Observation Deck

Medicare's Most Stringent Audits

Alternatives to CMS's flawed methods exist.

• By Paul Komishock
• Feb 01, 2013

Providers of durable medical equipment (DME) are no strangers to audits, facing what’s been called an “alphabet soup” of auditors: DMEMACs, RACs, ZPICs, and CERTs. Of these, the Comprehensive Error Rate Testing (CERT) program is intended to measure the accuracy and correctness of claims processed by Medicare contractors. At face value, this sounds like a good idea; hire a contractor to ensure the Centers for Medicare and Medicaid Services (CMS) are getting its money’s worth from their claims processing contractors. However, there are shortcomings in this process thatdemand attention.

If a supplier appends the KX modifier to a claim, they are indicating the patient’s file has met specific policy requirements for billing. For many DME items, if the correct codes and modifiers are submitted electronically, including the KX modifier where appropriate, the claim pays, assuming all other requirements are met. Theoretically, the provider would have been paid correctly since the KX modifier says they have the necessary information on file and willsupply it upon request.

In many cases, especially for power mobility devices (PMDs), a provider may not know whether a file meets all of the requirements until an audit occurs, due in part to the subjectivity of medical necessity documentation review. Clearer coverage guidelines, or a standardized format to collect the required information, would go a long way in resolving this problem. Rather than using a pay and chase method, prior authorizing claims, especially for high volume or high dollar items, would also alleviate uncertainty in the process. The DME MAC contractors are faced with the task of processing claims correctly and efficiently, hence greater “automation” of the process could be a key componentin this endeavor if structured properly.

In 2009, Medicare published the “Improper Medicare Fee-For-Service Payments Report - November 2009” (summary available at http://www.cms.gov/). Two items are worth noting:

1. DME accounts for 4 percent of Medicare spending.

2. The DME MAC error rate was 51.9 percent compared to the Carrier/MAC (9.9 percent), FI/MAC Non-Inpatient (3.9 percent) and FI/MAC Inpatient (6.1 percent) rates, “because CMS’ stricter adherence to policies disproportionally affected DME claims. More DME claims were determined to be paid in error because of the more strict enforcement of documentation requirements rather than allowing for clinical review judgment. In the past, reviewers applied clinical review judgment to claims to fill in the gaps of knowledge where documentation was missing. Once CMS clarified that clinical review judgment may not override documentation requirements, more errors were found on DME items. Additionally, it is often more difficult for DME contractors to obtain the proper documentation because they request documentation from the supplier who billed for the item, not the medical professional who ordered the item…CMS also recently clarified that documentation produced by the supplier alone is insufficient to warrantpayment of the claim.”

CMS first told CERT contractors that “clinical review judgment cannot override statutory, regulatory, ruling, national coverage decision or local coverage decision provisions” and that “all documentation and policy requirements must be met before clinical review judgment applies.” In other words, where CERT contractors had allowed for clinical inference of the beneficiary’s medical records to “fill in the blanks,” they would now audit for exactly what apolicy dictated.

Additionally, in a 2008 independent review of the CERT program, Palmetto GBA found seven times the errors than the CERT contractor found in the samesampling of claims, which hardly inspires confidence in the process.

The error rate for DME MAC claims sticks out like a sore thumb and begs the question: why? One reason is the nature of documentation. DMEPOS providers are responsible for collecting certain documents to support each claim. They are also responsible for interpreting the file, placing them in the uncomfortable position of second-guessing, openly questioning, or even denying access to care prescribed by a physician order. How many providers have been in the awkward position of telling a physician he or she hasn’t documented something “the right way” in a chart? Whose patient is it, anyway? When the DME MAC error rate is over five times higher than the next closestcontractor, CMS needs to address the issue.

Rather than addressing the error rate and the root causes, Medicare has chosen to insert itself into the independent Administrative Law Judge (ALJ) process. ALJs tended to review cases in a holistic manner and determine whether or not a beneficiary needed an item, not whether or not he or she met specific technical policy guidelines. Recently, CMS announced new Medical Directors have been added to each DME MAC for the express purpose of working on ALJ cases, presumably to interject strict policy interpretations intoALJ decisions.

Some easy solutions come to mind such as a standardized documentation tool, electronic transmission of medical information, and consistent evaluation of the information, especially for the PMD policy. If the DME MACs process claims expecting to see one thing and the CERT contractor audits them with adifferent set of expectations, the process is doomed from the start.

For DME claims, allow clinical review judgment to be part of the process, especially in situations where the DMEPOS provider has satisfied the statutory requirements, but the medical documentation provided by the physician may be open to interpretation. For example, let’s say a PMD claim is examined by a CERT contractor, and denied because the clinical documentation does not specifically state how a patient’s MRADLs will be helped. If the patient’s contemporaneous medical records show that he or she has a genuine need forthe equipment, shouldn’t this carry greater weight?

The PMD prior authorization demonstration project is also a step in the right direction, helping to eliminate some of the guesswork currently involved in the process. Once this process is perfected, it may provide a solution to the audit and documentation problems, at least for PMDs. However, there is muchroom for improvement.

Common sense solutions are available and would be in all stakeholders’ interest. When CMS realizes the amount of time and expense to the Medicare trust fund that would be saved by implementing changes that increase efficiency and accuracy, they would be hard pressed not to advance.

This article originally appeared in the February 2013 issue of HME Business.