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The Scooter Store took no action to repay the money until February 2012, when the Health and Human Services’ inspector general threatened to bar the company from doing business with Medicare, which accounts for about 75 percent of its income, according to its congressional testimony.
The company said the government’s estimate was flawed and that it was willing to repay $19.5 million in overpayments. The company has paid about $5.7 million, with the rest scheduled for repayment over a 5-year period to be completed in 2017.
Medicare said in a January letter that it accepted the fee based on The Scooter Store’s own assessment of what it owed, but that the agreement "does not absolve The Scooter Store from any further liability."
In recent months Sen. Richard Blumenthal, D-Conn. and other members of the Senate Aging Committee have pushed Medicare to recover the millions of dollars spent on unnecessary scooters each year. Those purchases totaled about $500 million in 2011, the latest year available, according to a report by the Department of Health and Human Services’ inspector general.
Medicare, which says that it does not have control over how companies market chairs, launched a pilot program designed to reduce wasteful spending on scooters.
Under the program, government contractors in seven states review patients’ medical documentation to make sure they need a wheelchair or scooter before approving payments for a device. The program is being tested in a small number of states — including Florida, California and New York — because the government must pay contractors extra to review additional paperwork.
The program has been criticized by The Scooter Store’s executives, who say that contractors are too strict in their reviews, rejecting payments for power chairs that are genuinely needed.
The reduced payments are taking a toll on the company, which was founded in 1991. The Scooter Store has spent nearly $1 million lobbying Congress over the last two years, almost exclusively focused on the Medicare review program. And the company laid off about 370 employees in the past year, blaming the reduced payments it’s been getting from Medicare.
Then, last week, The Scooter Store notified most of its remaining 1,800 employees that their jobs were being eliminated. The company said in a statement to the Associated Press that it is operating with a workforce of 300 employees — down from the 2,500 workforce it had at its peak — while trying to restructure its operations.
The mass layoffs followed a raid in February by about 150 agents from the FBI, the Department of Justice and the Texas attorney general’s Medicaid fraud unit at the company’s headquarters.
Federal authorities have declined to speak about the raid, but scooter industry critics in Congress praised the action.
"This raid is a welcome step toward cracking down on waste and fraud in Medicare," said Blumenthal, the Connecticut senator. "I have urged action to stop abusive overpayments for such devices — costing taxpayers hundreds of millions of dollars and preying on seniors with deceptive sales pitches."
AP writer Juan Lozano contributed to this report from Houston.
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