Medical suppliers’ ‘no cost to you’ marketing on hot seat in Senate

Representatives of “durable medical equipment” companies accused of badgering senior citizens into obtaining scooters and other equipment “at little or no cost to you” — with the rest picked up by taxpayers — hid from scrutiny by a Senate oversight committee Wednesday.

A bipartisan group of lawmakers faulted the manufacturers for aggressive marketing, and at one company, 99 percent of the invoices it submitted to Medicare were ineligible, federal investigators found.

Sen. Claire McCaskill, Missouri Democrat, said the nation’s aging population and complex and massive Medicare system have provided a rapidly growing and enormously expensive avenue for companies to take advantage of seniors and taxpayers.

Steve Silverman, chairman of Med-Care Diabetic & Medical Supplies, which received $35 million from Medicare last year, refused to appear voluntarily before the Senate Homeland Security and Government Affairs subcommittee on financial and contracting oversight.

Mrs. McCaskill said her office has been bombarded by seniors who say they feel tricked by aggressive marketers into believing they are corresponding with a government official or their doctor.

“So it’s just a coincidence that your name sounds just like Medicare?” she asked after compelling his appearance by subpoena.

The companies call and offer medical equipment to people, and then obtain a prescription from a doctor on their behalf.

“With a senior population, don’t you think if they need medical equipment it should come from their doctor, not a go-between who is contacting them directly?” Mrs. McCaskill asked.

“Sometimes patients are intimidated by their physicians, they don’t agree with their physicians,” Mr. Silverman, a chiropractor, responded. He said people were contacted only after clicking an online ad and checking a box giving consent for them to be called.

“Are there commissions” for salespeople? the senator asked.

“No, they are salaried employees.”

“I want to be clear, there are no commissions?”

“They have incentives based on how many orders they get,” Mr. Silverman ultimately acknowledged.

“Do you think when my mom wound up with five diabetic testing machines it’s because she needed five or because she kept getting contacted by people saying you can have a new model for no or little cost to you, and read underneath that, paid for by the federal government?” Mrs. McCaskill asked.

She also faulted bureaucrats for a lax review process, saying that the Centers for Medicare & Medicaid Services had demanded repayment for 400 of 590 of Med-Care’s claims that it said were improperly paid. Mr. Silverman denied any knowledge of that request.

Investigators have found myriad problems with the companies offering the likes of diabetic testing equipment, power mobility devices and back braces — all billed to Medicare.

The Department of Health and Human Services inspector general “conducted unannounced site visits of 1,581 suppliers and found that 31 percent did not maintain physical facilities or were not open and staffed,” and also found that the suppliers currently owe the federal government more than $70 million for overpayments, most of which the government will never collect.

Last month, the Scooter Store, one of the best-known purveyors of durable medical equipment whose advertisements littered late-night television, filed for bankruptcy after a federal investigation found the company overbilled Medicare and Medicaid by between $47 million and $88 million from 2009 to 2011. Before the bankruptcy filing, the government had agreed to require it to pay back only $20 million.

At Wednesday’s hearing, another company’s representative declined to answer a single question.

“What is your company’s primary business purpose?” Jon Letko of U.S. Healthcare Supply LLC was asked.

“I would like to answer your question, but based upon advice of my counsel I respectfully decline to answer your question,” he responded.

Mrs. McCaskill noted that the company was not so tight-lipped when its assertions didn’t put them at risk of perjury.

“We know your company has been willing to speak to the press about this issue, and I hope you will someday be willing to speak under oath to this committee in the same manner.”