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News January 2015

Washington Watch

Medicare: Rules, Regs, Reversals, Boondoggles and Fraud Fights

By Alan M. Schlein

These doctors started testing for as many as 40 different drugs, including illegal ones that few seniors ever use, and billing Medicare separately for each substance. The Wall Street Journal found Medicare’s spending on 22 high-tech tests for drugs of abuse hit $445 million in 2012, up 1,423% in five years.

Medicare is like a government octopus, with its tentacles stretching into almost every aspect of senior life.

With its policies affecting 50 million beneficiaries, this agency has a lot going on simultaneously. Sometimes, policies it puts in place get lost in the shuffle, as it has with its obesity program (see below). Other times, people figure out how to game the system, resulting in huge fraud and abuse.

So as often happens at year end, the agency, formally known as the Centers for Medicare and Medicaid Services (CMS), has been issuing rulings, decisions and actions to clear the end-of-year backlog. Here’s a run-down of some of the more important actions and policy implications.


New Rules to Reduce Billing Abuses

Fraud is tops on the agenda as the next Republican-controlled Congress has signaled it plans to try and rein in Medicare waste and fraud. The Obama administration has been working on this issue for months and in December, the White House strengthened Medicare’s authority to kick doctors and other medical providers out of the federal program for abusively billing the government.

Facing stunning dollar amounts of waste and abuse, the move is a serious shift in how the government cracks down on waste and abuse in Medicare. CMS estimates that for the fiscal year ended Sept. 30, Medicare issued $45.8 billion in improper payments, representing nearly 13 percent of its total spending.

Under the new rules, Medicare will be able to revoke the billing privileges of any doctor, medical-equipment seller or other health service provider who demonstrates a pattern of billing the program inappropriately. Until now, Medicare has been slow to kick out so-called “bad actors” because it first must undertake lengthy, expensive audits and claims reviews. Other times, it can’t ban these providers because it lacks the authority, agency officials say.

But Medicare will face challenges in using its new powers. Its own lawyers have traditionally been very narrow in how they crack down on cases of fraud, only going after clear-cut cases of suspected abuse – for instance, if a medical provider was out of the country or billed for more than 24 hours of services in a day.

Last spring, after pressure by the Wall Street Journal, Pro Publica and other news organizations, Medicare released billing records for 2012 and the Wall Street Journal analyzed the records, finding uncovered potential abuses in the $600 billion program. Pro Publica, in a series of reports, analyzing the same data, examined how fraud flourishes in the Medicare system and also found that Medicare had trouble kicking out doctors who were badly abusing the system.

Not surprisingly, physician groups have been pressuring the agency to scale back the new rules since they were first proposed last year. The doctors worry that the tougher billing requirements risked ensnaring doctors who make innocent mistakes when submitting bills in compliance with Medicare’s complex system of rules and codes. Simple mistakes happen, they argue, for example, when a single vaccine can be billed four different ways.

Medicare officials say the agency plans to focus on clear cases where a provider didn’t change his or her behavior after the agency had tried to instruct the provider that they were billing incorrectly.

The new rules give Medicare the power to block health care providers from enrolling in the program if they have had certain felony convictions and stop others from re-enrolling if they have existing debts to Medicare. That is designed to stop providers who shut down, then later set up shop under a different company name, a common practice.

Lawmakers on Capitol Hill, who have signaled that Medicare fraud will be a focus of the new Republican-controlled Congress beginning in January, want to see Medicare go further, stopping a policy of paying health-care providers first, then chasing them only after they have reaped improper payments.

Reps. Kevin Brady, R-Tex., chairman of the House Ways and Means Health subcommittee recently joined with his ranking Democratic member, Rep. Jim McDermott, D-Washington, offering legislation that would make changes designed to thwart abuse, including removing Social Security numbers from beneficiaries’ Medicare cards and moving to more electronic records.

Another provision of the new Medicare rules, is estimated to save $327 million annually, makes billing privileges consistent across provider types. It will end a policy that allowed ambulance services to bill Medicare for up to a year before enrolling in the program. It also requires the ambulance providers to submit any remaining claims within 60 days after their privileges are revoked.

While Medicare was issuing its new fraud rules and policy, the Wall Street Journal recently uncovered another fraud – pain specialists ordering costly tests for illegal drugs like cocaine and angel dust, which Medicare is paying for, even though few seniors ever use the drugs.

Medical guidelines encourage doctors who treat pain to test their patients, to make sure they are neither abusing pills nor failing to take them, possibly to sell them. Now, some pain doctors are making more money from the testing than from treating their patients, the Journal found. Spending on the tests took off after Medicare cracked down on what appeared to be abusive billing for simple urine tests. Some doctors, realizing that they wouldn’t make as much money from doing these tests, also figured out a more lucrative idea – moving on to high-tech testing methods, for which billing wasn’t limited.

These doctors started testing for as many as 40 different drugs, including illegal ones that few seniors ever use, and billing Medicare separately for each substance. The Wall Street Journal found Medicare’s spending on 22 high-tech tests for drugs of abuse hit $445 million in 2012, up 1,423% in five years. As an example, the newspaper reported, the program spent $14 million in 2012 just on tests for angel dust or PCP. For dozens of pain doctors, Medicare payments for drug testing have eclipsed their income from treating patients, the newspapers analysis of 2012 billing data found.

Medicare pays separately for each substance that high-tech testers look for. Cocaine tests pay up to $21 on average. Hydrocodone, an active ingredient of the prescription drugs Vicodin and Lortab, pays $29.

Medicare officials, in a document laying out some proposed changes to lab-service payments, recently said they “are concerned about the potential for overpayment when billing for each individual drug test.” The agency is “evaluating public comments on our proposal and expects to make a final decision” soon, a CMS spokeswoman said.

Medicare also pays for high-tech tests for substances that aren’t specified in its fee schedule, such as ecstasy. For each, it pays about $25. Use of such club drugs by older people is extremely rare, doctors say. Even counting marijuana, only about one of 1,000 seniors abuse or are addicted to illicit drugs, according to a 2012 survey by the federal Substance Abuse and Mental Health Services Administration.


Medicare Obesity Program Lost in the Shuffle

Three years ago, the Obama administration offered hope to millions of overweight seniors when it announced Medicare would offer free weight-loss counseling. Officials estimate that about 30 percent of seniors are obese and therefore eligible for counseling services. But so far, less than one percent of Medicare’s 50 million beneficiaries have used the benefit, a Kaiser Health News story found recently. Experts blame the government’s failure to promote the program, rules that limit where and when patients can go for counseling as well as the low fees for providers. But despite these limits and problems, the program is available to Medicare recipients, although few people know about it.

Obesity, which is defined as being 35 pounds or more overweight or having a body mass index above 30, increases the risk of many diseases, including diabetes, heart disease and cancer. Since Nov, 2011, about 120,000 seniors have participated, including about 50,000 last year, according to federal data. By comparison, about 250,000 seniors last year used Medicare’s tobacco cessation counseling benefit, which started in 2005 and offers greater flexibility about how providers can offer it. Nationally, 9 percent of seniors smoke, while 30 percent are obese. Obesity and smoking are the leading causes of preventable death in the United States.


ALS Reversal by Medicare for Speech Device Reimbursement

Medicare recently reversed a decision that could have blocked reimbursement for certain speech generation devices that help ALS patients. The decision, which came after strong pushback from Congressional lawmakers and ALS patients, will keep Medicare continuing to cover most of the cost of devices that can be upgraded by patients at their own expense.

These devices are critically important to patients with ALS, amyotrophic lateral sclerosis, also known as Lou Gehrig’s disease, and other neurodegenerative disorders – conditions that limit their capacity for speech and movement.

Since 2001, patients have been able to upgrade their speech devices and machines that enable them to connect to the Internet as well as devices that open doors or adjust room temperatures and Medicare would reimburse those costs. But earlier this year, Medicare announced a policy interpretation that would have stopped covering the cost of upgradable devices.

That policy change prompted strong objection from ALS advocates and a letter from more than 200 Congressional lawmakers (both Democrats and Republicans) added pressure, forcing Medicare to back off and acknowledging how important technology is to those with ALS.

But this fight is not over. Medicare intends to update its National Coverage Determination, the federal rule that determines what exactly Medicare can cover to incorporate technological advances that weren’t around in 2001. A new rule is likely by the summer of 2015 and public comments will be solicited.

Lawmakers, led by Rep. Tim Murphy, R-Pa., say they plan to continue to press the agency because of a pattern of Medicare denials of coverage of eye-tracking technology, which uses eye movements to generate commands for the speech devices. Those claim denials are routinely reversed, but the appeals process can take months.


Other Rulings and New Policies

  • Tightening non-emergency use of ambulances. Seniors living in three states will need prior approval from Medicare before they can get an ambulance to take them to cancer or dialysis treatments, under a new Medicare proposal. The change, which started in December, is part of a three-year pilot program to combat extraordinarily high rates of fraudulent billing by ambulance companies in Pennsylvania, New Jersey and South Carolina.

    Under the new rules, Medicare will require prior approvals for services and equipment associated with a high incidence of fraud, such as wheelchairs, chiropractic visits and plastic surgery. Officials said the three states were selected based on “high utilization and improper payment rates.” If cost savings are shown, the program is expected to be expanded nationally.
  • Medicare proposes coverage of low-dose CT scans to detect lung cancer. The evidence has been piling up that properly done CT scans can help doctors find tiny lung tumors in longtime smokers while the cancer can still be treated effectively. Now, Medicare is proposing to pay for annual scans for beneficiaries at a high risk for lung cancer. To qualify, patients would have to first meet with a doctor to talk through the pros and cons of scans, which involve a low-dose of radiation. Also:
    • Patients would have to be between the ages of 55 and 74.
    • Have no symptoms of lung disease.
    • Have smoked the equivalent of 30 pack-years (or a pack a day for 30 years).
    • And be a current smoker or have given it up in the past 15 years.

This plan is in the proposal stage and a final payment decision is expected soon.

While signaling a willingness to consider the request from the American Medical Association, Medicare did not include new billing codes for end-of-life counseling services in its 2015 payment rules. That, in effect, puts a hold on the issue for now. Counseling people about what choices they would face for care when terminally ill was portrayed as a government effort to establish “death panels” during the bitter debate over the health care overhaul.


[Also contributing to this column were Kaiser Health News; Wall Street Journal; Modern Healthcare; and NPR]
Alan Schlein is the author of "Find It Online," and an internet consultant. He can be reached at  This email address is being protected from spambots. You need JavaScript enabled to view it.

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