Fraud spotlight: Will licensure kill the weeds?

Friday, May 31, 2002

SACRAMENTO, Calif. - While California HMEs retreat from the spotlight of what the FBI is spinning as the largest undercover healthcare fraud investigation in U.S. history, the industry once again finds its reputation tainted by scam artists working from the fringe.

And once again, in the turbulent wake of the FBI's revelation of nearly 400 arrests in California since 1999, the questions inevitably turn to what can be done to stifle the abuse and free the industry from its unseemly shadow.

Licensure is frequently mentioned as one means of culling the wheat from the chaff. In California, HME businesses have been required to obtain a Home Medical Device Retailer License (HMDRF) since July 1, 2001. As a consequence, the National Supplier Clearinghouse requires California businesses that apply for a DMEPOS supplier number to provide a copy of their HMDRF license on their NSC application.

But in the three months following the implementation of California's licensure requirement, the number of issued supplier numbers actually went up. Two hundred ninety-seven DMEPOS supplier numbers were issued in July, August and September of last year in California. During the first quarter of last year, the NSC issued 273 supplier numbers to California businesses.

Maybe it's too early to tell whether licensure will act as a winnowing agent in California. But if the experience of other states is any indication, it may be that licensure does little to keep the bad apples out of the basket.

"We haven't seen significant changes in the supplier numbers in those states where [licensure] is a state requirement," said Elaine Hensley, a spokesperson for the NSC.

Nationally, the NSC has granted 106,866 DMEPOS supplier numbers, according to numbers tallied as of Sept. 30, 2001. The NSC deletes a supplier number if none of the DMERCs are billed by that supplier in four consecutive quarters. HME