Pre-payment reviews and post-payment audits have increased in frequency and intensity. With a post-payment audit, at least payment has been received up front, allowing an HME company to keep its doors open. Conversely, with a pre-payment review, the supplier does not receive payment until after the carrier is satisfied — and by the time that happens and payment is released, the company may have been forced to close its doors.
Why are reviews and audits on such a rapid increase? First, experience has shown that for every dollar CMS spends on fraud, overpayment detection and enforcement, it collects that amount many times over. Second, there is an increase in utilization of DME. Third, DME suppliers provide relatively expensive items. And last, the auditors themselves are becoming more sophisticated.
CMS contracts with three types of contractors to achieve the goal of reducing improper payments: Medicare Administrative Contractors (MACs), Comprehensive Error Rate Testing (CERT) contractors, and Recovery Audit Contractors (RACs). CMS also contracts with Program Safeguard Contractors (PSCs), now being converted to Zone Program Integrity Contractors (ZPICs), to identify and stop potential fraud.
Generally, an HME supplier becomes subject to a pre-payment review either because it provides an item that has been selected for pre-payment edit, or it has caught the attention of the DME MAC or ZPIC due to: the results of a prior audit; data analysis indicating that the supplier is outside the norm; or, complaints filed against the supplier.
The steps in the pre-payment review process are the following: The supplier submits the claim to the DME MAC; an Additional Documentation Request (ADR) letter is sent to the supplier; the supplier sends the additional documentation to the reviewer within 30 days (the claim will automatically deny if documentation is not received within 45 days); the claim is reviewed by the medical review nurse and a determination on whether to pay or not is made; and an Explanation of Benefits (EOB) is provided to the supplier. Each claim is normally reviewed within 60 days from the receipt of additional documentation by the DME MAC. It may take longer for claims reviewed by the ZPIC or PSC.
If you are subject to a pre-payment review due to specific items being placed on a pre-payment edit and your company provides a high volume of such items, you can sometimes work with the reviewer to limit the number of claims subjected to pre-payment review. Normally a supplier will remain on pre-payment review until its charge denial rate (CDR) is less than or equal to 20 percent. When the CDR drops below 75 percent, a targeted review (a review of a portion of claims submitted based on the CDR) is normally initiated.
In preparing for a pre-payment review, the first step is to verify that each patient file contains the documentation required by Medicare regulations and applicable LCDs. These items include a written order from the physician, an intake form, proof of delivery and any specifically required additional documents. If you are prudent, you will develop a checklist of the documents required for various types of equipment.
Frequently, suppliers are missing medical records from other providers that support medical necessity. Examples include hospital records, hospital discharge summaries, treating physician's progress notes, notes arising from consultation by a specialist physician and a home health agency plan of care. Begin gathering the additional documentation now, and verify that it demonstrates that the Medicare coverage criteria have been met.
You should also conduct regular self-audits to review: denials; accounts receivable history; OIG's annual workplan; reports published by carriers and the OIG; CMNs; results of Medicare appeals, hearings, and reviews; usage of KX modifiers; items requiring written orders prior to delivery; the size and age of your credit balances; and the OIG's Corporate Compliance Program Guidance for DME Suppliers.
In addition, you should develop a file contents checklist, test employees and verify that members of your staff do not appear on the OIG's exclusion list.
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Jeffrey S. Baird, Esq. is chairman of the Health Care Group at Brown & Fortunato, P.C., a law firm based in Amarillo, Texas. He represents pharmacies, infusion companies, home medical equipment companies and other health care providers throughout the United States. Baird is board-certified in health law by the Texas Board of Legal Specialization. He can be reached at 806/345-6320 or jbaird@bf-law.com.
