billing.
  6. Comparison of Provider-Based and Free-Standing Clinic—Medicare often makes higher payments to provider-based status facilities than to freestanding clinics for certain services, and the OIG will assess and compare the difference in Medicare payments between physician office visits in provider-based clinics and freestanding clinics for similar procedures.
  7. Duplicate Graduate Medical Education Payments—Prior OIG reviews have found that hospitals have received duplicate or excessive Medicare payments for graduate medical education (GME). The OIG assess whether hospitals received duplicate or excessive GME payments.
  8. Indirect Medical Education Payments—Teaching hospitals receive indirect medical education (IME) payments for each Medicare discharge to account for the higher indirect patient care costs of teaching hospitals compared to those of nonteaching hospitals. The OIG will assess whether hospitals’ IME payments were calculated properly according to federal regulations and guidelines.
  9. Outpatient Evaluation and Management Services Billed at the New-Patient Rate—Medicare payment rates vary for evaluation and management (E/M) services dependent on whether patients are new or established based on previous encounters with the hospital. Prior work found overpayments due to hospital use of new-patient codes when billing for services to established patients and OIG intends to revisit this area to verify whether payments were appropriate and will recommend recovery of overpayments.
  10. Nationwide Review of Cardiac Catheterization and Endomyocardial Biopsies—The OIG will review Medicare payments billed during the same operative session to determine whether the procedures were billed in accordance with Medicare billing requirements.
  11. Review of Hospital Wage Data Used to Calculate Medicare Payments (New)—In the past, the OIG identified hundreds of millions of dollars in incorrectly reported wage data and intends to review hospital controls for accurate CMS calculation of wage index rates for Medicare payments.
  12. Participation in Projects with Quality Improvement Organizations—CMS contracts with Quality Improvement Organizations (QIOs) to “improve the efficiency, effectiveness, economy, and quality of services delivered to Medicare beneficiaries,” and the OIG will review the extent and nature of hospitals’ participation in quality improvement projects with QIOs and the extent to which they overlap with projects from other entities.
  13. Oversight of Hospital Privileging—Hospitals participating in Medicare are required to have an organized medical staff that operates under bylaws approved by a governing body. The OIG will assess how hospitals evaluate medical staff candidates before granting initial privileges, including verification of credentials and review of the National Provider Databank.

The Center for Public Integrity

The Center for Public Integrity is a nonpartisan, nonprofit investigative news organization founded in 1989 by Charles Lewis. Its stated mission is to serve democracy by revealing abuses of power, corruption, and betrayal of public trust by powerful public and private institutions, using the tools of investigative journalism. It provides nonprofit digital news and does no advocacy work. On many occasions, I have found their work to be very useful and enlightening. In fact, in a recent posting (“Increased Regulatory and Enforcement of Medicare Advantage Plans“), I relied greatly on the work they have done. I believe the Center offers information and insights derived from investigative journalism that is not to be found in the popular media.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2014 Strategic Management Services, LLC. Published with permission.

More Fraud in Detroit; Home Health Recruiter Arrested

A Detroit-area home health agency recruiter will face criminal charges that he participated in a health care fraud scheme that resulted in $2.7 million in improper Medicare payments. Javed Akhtar served as a patient recruiter for two agencies in Wayne, Michigan that purported to provide home health services to Medicare beneficiaries. According to the Department of Justice (DOJ), Akhtar was arrested on November 5, 2014.


The complaint alleges that Akhtar served as a recruiter for Life Choice Home Health Care, LLC and Angle’s Touch Home Health Care, LLC. Akhtar is accused of paying illegal kickbacks to Medicare beneficiaries in exchange for information and signatures required to file claims. He then filed claims with Medicare for procedures that were medically unnecessary or never provided.

Detroit-Area Fraud

The case was brought, in part, by the Medicare Fraud Strike Force, an interagency group that targets Medicare fraud, with operations in nine cities across the country, including Detroit, Michigan. Recently, a Strike Force investigation led to the imprisonment of another Detroit-area home health worker (see Prison term, restitution for home health worker who bilked Medicare of millions, October 30, 2014). This appears to be part of a trend, as CMS instituted moratoria on the enrollment of new suppliers and ambulance services in various metropolitan areas, including the Detroit metropolitan area, in February 2014, due to a high incidence of fraud and abuse. The moratoria were extended until February 2015 (see Moratoria on enrollment of new home health and ambulance providers extended for six months, July 30, 2014).

Medicare Changes May Leave ALS Patients Without a Voice

As of December 1, 2014, some Medicare beneficiaries with amyotrophic lateral sclerosis (ALS) could lose access to certain technological devices designed to facilitate communication, according to a report from Kaiser Health News. Although ALS awareness reached the national spotlight this summer with a far reaching fundraising campaign known as the “Ice Bucket Challenge,” money and notoriety have not insulated patients with ALS from what could be damaging Medicare changes, which could put limits on the ability of ALS patients to effectively communicate.

Speech Devices

At issue are speech generation devices, which are the devices that many patients with ALS use to communicate with others both at range and up close. In a February, 2014, “Coverage Reminder” posted by CMS, a distinction was drawn indicating that Medicare may change the way it reimburses speech devices. Historically, Medicare has provided reimbursement for two kinds of speech generation devices, those classified as “dedicated devices” and those that are upgradeable or “locking.” According to the ALS Association (ALSA), since 2001, Medicare beneficiaries have been able to purchase what are known as locking devices and receive Medicare reimbursement for the basic functions of the device. Then, if a beneficiary chooses, the beneficiary can pay out-of-pocket, without Medicare reimbursement, to unlock additional functions, like word processing, accounting, or other non-medical functions. The locking devices are to be distinguished with devices that only serve a speech generation function. Medicare has also historically covered these “dedicated devices.” Traditionally, Medicare has covered 80 percent of the cost of basic speech generation devices, without regard as to whether they are dedicated or upgradeable.


The Coverage Reminder appears to upend the traditional reimbursement model and “specifies that in order for a speech generating device (SGD) to be considered for reimbursement under the Durable Medical Equipment (DME) benefit, it must be a “dedicated” device.” According to the KHN report, beneficiaries and patient advocates have read the CMS notice to mean that beneficiaries will no longer be provided the opportunity to upgrade reimbursable devices, even at their own cost. In other words, under the new coverage, Medicare will only cover basic devices that are incapable of upgraded functioning. The results are serious for ALS patients who may lose functionality like the ability to connect to the internet. For some patients, that would mean losing the only available means to communicate with people who are not in their immediate vicinity. In some cases, without access to the internet, patients will be left vulnerable and unable to call for help if the need arises.

Device Cost

The changes are likely due to the increases in technology and cost. KHN reports that a basic speech generation device costs somewhere in the neighborhood of $4000, while upgrades, for things like eye-tracking technology, can bring a device’s cost up to as much as $15,000 or more. According to KHN, Medicare has typically paid for about 3,000 devices each year.


The coverage change follows another change by CMS that alters the way patients come to own devices. According to the ALSA, on April 1, 2014, Medicare changed the way it pays for speech generation devices by eliminating the ability of Medicare beneficiaries to either rent or outright purchase a device. Under the new paradigm, beneficiaries are required to rent a device over a 13-month period before being granted the right to purchase the device. Each month, people with ALS are contacted by a device’s manufacturer to be sure that the device is still needed. Only upon the expiration of the 13-month period do the manufacturer’s questions stop.


Efforts have been made to slow or stop the decision to change speech generation device reimbursement. For example, 200 members of Congress sent a letter to CMS urging the agency to address ALS patients’ concerns about device access. CMS has not yet responded to the congressional request for action. ALS patients are hoping that they can stop the change before it takes effect in December. According to KHN, ALS patients are quick to point out that they are not asking for Medicare to cover any extra device functionality, they just want Medicare to continue to cover the portion of the cost of speech generation devices that the program has always covered.