Getting the House In Order: Responding to Medicare Part B DMEPOS Audits

1. Getting the House In Order:Responding to Medicare Part B DMEPOS Audits MNCHA Annual Meeting September 18 Turf Valley Country Club Mary Ellen Conway, President Capital Healthcare Group

2. Very Interesting • In 2011, the Medicare Program received over 1.2 billion claims. • 4.5 million claims per work day; • 574,000 claims per hour; or • 9,579 claims per minute.

3. Medicare’s Arsenal of Weapons

4. Audits • Multiple Types • Widespread • Supplier specific • Pre-payment • Post-payment

5. Pre-Pay Audits

6. Pre-Pay Audits • What are the steps in the pre-pay audit review process? • The supplier submits the claim, electronically or hard copy, to the DME MAC (Durable Medical Equipment Medicare Administrative Contractor). • An Additional Documentation Request (ADR) letter is sent to the supplier. • The supplier sends the additional documentation to the auditor within 30 days. • Extensions are not generally permitted

7. Pre-Pay Audits • What are the steps in the pre-pay audit review process? [continued] • The claim is reviewed by the medical review nurse and a determination on whether or not to pay • An Explanation of Benefits (EOB) is provided to the supplier.

8. Pre-Pay Audits • What is the time frame for the review of each claim by the auditor? • Generally 60 days from the receipt of the material • Process takes longer than routine claims submission

9. CERT Audits

10. Comprehensive Error Rate Testing (CERT) Audits • CMS established the CERT program to monitor the accuracy of Medicare fee-for-service payments by the DMEMACs. • CMS typically retains third-party contractors to conduct CERT audits. • The CERT process generally begins with the Medicare program identifying procedure codes that statistically appear to be the subject of potential incorrect billings and/or payments.

11. Comprehensive Error Rate Testing (CERT) Audits • Once the procedure codes are identified, the CERT contractor randomly selects claims made with the procedure code for a probe audit and sends the identified provider a letter requesting copies of relevant medical records. • Generally, Medicare does not pay the claims requested in a CERT audit until the review substantiates the appropriateness of payment = Pre-pay

12. Comprehensive Error Rate Testing (CERT) Audits • Upon receipt of the medical records, the CERT contractor reviews the records to determine whether the claims and medical records comply with the Medicare coverage, documentation, coding, and billing rules.

13. Comprehensive Error Rate Testing (CERT) Audits • When performing these reviews, the CERT contractor must follow Medicare regulations, billing instructions, National Coverage Determinations (NCDs), coverage provisions in interpretive manuals, and Local Coverage Determinations (LCDs) made by the applicable Medicare claims processing contractor. • The CERT contractor does not develop or apply its own coverage, payment, or billing policies.

14. Comprehensive Error Rate Testing (CERT) Audits • If the CERT contractor determines that the records and claims do not substantiate payment, it sends the provider a letter denying the reviewed claims. • Moreover, negative findings from a probe audit often lead to a more extensive post-payment audit and subsequent repayment demands for “erroneous” claims.

15. Sample CERT Audit Items • Physician records must be complete. • Look for illegible or missing signatures. • All documentation, including medical records, required to be considered medically necessary. • Requires evidence of treating doctor’s intent to order tests. • Requires medical records from treating physician to substantiate need.

16. Post-Pay Audits

17. Post-Payment Audits • Claims previously paid are audited. • The process starts with a written notice and a request for review of a sample of the health care provider's medical records. • Valid statistical random sample: • Statistical sampling and extrapolation of the sample results to create an overpayment. • This approach allows the auditor to perform a minimal review that can yield maximum results.

18. Post-Payment Audits • Valid statistical random sample [continued]: • Often results in allegations that a Medicare provider has been astronomically overpaid. • Statistical sampling and extrapolation of the sample results are used to establish an error rate. • This error rate is then applied to the “universe” of claims made by a provider in a given time period.

19. Post-Payment Audits • The records are reviewed by the reviewer who then makes a determination whether payment for the services were medically necessary and reasonable. • A letter with an explanation of its findings, which usually involves a calculation of the amount that was deemed to be “overpaid”, will be sent to the provider.

20. Post-Payment Audits • The date the provider receives the demand letter usually starts the appeals clock. • At the conclusion of each stage of the appeals process, the provider receives a written notice explaining the outcome of that stage and its appeal rights.

21. Z-PIC Audits

22. Zone Program Integrity Contractors (ZPICs) • ZPIC organizations hired indirectly (or in connection with other CMS affiliated contractors) by CMS to perform wide range activities including: • Medical review, • Data analysis, and • Medicare evidence-based policy auditing activities.

23. Zone Program Integrity Contractors (ZPICs) • Was not officially rolled out with an emphasis on physicians, DME suppliers, and physical therapy billing, but that is exactly where the program has been recently focusing efforts.

24. Zone Program Integrity Contractors (ZPICs) • PSCs are now known as ZPICs. • At the highest level, CMS considers an individual ZPIC as being responsible for detecting, deterring, and even preventing Medicare fraud and abuse. • In this capacity, the ZPIC is directly responsible for operation areas such as: • Investigation • Case development • Administrative solutions • Referral to law enforcement

25. Zone Program Integrity Contractors (ZPICs) • ZPICs refer all identified overpayments to the DME MAC, who subsequently sends the provider a demand letter for recoupment of the perceived overpayment. • In any case involving an overpayment, even where there is a strong likelihood of fraud, the DME MAC will typically request recovery of the overpayment. • Under most circumstances, CMS contractors may use statistical sampling to calculate and project (i.e., extrapolate) the amount of overpayment(s) made on claims.

26. Zone Program Integrity Contractors (ZPICs) • If the provider elects to appeal a claim reviewed by a ZPIC, then the ZPIC forwards its records on the case to the CMS affiliated contractor (typically a DME MAC) so that it can handle the appeal. • ZPICs are required to have a medical specialist involved in denials that are not based on the application of clearly articulated policy with clearly articulated rationale.

27. Zone Program Integrity Contractors (ZPICs) • A review or reconsideration involving the use of medical judgment should involve consultation with a medical specialist. • While ZPIC audits are similar in many ways to other CMS audits currently being performed nationwide, they do differ in one very important aspect – potential Medicare fraud implications. • Of all the current CMS audit initiatives (RAC audits, MIC audits, etc.), it is vital that providers facing ZPIC audits immediately and effectively address targeted audit issues.

28. First Thing… • On prepayment ZPIC reviews, you should receive a letter explaining you are being audited and who the auditor is. • If you know, reach out to them and introduce yourself. • If you don’t, find out. 28

29. RAC Audits

30. Recovery Audit Contractors (RACs) • RACs are paid a contingency fee for identifying and correcting improper payments. • The fees in the demonstration program were considered proprietary and were not released. • The fees for the permanent program are published on CMS’s website and range from 9 percent to 12.5 percent. • Now apply to both Medicare and Medicaid

31. Recovery Audit Contractors (RACs) • The RACs conduct two types of reviews: • Automated and Complex • Automated • An automated review occurs when a RAC contractor has identified a payment that is clearly in violation of Medicare policy. • In such cases, an automatic adjustment is made and the payment corrected.

32. Recovery Audit Contractors (RACs) • Complex • In a complex review, the RAC identifies what is likely a payment error, and requests medical records from the provider to conduct a full review. • A provider has 45 calendar days to respond to the RAC request for medical records. • RACs are required to reimburse Prospective Payment System (“PPS”) providers and Long Term Care providers at a rate of 12¢ per page for copying the medical records but are not required to reimburse DME Suppliers.

33. Goal of the RACs • The RAC program is designed to: • Detect and correct past improper payments in the Medicare FFS program. • Provide information to CMS and Medicare contractors to help prevent fraud in the future and to lower the claims payment error rate.

34. 2013 OIG Work Plan

35. 2013 OIG Work Plan • Quality Standards—Accreditation of Medical Equipment Suppliers (New) • Program Integrity—Reliability of Service Code Modifiers on Medical Equipment Claims • Program Integrity—Use of Surety Bonds To Recover Medical Equipment Supplier Overpayments • Lower Limb Prostheses—Supplier Compliance With Payment Requirements (New)

36. 2013 OIG Work Plan • Power Mobility Devices—Supplier Compliance With Payment Requirements (New) • Vacuum Erection Systems—Reasonableness of Medicare’s Fee Schedule Amounts Compared to Amounts Paid by Other Payers (New) • Back Orthoses—Reasonableness of Medicare Payments Compared to Supplier Acquisition Costs • Lower Limb Prostheses—Supplier Compliance With Payment Requirements (New)

37. 2013 OIG Work Plan • Parenteral Nutrition—Reasonableness of Medicare Payments Compared to Payments by Other Payers • Frequently Replaced Supplies—Supplier Compliance With Medical Necessity, Frequency, and Other Requirements • Power Mobility Devices—Supplier Compliance With Payment Requirements (New) • Continuous Positive Airway Pressure Supplies—Reasonableness of Medicare’s Replacement of Supplies Compared to That of Other Federal Programs (New)

38. 2013 OIG Work Plan • Diabetes Testing Supplies—Supplier Compliance With Payment Requirements for Blood Glucose Test Strips and Lancets • Diabetes Testing Supplies —Effectiveness of System Edits To Prevent Inappropriate Payments for Blood-Glucose Test Strips and Lancets to Multiple Suppliers • Diabetes Testing Supplies—Potential Questionable Billing for Test Strips in 2011 • Diabetes Testing Supplies—Improper Supplier Billing for Test Strips in Competitive Bidding Areas (New) • Diabetes Testing Supplies—Supplier Compliance With Requirements for Non-Mail-Order Claims (New)

39. 2013 OIG Work Plan • Competitive Bidding—Mandatory Review • Program Integrity—Onsite Visits for Medicare Provider and Supplier Enrollment and Reenrollment (New)

40. OIG Recommendations • OIG recommends that all suppliers conduct internal audits. • Review random sample of claims based on risk areas it identified. • Conduct initial baseline audit and periodically conduct follow-up audits. • If problems identified in the baseline audit, re-audit the same issue later. • Objective to measure effectiveness of any corrective action(s). • Document results of all audits.

41. What You Need To Do In Your Office

42. Rule Number One • A DME supplier’s documentation will make or break the company.

43. Audit Request • Document request letter will provide general information on type of documents to submit. • Prescriber medical records • Supplier records • Detailed written order • Dispensing order • Certificate of medical necessity (CMN) • Delivery tickets

44. Documentation to Submit • Medical records include, but are not limited to: • Physician’s office records. • Hospital records. • Nursing home records. • Home health agency records. • Records from other health care professionals. • Test reports.

45. Prescriber Medical Records(Documentation) • This is the element that is most often missing in the response to development letters. • Suppliers must provide a copy of documentation from the prescriber’s medical record that identifies the condition/diagnosis for which the item is being ordered and other pertinent information relating to the medical necessity for the item.

46. What Should be Included in Prescriber’s Medical Record (Documentation)? • Prescriber’s medical record includes, but is not limited to: • Ordering physician’s diagnosis. • Duration of the patient's condition. • Clinical course (worsening or improvement). • Prognosis. • Nature and extent of functional limitations. • Other therapeutic interventions and results. • Past experience with related items.

47. Prescriber Medical Records(Documentation) • The prescriber must be: • Someone who is practicing within his/her scope of practice. • Who can bill Medicare for his/her services (i.e., is a Medicare-enrolled provider). • Who has no financial relationship with the supplier.

48. Prescriber Medical Records(Documentation) • The ICD-9 code submitted on the claim should reflect this condition/diagnosis.

49. Prescriber Medical Records (Documentation) • The date of the visit must be noted in the record and must be prior to the date of service on the claim. • For items that are being newly provided, the date of the visit must generally be within 3 months prior to the initial dispensing of the item.

50. Prescriber Medical Records(Documentation) • For items addressed in LCDs, there must be information to document that all coverage criteria specified in the medical policy have been met. • This may include copies of laboratory or other diagnostic test results or x-ray reports.