Moving the HME Industry Forward

Billing/Reimbursement

Preparing for and Responding to Audits – A Primer

March 17, 2014

AMARILLO, TX – The Medicare fee-for-service program receives over 1.2 billion claims per year: (i) 4.5 million claims per work day; (ii) 574,000 claims per hour; and (iii) 9,579 claims per minute. From 2010 to 2013 OHMA claims and entitlement workload grew by 184% with no new resources. In January of 2012, the number of weekly receipts in the Central Operations Division averaged 1250.

In December of 2013, the number of weekly receipts in the Central Operations Division averaged 15,000. As of July 15, 2013, approximately 357,000 claims were assigned to the 65 ALJs with OMHA. Appeals received after July 15, 2013 will be entered into the OHMA case processing system and then held until they can be accommodated by an ALJ docket. Based on current workload and volume of new requests, it is anticipated that assignment of a request for hearing to an ALJ may be delayed for up to 28 months.

In attempting to predict CMS’ audit priorities, the DME supplier can look at the following resources: (i) DME MAC ListServs; (ii) Quarterly Advisory Newsletter; (iii) OIG Work Plan; (iv) Office of Evaluation and Inspection Reports; (v) Office of Audit Services Reports; (vi) Supplier Manual; and (vii) Medicare Learning Network.

Pre-Payment Audits
In a pre-payment audit, the supplier will have submitted a claim, but will not be paid for the claim until the CMS contractor reviews the DME supplier’s documentation. In a best case scenario, it will take 60-90 days for the payment to be released to the supplier. The steps in a pre-payment audit are: (i) the supplier submits the claim, electronically or hard copy, to the DME MAC; (ii) an Additional Documentation Request (ADR) letter is sent to the supplier; (iii) the claim is reviewed by the medical review nurse and a determination on whether to pay or not is made; and (iv) an Explanation of Benefits (EOB) is provided to the supplier.

Post-Payment Audits
In a post-payment audit, the claims previously paid are audited. The process starts with a written notice and a request for review of a sample of the supplier’s medical records. Such written notice must contain a number of elements.

The contractor may engage in 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. This process 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. Note that federal law requires that before using extrapolation to determine overpayment amounts to be recovered by recoupment, offset or otherwise, there must be a determination of sustained or high level of payment error, or documentation that educational intervention has failed to correct the payment error.

Recoupment
Medicare regulations generally provide that a contractor may offset payments to a supplier when the contractor determines that the supplier has been overpaid. In order to proceed with the offset, the contractor must: (i) notify the supplier of its intention to offset or recoup payment, in whole or in part, and the reasons for making the offset or recoupment; and (ii) give the supplier an opportunity for rebuttal.

Contractors can begin recoupment no earlier than 41 days from the date of the initial overpayment demand. They must cease recoupment of the overpayment upon receipt of a timely and valid request for a redetermination of the overpayment. If the recoupment has not yet gone into effect, the contractor may not initiate recoupment. If the redetermination affirms the overpayment, in whole or part, recoupment may resume on the 60th day after the date of the redetermination decision.

Upon receipt of a timely and valid request for a reconsideration of an overpayment, the Medicare contractor must cease recoupment of the overpayment. If the recoupment has not yet gone into effect, the contractor may not initiate recoupment. Recoupment may resume or commence if the reconsideration decision affirms the overpayment, in whole or in part. There is no limitation on recoupment applicable to other levels of appeal.

Documentation
A DME supplier’s documentation will make or break the company. Ideally, a supplier will have all necessary documentation to support the claim on hand prior to claim submission. A complete patient medical record is the element that is most often missing in the response to document request letters. Suppliers must provide a copy of documentation from the patient’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.

March 18 Webinar on Audits
Tomorrow (Tuesday, March 18th), AAHomecare will host a webinar entitled “Steps to Prepare for and Respond to a Post-Payment Audit or Pre-Payment Review.” The co-presenters will be Jeffrey S. Baird, JD, chairman of the Health Care Group of Brown & Fortunato, PC, and Andrea Stark, DME consultant and reimbursement specialist and President of MiraVISTA.

The webinar will be from 2:30 – 4:00 p.m. Eastern. Jeff and Andrea will present a detailed discussion on how to prepare for and respond to prepayment and post-payment audits. Their presentation will also cover hot button issues such the face-to-face requirements and ICD-10. In order to register, go to https://www.cvent.com/events/aahomecare-s-steps-to-prepare-for-and-respond-to-a-post-payment-audit-or-prepayment-review-/registration-3441e8cfb057461cb1cb62d84eda1b8a.aspx.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato PC, a law firm based in Amarillo, Tex. He represents DME suppliers, pharmacies, infusion companies, and other health care providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or jbaird@bf-law.com.