When revalidating through the electronic provider enrollment chain and ownership system (PECOS), you are highly encouraged to print a paper copy of your reenrollment application for your records. However, if you tried to do this recently, you may have noticed that not all of the information you entered into PECOS successfully printed. In fact, the form that prints may look somewhat different than the CMS-855S you are accustomed to seeing.

We have confirmed with CMS that there is a glitch in the PECOS system that occurs when suppliers try to print paper copies of their electronic reenrollment applications. Suppliers should note that this does NOT impact the information that is sent to the NSC. The information you enter into PECOS will still be successfully transmitted to the NSC, once your electronic application is submitted.

On one of the last screens displayed in the PECOS revalidation process, suppliers are given the opportunity to view and print a copy of the completed application. Clicking the print link should produce a prepopulated paper copy of the CMS-855S form that you may keep for your records. However, as of May 1, 2012, a glitch in the system is resulting in applications printing with incomplete fields and missing information. As previously mentioned, while this does create a bit of a headache for suppliers trying to print hard copies, if you can see the information in PECOS and everything looks correct online, it is safe to submit your electronic application to the NSC.

After a little digging, MiraVista was able to confirm that the glitch is the result of PECOS trying to print information to a new, draft version of the CMS-855S form that has not yet been released. You can identify whether PECOS incorrectly printed the draft copy of the CMS-855S by looking for an 04/12 revision date in the lower left-hand corner of each page. This version of the CMS-855S is not yet active, and it is our understanding that PECOS is not set to populate the revised fields in this form.

The active version of the CMS-855S form that should be linked to in PECOS (and that suppliers should use if they opt to submit a paper application) was last updated on July 2011 and can be identified by an 07/11 revision date in the lower left-hand corner of each page. This is the form PECOS is set to populate when printing hard copies of electronic revalidation applications.

We have informed CMS of the issue and have received confirmation that they are looking into a fix. A date has not yet been released for the implementation of the 04/12 draft version of the CMS-855S form. Look for full details on revisions made to the draft form in the June 2012 issue of Vista Notes.

The Jurisdiction C recovery audit contractor (RAC) Connolly Healthcare has been instructed by CMS to slow down a semi-automated review for CPAP and BiPAP sleep tests. The RAC began auditing suppliers for Medicare covered sleep tests in in September 2011, targeting claims for patients who received their initial PAP devices prior to enrollment in the Medicare program (see here for full details).

It’s important to note that while no new request letters are actively going out, the audit has NOT been rescinded. Suppliers must still respond to any letters they already have in their possession and provide the RAC with a copy of the patient’s qualifying sleep test.

If you are struggling with a large volume of requests for this audit, you may contact Connolly Customer Service at 1-866-360-2507, option 4 to request an extension beyond the original response timeframe referenced in your letter.

When submitting your response, we recommend including a cover sheet that lists all service dates targeted in the audit for that patient.  For this particular audit, CMS has instructed Connolly to accept a blanket, aggregated response at the patient level (in lieu of responding to each individual service date).

On January 20, 2012, CMS released change request (CR) 7167, which provides the DME MACs with instructions on how to obtain payment from a DME supplier’s surety bond. Effective February 21, 2012, if a supplier has not made at least partial payment towards an identified overpayment within 101 days of the date on the payment demand letter, the DME MACs are to request payment from the supplier’s surety.

Preventing Debits to Your Bond:

It’s important to note that the new instructions do not alter your appeal rights and your surety bond will be tapped as a last resort. Suppliers will still be able to have payments offset from their pending claims to settle a debt. As long as you are actively billing Medicare (defined as at least once per year) and an offset is actively taking place for any overpayments for which you do not appeal timely or lose your appeal, this will satisfy the partial payment requirement. In the case of most overpayments, providers typically will see automatic offsets if full payment is not received timely.  While interest does begin to accrue and you end up paying more money in the end, this process will actually keep most suppliers from facing the threat of having their surety bonds tapped into.

However, if your cash flow dries up and you are unable to remit payment in full or offset claims to make good on an overpayment, you will want to contact your MAC and request an extended repayment plan (ERP) immediately. To be considered for an ERP, you must submit your request in writing and explain your current situation. ERP requests must reference the specific overpayment, the number of months requested for repayment, the monthly payment amount, and must include the first month’s payment. In addition, you must provide specific documentation to support your financial hardship. For more detailed information on what must be included in an ERP request, see the Overpayments and Refunds chapter of your DME MAC’s Supplier Manual.

The whole intent behind surety bonds is to ensure Medicare has a way to retrieve owed debts from suppliers who may otherwise just pack up and walk away. By providing a bond, the surety is agreeing to repay Medicare any debts owed by the bonded supplier (up to the amount of the bond) in the event attempts to collect money from the supplier prove unsuccessful. The surety is only liable for overpayments incurred during the term of the bond.

Collection Procedures:

The following procedures have been laid out in CR7167 for collecting overpayments from a DME supplier’s surety:

1. An electronic list of bonded suppliers will be sent to the DME MACs by the Provider Enrollment Operations Group on a monthly basis.
2. The DME MACs will review the list monthly and identify any suppliers who have not remitted full or partial payment for an overpaid claim within 101 days of a demand letter being sent.
3. The DME MAC will send the supplier’s surety a letter informing them that they must remit payment for the amount owed within 30 days. The surety will be responsible for any debt incurred under the term of the bond, up to the amount of the supplier’s bond, including any accrued interest.
4. The DME MAC will provide the surety with sufficient evidence that the supplier owes the delinquent debt. The MACs are given significant discretion to determine what constitutes “sufficient” evidence.
5. Once payment is received from the surety, the DME MAC will send a letter to both the supplier and the NSC within 15 days, notifying them that the debt has been paid. 

If the bond ends up being reduced, suppliers must obtain additional coverage to maintain the required $50,000 bond minimum within 30 days of being notified that their bond has been debited by the DME MAC. If just a portion of your bond is debited and you do not wish to obtain a new $50,000 bond, your only option is to obtain the additional amount needed to meet the minimum $50,000 bond requirement through your current surety and have it added to your current bond. CMS will not allow suppliers to obtain any new bonds in amounts less than $50,000. If you are unhappy with your surety and do not want to purchase additional coverage from them (or they refuse to sell you additional coverage), you have two options:

1. Cancel the remaining bond and obtain a new $50,000 bond with another surety. In this scenario you will be losing any money you have paid on the current term of the bond
2. Keep the remaining amount with your current surety in addition to purchasing a new $50,000 bond from another surety. In this scenario, you will have a total coverage of greater than $50,000. With this option, you will be able to ride out the term of your current bond, having it serve as backup coverage.

Although obtaining surety bonds became a mandatory part of enrollment into the Medicare program in 2009, up until now there have been no procedures in place for how to retrieve owed monies from a supplier’s surety. As a consequence of the new regulations, suppliers may see an increase in the fees paid to obtain or renew bonds once sureties begin to feel the sting of repaying monies owed by their bonded suppliers. Additionally, suppliers who have had their credibility damaged by a debit from their bond may find it challenging to obtain additional coverage with their current surety, or a new surety, in order to maintain the required minimum bond amount of $50,000.

The Appeals Process:

While not specifically discussed in the change request, we do not expect bond debits to impact the appeals process. Under current guidelines, suppliers may stave off recoupment attempts by entering into an appeal at the first level, redeterminations, within 40 days of the date on the demand letter. If the final determination is unfavorable, you then have an additional 60 days from the date of the determination to enter into an appeal at the second level, reconsiderations, before CMS may begin recoupment attempts. In this scenario, it will be greater than 101 days before a final determination is made at the second level. However, it is our expectation that if a supplier staves off recoupment by entering into a timely appeal at the first and second levels, the supplier will not be required to remit payment until the final determination is received (even if 101 days passes).  Again, you have the option of remitting a check or voluntarily offsetting claims once it comes time to pay the piper.  As a reminder, there are no additional protections to prevent recoupments after the second level of appeals. If your appeal comes back as unfavorable recoupment will resume with interest.  Pursuit of an Administrative Law Judge Hearing (third level of appeals) in and of itself will not prevent recoupments until you procure a favorable response.

On June 30, 2011 CMS implemented a new predictive analytics system that analyzes claims for suspicious billing activity in real-time. The system works by using various algorithms to immediately detect billing patterns that present a high risk of fraud.

All Medicare fee for service claims are actively being scanned through the new predictive system.  However, claims are NOT currently being denied based solely on alerts generated by the system; CMS is still working to refine the algorithms used to predict fraudulent behavior.

How it Works

As claims are scanned, the system builds profiles of provider and supplier billing patterns, and beneficiary utilization. These profiles help CMS identify typical billing behaviors. If an atypical billing pattern emerges, the system will generate an alert and flag the claim(s) in question. Those claims that generate the highest number of alerts will be prioritized for review.

In the event a claim is flagged as potentially fraudulent by the system it will be held for human review. If an analyst finds only innocuous billing, the claim will be released and payment will be made as usual. CMS is using the information learned from each mis-held claim to refine the algorithm loops in the system to better target true fraud.

CMS expects the new system to benefit honest suppliers by prioritizing those claims with the highest number of alerts for review over claims from suppliers who may only occasionally exhibit unusual, but honest billing patterns.

Today, January 30, 2012, marks the official opening of the bid window for Round 2 of Competitive Bidding. Suppliers who wish to compete in Round 2 and/or the national mail-order competition for diabetic supplies may now log into DBidS (CMS electronic online bidding system) and place their bids. A reference guide to assist you in placing your bid is available here.

Now that the bid window has opened, suppliers who wish to submit a bid must be mindful of the following critical deadlines:

1. If you have not already done so, you only have 10 days left to register your authorized official (AO), backup authorized official (BAO), and any end users (EUs) who will be submitting bid information on your behalf. Users must register through CMS’ IACS system for a DBidS user ID and password. The registration window will close at 9pm EST on February 9, 2012. If your AO has not completed the registration process by this date, you will not be able to bid.
2. In order to be considered, your final bid must be in the DBidS system before 9pm EST on March 30, 2012, at which time the bid window will close.
3. All required financial documentation for your bid must be receivedby the CBIC in hardcopy form no later than March 30, 2012.
4. February 29, 2012 is the covered document review date (CDRD). While you technically have until March 30^th for the CBIC to receive required financial documents, if you would like to have your documentation reviewed for missing information, your packet must be received by the CBIC by February 29, 2012.  Suppliers whose hardcopy documentation is received by 11:59pm EST on Feb. 29th will be notified of any missing financial documents within 90 days of the CDRD and given 10 additional days to submit the missing information.

Look for more details on what types of financial documents the CBIC will be looking for and how your documentation must be submitted in the upcoming February 2012 issue of Vista Notes.

On July 17, 2011, economist Professor Peter Cramton put his ideas for a restructuring of the Medicare Competitive Bidding program to paper. Cramton is one of 167 economists who signed and presented a letter to both CMS and Congress last year, which called for CMS to reevaluate the bidding process and implement changes to the bid model prior to the start of Round 2.

According to Cramton, the main flaw with the current bidding program is that companies are able to submit non-binding, low-ball bids, resulting in prices that are far below any reasonable profit level. The current CMS model permits for a complete lack of accountability on the part of the prospective bidder, who can reject the final contract offer. Cramton believes that by switching to a more traditional auction process, where bids are binding and publicly made, the program could prove successful.

In his July 17^th Repeal and Reform Legislation for Medicare DME Auctions publication, Cramton outlines his plan for reforming the Competitive Bidding program and explains why he believes repeal alone is not a viable option.

According to Cramton, replacing the current bidding program with a more efficient auction system is needed to improve the federal budget, develop sustainable pricing mechanisms, and minimize regulatory uncertainties. Cramton believes that under such a system efficient providers would continue to grow, and Medicare patients would receive quality services at the lowest prices.

Cramton’s redesigned bidding program calls for CMS to contract with an Auction Expert and independent Market Monitor to design and oversee the implementation of a new bidding system. Neither the Auction Expert nor Market Monitor may be a current or former CMS employee, or contractor previously involved in competitive bidding. Every aspect of the bidding process would be required to be transparent, including a full public disclosure of financial and performance bidding standards.

In Cramton’s redesign, a series of auctions would be performed online, with suppliers required to apply and qualify to compete in each auction. To prevent low-ball bidding, bid amounts would be binding (much like the current EBay model), and winning suppliers would be posted within 15 minutes of the end of each auction. Additionally, a list of all participating suppliers and their submitted bids would be made publicly available within 1-day of the auction’s close. To ensure a competitive market, Cramton’s design limits each winning supplier to servicing no more than 20% of any product-region and ensures that at least 20% of each product-region is awarded to small businesses with billing volumes under $8-million.

Cramton is working on developing a formal legislative proposal, which will be submitted to the Congressional Budget Office (CBO) for scoring. From there, the legislation will need to gain a champion in both the House and Senate, where it will likely undergo multiple revisions in several subcommittees before becoming eligible for a floor vote.

While many in the industry are still pushing for the passage of H.R. 1041, a bill to repeal Competitive Bidding, a full repeal of the program doesn’t seem likely at this time. CMS has informed Congress that Round 1 of the bid program is progressing smoothly and has stated that complaints from patients have been minimal.  H.R. 1041 currently has 141 co-sponsors; however, at the time of this publication, a companion bill in the Senate does not appear to be forthcoming. The bill must gain Senate support to move forward in the legislative process.

You may be among an increasing number of nervous suppliers that recently started receiving an influx of unusual B7 denials on your Medicare EOBs. There is no need to panic yet. This is attributable to a system error that is incorrectly denying a large number of claims for not meeting accreditation standards. As we reported to you in the last few editions of Vista Notes, Medicare was to implement new edits beginning on July 5. 

The following groups of products were to be subject to the edits:

Diabetic supplies, Canes and crutches, CPAPs and accessories, Enteral Nutrients and supplies, Hospital Beds, Oxygen Equipment and Supplies, Respiratory Assist Devices, Support Surfaces: Pressure Reducing Beds/Mattresses/Overlays/Pads, Walkers, Wheelchairs – Complete Rehabilitative Power Wheelchair and Related Accessories, Wheelchairs – Standard Power and Related Accessories.

Apparently when the supplier validation files were sent to the MACs there was a critical error with the file that caused the edits to fire incorrectly. For now, there is no need to call your Accreditation Organization, MAC or the NSC. The MACs, CMS and the NSC are all working together to remedy the problem. 

As of the publication of this notice Jurisdiction D announced that they are currently pending all of these claims instead of letting them deny. We fully expect that other MACs will follow suit and that the MACs will ultimately reprocess all affected claims without the need for resubmissions or appeals. We will continue to keep you posted as additional information becomes available. 

7/19/11 UPDATE!

On July 19, CMS issued instruction to the MACs to temporarily deactivate the accreditation edit until a permanent fix is developed. At this time, claims should no longer be denying with B7 denials. Once resolved, the edit will be turned back on.

NHIC and CIGNA have both announced that they will automatically reprocess affected claims. We expect NGS and NAS to also follow suit.

CMS has rejected a recommendation from the Office of Inspector General (OIG) to categorize all currently enrolled DME suppliers as high risk. Federal enrollment regulations currently require all suppliers to be classified into one of three fraud risk categories: low, moderate, or high. Under the new regulations, all newly enrolling suppliers are classified as high risk, while currently enrolled suppliers are considered to be a moderate risk. At the moderate risk level, suppliers revalidating their enrollment must pay a Medicare enrollment fee, pass licensure and database verification checks, and undergo an unannounced on-site visit. Had CMS accepted the OIG’s recommendation to deem all DME suppliers high risk, currently enrolled suppliers would also have had to undergo criminal background checks and fingerprinting (at a cost of $50 per individual) during revalidation.

The OIG issued the high risk recommendation, along with three others, in a report published on July 2011. According to the report, in 2007 Medicare inappropriately allowed $95-million in payments for power wheelchairs that were either medically unnecessary (i.e. the patient qualified for a lower level chair) or lacked sufficient documentation. However, supplier billing errors weren’t the only cause of improperly paid claims.

According to the OIG, 39% of the total claims reviewed had no direct billing errors in the supplier’s record. However, 78% of those otherwise clean claims were ultimately determined to be overpayments due to inadequate documentation in the physician’s record. As a result, the OIG provided the following three recommendations to which CMS concurred:

1. Direct contractors to review records from prescribing physicians, in addition to those from suppliers,
2. Continue to educate power wheelchair suppliers and prescribing physicians, and
3. Review the suppliers for which claims were found to be in error.

These recommendations come on the heels of a new power mobility face-to-face exam checklist, released by CMS in May, and are indicative that both CMS and the OIG clearly recognize a need for greater physician education. What remains to be seen is whether concurrence with the recommendations means CMS and its contractors will play a more active role in educating physicians, and whether CMS may ultimately consider a revision to mobility documentation requirements as a solution.

With the establishment of the Omnibus Budget Reconciliation Act of 1987 (OBRA ’87), durable medical equipment (DME) became broadly defined as equipment that meets all of the following criteria:

a. Can withstand repeated use;

b. Is primarily and customarily used to serve a medical purpose;

c. Generally is not useful to a person in the absence of an illness or injury; and

d. Is appropriate for use in the home.

Historically, specific product requirements, such as supply utilization or a product’s expected reasonable useful lifetime (RUL), have been crafted by CMS and/or the DME MACs on a go-forward basis, resulting in individualized national and local coverage determinations (LCDs). However, a proposed rule published by CMS on July 1, 2011 would revise the OBRA ’87 definition to require that new products seeking classification as DME have a minimum lifetime of 3-years.

In general, DME is already expected to have an RUL of at least 5-years. However, this guideline applies to how often Medicare will pay for replacement equipment based on the date of delivery – not the equipment’s age – and allows suppliers to swap out equipment as often as needed (albeit without payment). With the proposed rule, CMS is taking it one step further by requiring that DME furnished under the Medicare program be able to withstand repeated use by a patient (or successive patients) for at least 3-years before requiring major repairs or replacement.

It is important to note that the minimum lifetime requirement does not replace the current RUL standard. Equipment replaced prior to 5-years from the date of delivery, regardless of age, will still remain ineligible for payment, with the exception of certain replacements due to loss, theft, irreparable damage, or a break in need of greater than 60 days.

The new definition would only apply to prospective equipment seeking classification as DME, and NOT to equipment already classified as DME under the Medicare program. It would also not apply to DME supplies or accessories. So those products you are currently providing to your Medicare patients will remain unaffected. However, products and product models that have not yet been approved by Medicare, where the manufacturer is actively seeking Medicare coverage under a particular HCPCS, will be affected. In situations where a portion, but not all, of a product may be considered durable (i.e. a new form of back brace), CMS will make benefit determinations on a case-by-case basis.

This article is posted as published in the June 2011 issue of Vista Notes.

On May 16, 2011, CMS published a proposed rule in the Federal Register (Vol. 76, No. 94) announcing a new initiative to better align Medicare and Medicaid benefits. The new Alignment Initiative seeks to improve access to care for dual eligible patients by eliminating regulatory conflicts and cost-shifting between the two programs.

 The Alignment Initiative is not simply an effort to catalogue the differences between Medicare and Medicaid, or to make the two programs identical; rather, it is an effort to advance dual eligible beneficiaries’ understanding of, interaction with, and access to seamless, high quality care that is as effective and efficient as possible.

As part of the initiative, the Medicare-Medicaid Coordination Office worked with industry stakeholders to develop a detailed list of areas in which Medicare and Medicaid alignment opportunities exist. Each area falls into one of the following categories:

• Coordinated Care
• Fee-for-service benefits (FFS)
• Prescription Drugs
• Cost Sharing
• Enrollment
• Appeals

 Under the FFS category, the following differences were identified between Medicare and Medicaid coverage for DME:

CMS is seeking public comment on the current list of identified alignment opportunities, which may be viewed at: http://www.gpo.gov/fdsys/pkg/FR-2011-05-16/pdf/2011-11848.pdf (page 4, Addendum 1). They have also posed the following questions for consideration: 

• How can the Medicare and Medicaid programs better ensure dual eligible individuals are provided full access to the program benefits? 
• What steps can CMS take to simplify the processes for dual eligible individuals to access the items and services guaranteed under the Medicare and Medicaid programs? 
• Are there additional opportunities for CMS to eliminate regulatory conflicts between the rules under the Medicare and Medicaid programs? 
• How can CMS best work to improve care continuity and ensure safe and effective care transitions for dual eligible beneficiaries? 
• How can CMS work to eliminate cost-shifting between the Medicare and Medicaid programs? How about between related health care providers? 

Comments must be received by 5pm on July 11, 2011. Comments may be submitted electronically by visiting: http://www.regulations.gov. Select the “submit a comment” tab, and enter CMS–5507–NC in the search field.

CMS will post periodic updates on the Alignment Initiative at: http://www.cms.gov/medicare-medicaid-coordination/.