Moving the HME Industry Forward


Audits – Can You Continue to Play Russian Roulette?

February 10, 2014

LAKE FOREST, CA – Just 24 hours after being asked to write an editorial, a new marketing flyer being used by a Midwest provider in our industry landed in my in-box. I opened the file expecting to find a professional example of a DMEPOS provider marketing its services to local hospitals in a non-controversial manner.

Instead, what I saw made me cringe. There, in plain English, the provider made potentially illegal offers to its customer. The provider assured the referral source in writing that “no written order was necessary” to initiate service (on a weekend when such orders are more difficult to obtain after the fact, no less).

To make matters worse, the provider also went on to explain to the customer that if the provider did not meet its delivery window commitment, it would donate money to charity. While seemingly noble on the surface, the latter represents an explicit “inducement” of a referral source, and it puts the recipient, as well as the company that made the offers, at risk of being accused of non-compliance with the Stark Law and other anti-inducement regulations.

That flyer sealed my decision to write about the ever-worsening situation in the industry—particularly the new standard for medical necessity documentation, ongoing avalanche of pre- and post-payment audits, persistently high error rates reported by the DMEMAC and CERT auditors, and the more recent announcement by Medicare’s Office of Medicare Hearings and Appeals (OMHA) that the Administrative Law Judges (ALJs) will not even accept new appeals until it digs out from under its almost 500,000 claim backlog. Ignorance of the law is no defense, but at least it is somewhat understandable given the tens of thousands of pages of regulations, cross-references, FAQs, guidance documents, emails, and verbal interpretations issued by the government and its contractors.

So, in the spirit of this week’s Sochi Olympics, I have to ask the rhetorical question: “Can providers continue to play Russian roulette with their businesses?” Can a provider willfully disregard the new Written Order Prior to Delivery (WOPD) requirements and basic compliance policies as the flyer described above illustrates?

Can a provider continue to “trust” his/her “best” referral sources by not requesting medical necessity documentation up front from physicians and hospitals who have a lot of volume but take six months to send the CMN? Can the industry really continue to operate on a hope and a prayer that referral sources will find their medical records and qualifying tests during an audit?

Although everyone is familiar with the standard definition of Russian roulette, the second is “any act which, if repeated several times, is likely to have disastrous consequences.” While it is very clear that disastrous consequences have arisen from competitive bidding, the same can be said for the current audit situation. With no less than 30 separate audit entities conducting pre- or post-payment audits today, one cannot possibly predict which claim associated with which referral source will be selected for an audit.

And with the DMEMACs continuing to publish error rates for oxygen and PAP alone in the 50%-72% range, it appears that their educational outreach is just not reaching the intended audience (whether that includes providers or referral sources). As a result, tens of thousands of claims now sit in various levels of appeal, while the industry’s credibility continues to suffer due to a CERT-reported error rate that is five to six times higher than the next closest health care segment.

While we can argue with these numbers all day long, and blame the ever-changing policy interpretations, we also have to take responsibility for what we can control in this equation. The only way the industry is ever going to move the needle on the error and claim denial rates is if providers of all sizes voluntarily change their patient intake procedures by requiring that certain medical necessity documentation be provided up-front.

Providers worry about upsetting their referral sources, and some industry consultants continue to advise their clients that “if they know their referral sources well, they can probably ask them for the paperwork only in the event of an audit.” Yet, data shows that at least 50% of all DMEPOS referrals—upon first submission of the paperwork—are missing the correct medical necessity documentation.

The last time I checked, few referral sources give 100% of their referrals to a single company, which means that every company in the market experiences the same kind of incomplete, high-risk orders. Yet, providers that ask for the documentation up-front are punished by the referral sources and told that they are the “only company in the local market making these requests.”

The financial strain that competitive bidding has placed on providers across the country is undeniable. But at least a clean claim, supported by accurate medical necessity documentation, would be paid in a relatively short period of time. By contrast, a 100% pre-payment audit can damage a company faster and more dramatically than competitive bidding alone ever will.

While Medicare payments are frozen indefinitely while the provider tries to meet some nebulous threshold of documentation accuracy, suddenly having cash to make payroll and buy patient equipment can become questionable. Providers are going out of business every day due to the proliferation of audits and poor outcomes.

Until every provider in the industry requires medical necessity documentation and WOPDs up-front, referral sources will continue to shift business around with reckless disregard for the future of the local provider community. So the next time a referral source vilifies a competitor who is asking for the paperwork, and you think, “Eureka! I’m going to get all of this customer’s business now,” think twice. Do you really trust this customer with the future of your business? Your kids’ college fund? Your bank line of credit? If they were not willing to give XYZ company the required paperwork, what makes you think they’ll be willing to give it to you?

It can’t just be the large companies that change their practices. It has to be everyone. Yes, customers will punish you for a while, until they figure out that there is no easy way out. If they want their patients to receive oxygen, PAP, power wheelchairs and other DMEPOS, they need to comply with Medicare’s requirements. Period.

In the absence of clear communication and direction from regulators, while the trade association continues to lobby regulators and Congress for meaningful audit reform, it is time for the industry to make changes voluntarily so that we’ll be stronger in the long-term. Otherwise, the outcome will be just like the traditional definition of Russian roulette—a lethal game of chance, and we all know how that game ends.

Lisa M. Getson is executive vice president, Government Relations and Corporate Compliance, Apria Healthcare, Lake Forest, Calif.