California Association of Medical Product Suppliers
Defense Fund Contribution Request

Click here to access the CAMPS legal Fund donation form.

You may be at risk for billing Medi-Cal their fee schedule allowable!

CAMPS needs your help in mounting a legal challenge to the Medi-Cal program’s implementation and interpretation of section 51008.1 of Title 22 commonly referred to as the Upper Billing Limit (UBL). This regulation was adopted in 2004 under the auspices of eliminating fraud and abuse. Though we attempted to convince DHCS not to go forward with this regulation and its flawed provisions it was adopted with only minor revisions.

In the past year CAMPS has heard from providers being assessed penalties and suffering recoupment of previous Medi-Cal payments. Most of those audits have been of payments for wheelchairs but the UBL can be applied to any DME or medical supply item.

One provider is fighting charges of criminal fraud for violating the upper billing limit.

In essence the UBL was adopted many years ago but since then has had little or no enforcement or recognition by providers. As we will explain, the UBL is foreign to the Medi-Cal coding and reimbursement of DME and medical supply items and incomprehensible to most providers.

The UBL applies to Medi-Cal purchase of items of durable medical equipment, incontinence and disposable medical supplies.  Medi-Cal provider reimbursement amounts are set by a fee schedule that is adopted and published by the program.  The UBL changed that by limiting what you can charge the program to no more then 100% of your “net purchase price.” 

Net purchase price is further defined as the actual cost to the provider to purchase the item from the seller, including any rebates or discounts known to the provider at the time of billing that reduces the invoice amount. There can be situations where a provider will be found in violation of this regulation by simply billing the Medi-Cal program the allowed fee schedule amount for that item. The audit may occur years after the service was rendered and reimbursed.

There are many reasons why the UBL is illogical and inappropriate in its application to our industry. Those arguments have not deterred Medi-Cal auditors and the risk of expansion of the UBL has in fact increased. A recent report for the Bureau of State Audits that reviewed payment for DME under Medi-Cal examined the UBL. Some of their conclusions were as follows:

  • DHCS conducted a limited review of providers and found that 21 providers over billed, and Medi-Cal overpaid, about $1.2M, or 25% of the $4.9M that providers billed.
  • Although DHCS has recovered $960,000 it does not know the extent to which other provider may have over billed the Medi-Cal program.

As the regulations were being developed and finalized there were two specific issues that we raised to DHCS that are now being misinterpreted by DHCS audit staff.  The first is the need to acknowledge that certain potential discounts are not “known to the provider at the time of billing.”  Secondary discounts based on payment timeframe or aggregate volume cannot be determined until well after Medi-Cal billing and cannot be apprehended with certainty at the time of billing.  The regulations specifically limits the discounts that must be included in the UBL to those known at the time of billing and do not require that secondary discounts be included -- neither should the auditors.

The other issue is the fact that the auditors have adopted an impossible formula for determining how labor is considered for custom wheelchairs (which are a labor intensive service).   To calculate a fair UBL, the related labor costs need to be recognized along with the product cost when doing the calculation.  The auditors have created a test which requires the labor cost to exceed the product cost before it will be considered – a situation that will not happen.  The regulations specifically allow labor costs to be recognized in the UBL calculation – applying a formula that fails to do so is inconsistent with the whole reason the language was added in the first place.

Several providers have already spent thousands of dollars to defend themselves in these audits and investigations. CAMPS has determined that we need to file a legal challenge to the UBL regulation and remove the threat to the DME provider community. We need to raise a legal fund of $100,000 to pursue this legal challenge. CAMPS has already expended funds for a legal analysis of the basis for our challenge and we do not have sufficient funds in reserve for these legal costs.

Please send your contribution today. If you have questions, please contact me at the CAMPS office or by e-mail at bachermann@amgroup.us.

Click here to access the CAMPS legal Fund donation form.

Send donations to the CAMPS office:

California Association of Medical Product Suppliers
One Capitol Mall, Suite 320
Sacramento, CA 95814
(916) 443-2115

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