REMEMBER WHEN it was unusual to receive a post-payment audit letter? Well, those days are over. Post-payment audits are one significant component of the durable medical equipment regional carriers' payment safeguard responsibilities.

In post-payment audits, DMERCs generally look for instances of fraud and abuse. Examples of abuse include unbundled charges, providing items that are not medically necessary and breaching assignment agreements.

Sometimes, repeated instances of abuse can escalate to fraud (e.g., repeated abusive conduct following supplier education). Examples of fraud include billing for items that were not provided, altering a claim form to obtain higher payment, supplier completion of Section B of the certificate of medical necessity, falsifying qualifying tests and soliciting, offering or receiving a kickback.

Why Me?

Your organization may become the subject of a DMERC audit for many reasons. You could be part of a random selection of suppliers in a general supplier audit, the DMERC may have detected an aberrant billing pattern, or it may have received complaints about your company from beneficiaries or other suppliers.

A smaller probe sample of five to 10 beneficiaries is usually based on a complaint, and the sample of beneficiaries identified usually includes the complainant. Smaller probes usually also mean a straight overpayment (versus an extrapolation), so your financial exposure is more limited. Larger samples are usually extrapolated, so the financial exposure can be devastating.

There are limitations on how far back the DMERCs can go with post-payment audits. The DMERCs can reopen claims for any reason within 12 months of payment, for good cause within four years of payment and at any time for fraud.

Documents the DMERCs might request include CMNs and physician orders, proof of delivery, proof of assignment of benefits/waiver of liability, service repair records, rent-purchase-option records, financial records or billing statements (proof of coinsurance collection), physician progress notes and/or assessment notes, and correspondence to or from the beneficiary. They may also contact the prescribing physicians and beneficiaries to verify that the medical necessity requirements were met and services were received as billed.

Don't Sit There — Respond!

Whatever the particulars of your circumstance, it is of paramount importance that you respond to the DMERC's request.

If the DMERC does not receive the requested information, it will consider the items as not documented and it will request a refund. While there may be instances in which it is in your best interests not to respond, you should submit an explanation to the DMERC as to why you are not responding.

For example, the documentation request is so large you do not have the staff to fulfill it. When submitting documentation, make sure you:

• Submit it in an understandable format;

• Maintain an exact copy of everything;

• Provide only what is specifically requested;

• Give an explanation, if necessary, of what you submit. You might, for example, need to explain that a particular document is a patient summary sheet.

First impressions do count. The DMERC will formulate a conclusion about you based upon your response. If you have a problem with responding, you should consult legal counsel.

Response Issues

If you can't locate some documents, consider submitting supplemental documentation, such as a letter from the physician to verify medical necessity and from the beneficiary to verify receipt of the item. If you have incomplete or inadequate documentation, you should consider getting legal counsel.

While the DMERCs typically allow suppliers 30 days to respond and provide all the requested documentation, suppliers can request an extension. The DMERCs usually grant an additional 15 days or, under extraordinary circumstances, 30 to 90 days. If the request is for a large amount of documentation, you may ask to provide the documentation in stages, as you are able to retrieve it. If you are unable to locate the documentation by the deadline, never concede that you have lost the documentation. Instead, continue your attempts to locate the documentation and forward it to the DMERC as it becomes available.

While the DMERCs are encouraged to complete their review of your submitted documentation and calculate the net overpayment within 90 calendar days of the start of the review, this rarely happens with large sample requests. The DMERCs could take six months to two years. In some cases, the supplier never receives a response from the DMERC. In any event, no news is good news!

When the DMERC does respond, it will be in the form of a preliminary overpayment determination letter, which includes a preliminary overpayment assessment. The letter should explain what the DMERC believes the supplier did wrong. It will sometimes allow the supplier to submit additional documentation (usually within 30 days). This letter does not require a supplier response.

Thirty days after the preliminary overpayment letter, the DMERC will send the supplier a final demand letter, stating the exact overpayment amount the supplier owes. The overpayment amount must be returned to the DMERC by the date stated in the letter (usually 30 days) or the supplier faces interest charges.

Once the DMERC issues the final demand letter, it becomes more difficult to stop the overpayment recovery process, and the supplier must make a determination of whether or not to pay. By paying up front, you will avoid interest charges. Also, paying at this point is not an indication of guilt. If you are unable to pay the entire amount up front, consider having the DMERC offset future payments against the overpayment amount.

A specialist in health care legislation, regulations and government relations, Cara C. Bachenheimer is an attorney with the law firm of Epstein, Becker & Green in Washington. Bachenheimer previously worked at the American Association for Homecare and the Health Industry Distributors Association. You can reach her by phone at 202/861-1825 or e-mail at cbachenheimer@ebglaw.com.

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