Medicare Fraud

When the old DME sent a whole mask they charged $245.23 same as this time -- BUT THEY NEVER CHARGED ADDITIONAL FOR EACH COMPONENT.
This DME charged $245.23 for a mask then charged $104.66 for the cushion then charged $65.00 for the headgear!!

The old DME charged $245.23 for the WHOLE THING then Medicare approved $188.64 and Medicare actually paid $150.91.
I don't know offhand what my secondary paid. I don't scan the copies of the checks they send me .. I just file them. I would have to dig through my filing cabinets to find those payments.

Now it makes more sense in what you were saying. I ran into the same problem with Lincurse when I first started CPAP. The mask was all assembled in one box but they billed everything separate. Nice little billing system I think. They actually make more money on the mask if they bill it as a mask and the components. I have private insurance and it was the same practice.

To boot, my insurance was a 50% coverage so I ended up spending $110 on a UMFF then another $120 for the machine rental charges, hose, filters, and humidifier when I went to pick it up. Yes that was for the first month. I then got to pay $24 a month for 10 months for the rental, $35 a month for the supplies(2 filters, a hose, and a mask seal) they sent. Then when I tried to get them to stop sending the supplies, somehow it took them 3 months to stop. Then they started to double bill me when I would call them to order anything.

Yes I know, I just spent a lot of money for an S8 Escape.

Then the woman at the other end of the phone wondered why I don't use them anymore.

Allen

I read a lot about how DMEs and sleep labs are suffering from low reimbursement rates but then I look at the cost of these things online and on auction (looking at reserve prices) and from some extrapolation you can get a good idea of how much this equipment really costs the DME and what their profits margins are. I figure the cost is around $300 for a Redmed or Respironics straight CPAP, $400 for an auto and around $50 for a mask. So they bill the insurance $3000 and get reimbursed for $1200 and $450/$150 for a mask. So thats in the neighborhood of 200%+ profit margin on this equipment. Oh yea, their 15 mins of setup services and some possible warranty support come out of this also, most of the time they just ship the machine back to the manufacturer and ship out a new one so their cost for the warranty support is minimal just shipping charges. If you have a newer machine they probably dont understand all of the new features so you have to learn about this yourself without the clinical manual. Most of the DMEs are associated with hospitals and insurance companies so they have a captive market with very low risks. Unless they are mismanaged they have to be extremely profitable. The squeaky wheel patients are probably their biggest pain because they actually have to do some work for them other than that it is like printing money.
I dont know the cost structure of the sleep lab industry but from the costs being $5000-$6000 for two studies for most OSA patients with most of the work being done by techs who are probably making $50K a year and the bulk of the diagnosis being a print out from a computer program I can imagine that their profit margins are quite high also. So low reimbursement means their profit margin goes from 400% to 200% percent with no risk. I challenge someone to prove the margins are lower than this.

Hawk256 wrote:So the reason doctors and hospitals charge the uninsured such high rates is so that they can get Medicare and other insurances to pay them an amount that they are "not happy with" and is "barely enough to keep the doors open"? Am I to believe that doctors and hospitals enter into agreements and contracts with Medicare and private insurance companies under duress or just to keep the doors open? I'm sorry but I'm just not buying it.

I'm sorry if you don't believe it, but it's just simply the truth - Medicare sets all the prices. You either agree to take it, or you don't. Pure and simple. And if you don't - you won't get referrals.

There's really nothing more to it. Nothing more to try to figure out. Nothing to read between the lines. It's pretty black and white.

Medicare says "We will pay this much - take it or leave it" and they honestly don't care which choice you make.

el_zorro wrote:I read a lot about how DMEs and sleep labs are suffering from low reimbursement rates but then I look at the cost of these things online and on auction (looking at reserve prices) and from some extrapolation you can get a good idea of how much this equipment really costs the DME and what their profits margins are. I figure the cost is around $300 for a Redmed or Respironics straight CPAP, $400 for an auto and around $50 for a mask. So they bill the insurance $3000 and get reimbursed for $1200 and $450/$150 for a mask. So thats in the neighborhood of 200%+ profit margin on this equipment. Oh yea, their 15 mins of setup services and some possible warranty support come out of this also, most of the time they just ship the machine back to the manufacturer and ship out a new one so their cost for the warranty support is minimal just shipping charges. If you have a newer machine they probably dont understand all of the new features so you have to learn about this yourself without the clinical manual. Most of the DMEs are associated with hospitals and insurance companies so they have a captive market with very low risks. Unless they are mismanaged they have to be extremely profitable. The squeaky wheel patients are probably their biggest pain because they actually have to do some work for them other than that it is like printing money.
I dont know the cost structure of the sleep lab industry but from the costs being $5000-$6000 for two studies for most OSA patients with most of the work being done by techs who are probably making $50K a year and the bulk of the diagnosis being a print out from a computer program I can imagine that their profit margins are quite high also. So low reimbursement means their profit margin goes from 400% to 200% percent with no risk. I challenge someone to prove the margins are lower than this.

I know a lot of it seems like the places are making an obscene fortune and that much of this may not make a difference, but...

Some of this just can't really be understood until you try making a living on that side of things. I can't speak with much experience on Sleep Labs, so let's ignore that for the sake of this discussion. A couple of quick points without getting too long winded:

1) The costs are higher than that.

2) Pretty much every single DME that I've worked with or for over close to 15 years does a HELL of a lot more work than you describe above.

3) One very large factor to take into consideration is just how much it really costs to bill someone's insurance. Currently, the average cost to submit an initial claim to Medicare is just under $100.00. That price takes into account the labor for collecting all the paperwork (A nightmare on it's own), the cost of software, billing, accounting, etc. Remember that up until very recently, Medicare had an average days to pay of over 4 months. AVERAGE. I've seen lots and lots of claims that took over a year to get paid.

4) Lots of times insurance companies will just deny claims in the interest of stalling tactics or for whatever. At one point the last company I worked for - BCBS just started denying all claims. Had an 80% denial rate. It took 2 years of court battles to turn it around. Cost the company an insane amount of lost revenue and then had to pay lawyers just to get them to pay claims they should have paid to begin with.

5) With Medicare, unless you specifically have in writing an exact reason why an item isn't covered BEFORE you give the item to the patient - you can never bill the patient if the claim is denied. So...for example... you can't get a doctor to sign a Certificate of Medical Neccessity... too bad. You don't get paid. Period. It's considered Medicare fraud to try and recoup the equipment or get paid for it. People absolutely go to jail for it, every single year.

6) CPAP rates right now are pretty decent (In my opinion). About where they should be for equipment and a bit high on some consumables. The real issue is all the other stuff that a DME has to carry that the rates are far too low on. Insurance Companies have long had a feeling that paying too much on some items is okay because payments are too low on others. This is very wrong and winds up being very unfair to uninsured patients who need the items that allowables are set too high on. What SHOULD be happening is that payments are fair and balanced across the board. Stop feeling it's alright to overpay on something because you are underpaying on another!!

That's todays overly-long rant on the payment system

mattman

mattman wrote:I'm sorry if you don't believe it, but it's just simply the truth - Medicare sets all the prices. You either agree to take it, or you don't. Pure and simple. And if you don't - you won't get referrals.

There's really nothing more to it. Nothing more to try to figure out. Nothing to read between the lines. It's pretty black and white.

Medicare says "We will pay this much - take it or leave it" and they honestly don't care which choice you make.

I believe everything you have said in this post. Medicare and private insurance will only pay a set amount, that the doctor agrees to accept for whatever reason. I just don't believe that what Medicare or any private insurance pays is only "enough to keep the doors open". If that were the case and most of your patients have Medicare or private insurance it would not be a smart business decision to become a doctor now would it.

Hawk256 wrote:I believe everything you have said in this post. Medicare and private insurance will only pay a set amount, that the doctor agrees to accept for whatever reason. I just don't believe that what Medicare or any private insurance pays is only "enough to keep the doors open". If that were the case and most of your patients have Medicare or private insurance it would not be a smart business decision to become a doctor now would it.

Gotcha! Sorry for misunderstanding you - my fault entirely.

And I can totally see what you mean. Statements like that tend to make me look sideways too. Maybe (at least from my persepective) the better way to put a thought like that would be:

It can be frustrating and confusing to deal with Medicare payments where some items are deliberately priced high with the expectation that others are too low. It ends up with a system that becomes challenging to maintain at best. And if you happent to deal mostly in items that are priced low it can be extremely difficult to run a business that earns a fair and reasonable profit.

mattman

mattman
1) The costs are higher than that.

If the costs are significantly higher, then most of the online providers are either selling at a loss or have better bargaining power than the big boy DMEs. Given the recent ResMed internet pricing advertising changes and the uproar that they brought on this board, I think the reason Resmed/Respironics are trying to control the internet pricing because their DME partners are complaining that it exposes their large profit margins.

mattman
2) Pretty much every single DME that I've worked with or for over close to 15 years does a HELL of a lot more work than you describe above.

If this is the case, then why is the opinion of how the DMEs are serving their customer so low here. Most of the rants are that they give customer compliant data only machines, dont give them the clinical guides or enough training and lie about how it is illegal for customers to change settings on their own machines. Of course, there are probably some squeaky wheels that the DME works hard for but these seem to the exception and not the rule.

mattman

One very large factor to take into consideration is just how much it really costs to bill someone's insurance. Currently, the average cost to submit an initial claim to Medicare is just under $100.00. That price takes into account the labor for collecting all the paperwork (A nightmare on it's own), the cost of software, billing, accounting, etc. Remember that up until very recently, Medicare had an average days to pay of over 4 months. AVERAGE. I've seen lots and lots of claims that took over a year to get paid.

4) Lots of times insurance companies will just deny claims in the interest of stalling tactics or for whatever. At one point the last company I worked for - BCBS just started denying all claims. Had an 80% denial rate. It took 2 years of court battles to turn it around. Cost the company an insane amount of lost revenue and then had to pay lawyers just to get them to pay claims they should have paid to begin with.

5) With Medicare, unless you specifically have in writing an exact reason why an item isn't covered BEFORE you give the item to the patient - you can never bill the patient if the claim is denied. So...for example... you can't get a doctor to sign a Certificate of Medical Neccessity... too bad. You don't get paid. Period. It's considered Medicare fraud to try and recoup the equipment or get paid for it. People absolutely go to jail for it, every single year.

6) CPAP rates right now are pretty decent (In my opinion). About where they should be for equipment and a bit high on some consumables. The real issue is all the other stuff that a DME has to carry that the rates are far too low on. Insurance Companies have long had a feeling that paying too much on some items is okay because payments are too low on others. This is very wrong and winds up being very unfair to uninsured patients who need the items that allowables are set too high on. What SHOULD be happening is that payments are fair and balanced across the board. Stop feeling it's alright to overpay on something because you are underpaying on another!!

If all of these are true about insurance and medicare billing being the only cause of the price confusion/inflation then the DME community could solve the problem easily by doing the same thing the online providers do, that is you pay price A.) higher, if you use insurance or medicare, and price B.) lower if you pay cash. I dont disagree that insurance and medicare are driving these costs up, but try to pay cash for a machine at a DME and see what kind of treatment you get. When I picked mine up, I tried to pay cash for my co-insurance and they wouldnt take it. Instead, I have to rent to own so they roll over into a new deductable year and I ended up paying $400 instead of $94. If they have to wait a year to collect the rest of their 200% profit, oh my this is a crying shame.

The whole system is flawed but dont try to justify the cost inflation by hiding behind insurance and medicare and the flaws in the system.

Just a couple things...

1. Medicare reimbursements really do suck no matter how you cut it. You see a bill for $500 and they allow $75.
2. Statistically, OSA is an old persons disease meaning Medicare. If you don't accept Medicare you are not in the game.
3. I have a copy of the Medicare billing info for DME and cannot find anything to bill an assembly for masks/headgear/cushion, or machine/bag/hose. The guidelines specify they are to charge by component.

For us seniors, Medicare is the only game in town. I don't like using a govt run system but am forced into it by my other insurance company. That said, I am very impressed with Medicare and when I've had to talk to a real live person they have been very pleasant and willing to help. They even speak old guy so i can understand it. Of course it takes forever on hold to get there, but their website is good also.

ecocyber wrote:I am sure there are some bad apples out there; but you need to understand something about how Medicare billing works.

Very educational post. Also, thanks for reminding me how much congress stinks. Throw 'em all out!

A few weeks ago, my father and I were having a phone conversation. Somewhere, the conversation touched on health, doctors, insurance, etc. He related a story which happened some years back about two trips to a doctor. For reference purposes, he'll be 91 this year and is in very good health. (I've also heard the story before, but this thread brought it to mind)

The story he related was that he had gone to a doctor to have some minor thing removed from his nose or face. This was before he turned 65. The doctor's charge was $30.00.
A few years later, he went back to the same doctor for the same type of procedure. By this time, he had passed his 65th birthday and was on Medicare. The doctor's charge this time was $300.00. The doctor told him that he charged that much BECAUSE HE COULD.


Den