Medical company declines to answer Senate questions on Medicare billing

McClatchy Washington BureauMay 22, 2013 

— The president and chief executive officer of a medical equipment company invoked the Fifth Amendment at Senate hearing Wednesday, declining to answer questions about aggressive marketing tactics used to sell scooters, sleep apnea machines and other home medical supplies to Medicare recipients who may not need or want them.

Jon Letko of U.S. Healthcare Supply LLC, based in Milford, N.J., exercised his constitutional right not to incriminate himself at the hearing before the Senate Subcommittee on Financial and Contracting Oversight.

Before dismissing Letko, the subcommittee’s chairwoman, Sen. Claire McCaskill, D-Mo., expressed hope that he might be more forthcoming with senators in the future.

“We know that your company has been speaking to the press about this issue and we’re hopeful that at some point in time your company will be in a position that you can speak to the committee under oath in the same manner that you were willing to speak to the press,” McCaskill said.

McClatchy wrote about the subcommittee’s probe into Medicare billing and marketing practices by medical equipment companies earlier this month, and the story quoted a statement from U.S. Healthcare that questioned the panel’s findings that more than 60 percent of Medicare payments for durable medical equipment – such as back braces, diabetic testing kits, and power scooters – may be improper. The high error rate cost Medicare an estimated $27 billion over the past four years, according to the investigation.

U.S. Healthcare and a second company – Med-Care Diabetic and Medical Supplies Inc., based in Boca Raton, Fla. – had declined invitations to testify at a hearing in April that focused on Medicare waste and fraud. Both companies were compelled by subpoenas to appear before the Senate panel Wednesday.

Although U.S. Healthcare declined to testify, Steve Silverman, a representative from Med-Care, agreed to answer senators’ questions. He was accompanied by an attorney.

Silverman acknowledged that his company pays incentives to employees based on how many people they call and the number of orders they place, but he said he and his staff did their best to follow all rules and regulations.

“I want to play by the rules,” he said.

The medical equipment industry has come under fire in Washington since a Missouri doctor, Charlotte Kennedy, wrote a letter to McCaskill that said U.S. Healthcare and Med-Care had been sending her faxes requesting approval for expensive supplies such as back braces and sleep apnea machines. When Kennedy spoke to her patients, her letter said, they told her they were being harassed by telemarketers and hadn’t requested any of the equipment.

Kennedy’s letter prompted the senator to open a congressional investigation into sales strategies used by some companies to target senior citizens enrolled in Medicare.

Medical equipment suppliers are prohibited from contacting anyone enrolled in Medicare by telephone unless the patient has given written permission or the supplier has provided equipment to the patient in the past.

More than 5,600 of 6,100 U.S. Healthcare claims reviewed by Medicare auditors were improper, according to a recent report by subcommittee staffers. The report said auditors had demanded that U.S. Healthcare return more than $100,000 in overpayments.

Applying the same 92 percent error rate to the rest of U.S. Healthcare’s claims suggests that the company might owe up to $50 million to Medicare, according to the report.

In a statement to a McClatchy reporter earlier this month, U.S. Healthcare questioned the report’s findings, saying the data doesn’t match information it provided to the subcommittee.

At the hearing Wednesday, U.S. Healthcare distributed a letter from Letko’s attorneys to reporters. Addressed to McCaskill, the letter decried the subcommittee’s report as “harmful and prejudicial,” and complained that the congressional investigation was conducted unfairly.

The report “is replete with cherry-picked data, selective and misleading terms and conclusions, and unexamined assertions by third parties,” the letter said.

Subcommittee staffers refused to explain the basis for findings in the report, according to the letter. “Of course, if this information could be verified USHS would take steps to repay money owed to Medicare,” the letter said.

U.S. Healthcare also said in the letter that the company had provided the subcommittee with an audio recording and documents to show that Kennedy’s patients had in fact requested equipment from U.S. Healthcare, which had “complied with applicable laws and regulations.”

Silverman, the representative for Med-Care, told McCaskill during the hearing that his company also had evidence that Kennedy’s patients had given written consent to be contacted by telephone or had been customers in the past. He said the patients had requested the equipment listed in the faxes to Kennedy.

McCaskill asked to see the evidence, and Silverman said he’d have to consult his lawyer to make sure he didn’t violate patient privacy laws.

Silverman added that he hadn’t been aware of allegations in the subcommittee’s report that more than 400 Med-Care claims in a sample of 590 were improper, or 68 percent, for a total of $146,689 in overpayments.

“To my knowledge we haven’t been demanded repayment for anything,” Silverman said.

He said the company’s error rates were between 3 percent and 7.8 percent from 2010 to 2012.

Email: lwise@mcclatchydc.com; Twitter: @lindsaywise

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