Did you know that if you hire any employee or contract with an entity that has been excluded from participating in a Federal healthcare program, that it could cost you tens of thousands of dollars in fines?

In addition to imposing civil money penalties (CMPs), the Office of Inspector General (OIG) has the authority to exclude any individuals and entities who have engaged in fraud or abuse from participation in Medicare, Medicaid and other Federal healthcare programs. Per the OIG:

• The practical effect of an exclusion is to preclude employment of an excluded individual in any capacity by a health care provider that receives reimbursement, indirectly or directly, from any Federal health care program.
• No Federal payment may be made for any items or services furnished by the excluded individual or entity, even if the payment is being made to another non-excluded provider or supplier.
• In addition, payment may not be made for items and services prescribed by an excluded physician.

Also per the OIG, if you employ an excluded individual while providing services to patients under a Federal healthcare program, you could face:

• A civil money penalty of up to $10,000 for each item or service furnished by the excluded individual or entity and listed on a claim,
• An assessment of up to three times the amount claimed, and
• A possible exclusion from program participation (i.e. Medicare).

For liability to be imposed, current statute requires that the supplier knew or should have known that the employee or entity was excluded. But, it is the OIG’s stance is that suppliers have a duty to check the exclusion status of an employee or contractor before entering into a relationship, or else run the risk of CMP liability.

With fines and revocation of billing privileges at stake, it is not worth the risk to hire someone without performing a check. Additionally, we recommend a retroactive check on existing employees if you have not screened them previously. To protect yourself against entering into a relationship with an excluded individual or entity, take a moment to search the OIG’s Exclusion Database, also known as the List of Excluded Individuals/Entities (LEIE). In addition to potential employees and vendors, be sure to screen each of your current employees for possible exclusions. The database is free, easy to use and is available here: http://exclusions.oig.hhs.gov/.

Below are some tips to keep in mind when searching the OIG’s Exclusion Database:

• You can search for up to 5 names at one time.
• Remember to screen all owners, managers and officers within the company.
• In addition to the employee’s current name, be sure to screen for aliases (i.e. nicknames like Charlie instead of Charles), hyphenated names and maiden names.
• For a broader search, type in the first few letters of the last name, with no first name.
• Don’t rely solely on the address or occupation listed to verify a match. The person may have moved and obtained a different position.
• If you locate someone you believe may be an employee, you can verify if they are the same person by clicking on the name and entering the employee’s social security number.

For more information on OIG exclusions see:

http://oig.hhs.gov/exclusions/effects_of_exclusion.asp.

In testimony given by Inspector General Daniel Levinson to members of the House of Representatives on March 17, 2011, the OIG announced that they will be performing, among other things, a review of improper payments identified by CERT contractors. Specifically, the OIG plans to:

• Review the amount of improper payments that have subsequently been overturned on appeal.
• Develop a pilot project to obtain missing documentation identified during CERT reviews.
• Perform an independent medical review of claims to determine whether Payment Error Rate Management (PERM) contractors are working within PERM guidelines (applies to Medicaid and Children’s Health).

This testimony follows CMS’ announcement that they will be performing follow-up reviews on the CERT contractor to specifically re-examine claims that were previously cited with errors (see below) and is a sign that officials within the industry may be taking notice of the disconnects between auditing contractors finding high instances of “errors” and the number of “errors” that are subsequently overturned in the supplier’s favor.

However, suppliers can expect little relief in the way of reviews from the OIG itself. Products currently under review for documentation requirements and improper payments include power wheelchairs and lower limb prostheses. Depending on the findings, the OIG may recommend CMS and the DME MACs implement additional edits or medical reviews for these product categories, resulting in increased pre-pay and/or post-pay reviews.

The Inspector General’s complete testimony may be read at: http://oig.hhs.gov/testimony/docs/2011/levinson_testimony_03172011.pdf.

This morning, Daniel Levinson, Inspector General, testified before the House Subcommittee on Health on the need to provide enhanced enrollment regulations for DMEPOS suppliers and better align Medicare payments with actual costs. A few experts from that testimony are below:

Enrollment: It has been too easy for fraudulent DMEPOS suppliers to obtain Medicare billing privileges

 OIG has identified systemic enrollment vulnerabilities for more than a decade. Since 1997, OIG has issued several reports that have assessed supplier compliance with standards by conducting unannounced site visits. We have consistently found that Medicare enrollment standards and oversight are not sufficient to prevent noncompliant and sham suppliers from obtaining Medicare provider numbers and billing privileges. Some Medicare-enrolled suppliers fail to maintain even the most basic Medicare standards – for example, maintaining a physical facility, or being open during reasonable business hours.

Payment: Medicare pays too much for certain DME items, resulting in waste for legitimate claims and making fraudulent billing more lucrative

 OIG reviews over the past two decades have determined that for certain items, the program pays too much. We have identified payment misalignments for a wide variety of DMEPOS items, ranging from power wheelchairs and oxygen equipment to wound care supplies and saline solution.

This pricing disparity also makes wheelchairs an attractive target for fraud. We have found that fraudulent suppliers often supply unneeded and unwanted wheelchairs to beneficiaries because the payment from Medicare exceeds their purchase costs by such a large margin that it is lucrative to supply unnecessary wheelchairs.

Compliance: Compliance programs and education can assist legitimate DME suppliers in billing appropriately

 OIG is planning a Provider Compliance Training Initiative to bring together representatives from a variety of government agencies to deliver compliance training at no cost to local provider, legal, and compliance communities. The training sessions are scheduled to be held in 2011 in several locations across the country. We aim to educate communities about fraud risk areas uncovered by OIG’s work and to share compliance best practices so that providers strengthen their own compliance efforts and more effectively identify and avoid illegal schemes that may be targeting their communities.

Oversight: Vigilant monitoring through data analysis and claims review is critical to preventing and detecting fraud, waste, and abuse

 In addition, it is critical that the Government vigilantly monitor the Medicare program to swiftly detect and respond to fraud, waste, and abuse when it does occur. Recently, innovative uses of information technology and data analysis have dramatically enhanced the Government’s ability to take a proactive approach to fighting fraud and abuse. Finally, a thorough review of claims and supporting documentation is sometimes necessary to determine whether DMEPOS claims were appropriately paid. Improper payments are a serious issue for DMEPOS in particular. In 2009, CMS reported an overall Medicare fee-for-service error rate of 7.8 percent; however, the payment error rate for Medicare DMEPOS claims was 51.9 percent.

Response: OIG-DOJ Strike Forces have responded swiftly and effectively to DME fraud schemes; CMS efforts to remedy program vulnerabilities are also essential

 OIG and DOJ are working in partnership to accelerate the Government’s response to fraud schemes by reducing the time needed to detect, investigate, and prosecute fraud. We have deployed Strike Forces in geographic “hot spots” with high concentrations of Medicare fraud.

Additional topics covered in the testimony include new authorities established under the Affordable Care Act to prevent fraud and abuse, and Competitive Bidding as a solution to Medicare payment misalignments. The full testimony may be read at:

http://www.oig.hhs.gov/testimony/docs/2010/testimony_levinson_09152010.pdf.

By: Michelle Hamel

We’ve all heard the saying, the numbers don’t lie. But almost every one of us knows how easy it is for statistics or figures to be manipulated or mis-interpreted. Take, for example, the latest Medicare Fee-For-Service Payments Report released by the Comprehensive Error Rate Testing (CERT) team, which shows that during fiscal year 2009:

• Medicare overpaid DME suppliers by $5.4 billion.
• 51.9% of all DME claims were improperly paid.

Looks bad, right? In a time when healthcare reform is front-and-center in congress and reducing Medicare waste is one of the biggest targets, these figures seem to paint a giant bulls-eye on an industry already suffocating under a chokehold of new billing regulations. In fact, we’ve all born witness to reports in the media showing how this DME product is overpaid or how easy it is for that DME product to be billed fraudulently.

But what if I told you the reason these figures are so high isn’t because Medicare is using poor judgment when paying claims, but rather the result of a regulation crack-down? I know… reason stands that if payments are being made more stringently, then the error rate should be lower, not higher, but bear with me here.

As any supplier in today’s DME industry can attest to, getting payments for legitimate claims is harder than ever before. With accreditation and surety bond requirements, increased scrutiny from CMS and the pending implementation of PECOS, many of today’s suppliers are struggling to stay afloat in a sea of ever-changing regulations. And if you’ve recently undergone an audit, you know firsthand that it’s a whole new ball game. (For an easy way to keep up-to-date on Medicare reimbursement requirements, see Vista Notes.)

So how does this impact the overpayment and paid error rate figures above?

Anyone who happens to do more than glaze over the initial statistics, will find that the CERT team attributes 2009′s high error rates directly to an increased enforcement of documentation requirements and a decrease in the allowance of contractor 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. The supplier then is responsible for submitting documentation to CMS that they have collected from the ordering provider. The involvement of multiple parties can cause a delay in documentation receipt and incomplete documentation. CMS also recently clarified that documentation produced by the supplier alone is insufficient to warrant payment of the claim.”

As unfair as it may seem for a supplier’s claim to be denied due to the physician’s failure to dot all the i’s and cross all the t’s, suppliers are ultimately responsible for ensuring documentation requirements for the services they provide have been met.

The increased payment error rates are also partially attributable to a new policy (implemented by CMS at the recommendation of the OIG) that prevents audit contractors from looking at a claim’s billing history as an additional source of information. CERT provides the following example of how a once payable claim was denied during a review based on this new policy.

“CERT reviewed a claim for a bedside commode. The supplier provided the treating physician’s signed and dated order to the CERT Contractor indicating a 79 year old patient was recovering from a total knee replacement. A review of claims history showed the beneficiary had a Medicare covered inpatient hospital stay for total knee replacement with a comorbid diagnosis of urinary tract infection shortly before this claim. The policy states a commode is covered when the patient is physically incapable of using regular toilet facilities. The CERT Contractor would have previously determined that the total knee replacement combined with the urgency of urination associated with a urinary tract infection was sufficient to meet this requirement. Now, however, the CERT contractor may not use claims history as a basis for payment. CERT would not know the patient had urinary incontinence unless a medical record indicating the condition was also submitted.”

And to top it all off, previously paid claims with illegible physician signatures are now receiving requests for recoupment as well. This is a scary thought for suppliers, as virtually every claim is subject to denial based on this technicality. Let’s face it; have you ever been able to read your doctor’s handwriting, much less their signature?

“In the past, if the provider’s signature was missing or illegible, and there were no other reasons for denial of the claim, the CERT contractor did not deny the claim. After consultation with the OIG, CMS issued instructions to the CERT contractor directing them to strictly adhere to the CMS policy requiring a legible identifier.”

If one of your claims is being audited and the physician signature is illegible, we recommend that you proactively get an attestation statement from your physician certifying that the signature is indeed theirs. (For information on how to develop a thorough intake process, including physician signature and documentation requirements for general DME, download DME Billing 101.)

So what does all this say about 2009′s $5.4 billion in overpayments and the 51.9% error rate?

In a nutshell, legitimate payments that otherwise would not have been denied are now being audited and recouped based on technicalities. What these numbers show is not that Medicare is improperly paying claims where there is no true medical need. Rather, they represent the learning curve taking place as DME suppliers transition from a Medicare world with a “read between the lines” grey area, into a sink or swim world of only black and white.

On January 14th the Office of Inspector General (OIG) issued a Special Fraud Alert (SFA) in response to reports of DME companies cold-calling Medicare patients. Unsolicited direct and third party DME telemarketing calls are a violation of section 1834(a)(17)(A) of the Social Security Act, which only allows suppliers to contact patients if: 1) they have received prior written consent from the patient, 2) are calling about a previously supplied item or 3) have furnished an item to the patient within the past 15-months.

The problem for DME suppliers arose when the OIG’s alert classified first-time calls to patients for which a physician order had been received as ‘cold-calls,’ stating that “a physician’s preliminary written or verbal order is not a substitute for the requisite written consent of a Medicare beneficiary.” This created a dilemma for suppliers who were now left wondering whether they could continue contacting new patients to arrange for delivery.

Upon release of the alert, several industry stakeholders wrote letters to both the OIG and CMS expressing their concerns over the OIG’s interpretation of what constitutes cold-calling.

In response, the OIG issued a recent letter stating that its SFA’s are meant to provide suppliers with guidance on what constitutes fraudulent practices, and that the recent telemarketing SFA “does not articulate a new interpretation of the law.”

In conjunction with the OIG’s statement, CMS also released a six question Telemarketing FAQ for DME suppliers. Per the FAQ, suppliers may contact a patient based on the receipt of a physician order, IF the patient has been made aware that a supplier will be contacting them regarding the prescribed DME. In this case, the patient’s physician may contact a supplier on behalf of the patient, who may in-turn call the patient to confirm delivery and billing information. The key point here, is that the patient must understand that their physician will contact a DME supplier on their behalf. If a supplier calls a patient based solely on a physician order and the patient had no knowledge that their physician would even contact a supplier, the call would be  considered unsolicited.

Also of note, is that suppliers may only use the initial call to discuss those items in the physician order and may not solicit sales for other DME. 

CMS has left the decision of whether to collect and maintain documentation from the physician showing that the patient is aware they will be contacted to the supplier’s discretion.

Just last week the Office of Inspector General (OIG) issued a Special Fraud Alert in response to reports of DME companies cold-calling Medicare patients. Direct and third party DME telemarketing calls are a violation of section 1834(a)(17)(A) of the Social Security Act, which prohibits suppliers from calling Medicare patients unless one of the following conditions are met: 

1. The patient has given written consent to make contact by phone.
2. The contact is regarding a covered item previously supplied to the patient.
3. The supplier has furnished at least one covered item to the patient within the past 15 months. 

In the alert, the OIG interprets this section of the Act to include all first time calls to patients, even if a written or verbal physician order has been received, stating that “a physician’s preliminary written or verbal order is not a substitute for the requisite written consent of a Medicare beneficiary.” This presents a real problem for suppliers who are now prohibited by this update from making calls to new patients to arrange for delivery.

While the clear intent of section 1834(a)(17)(A) is to protect elderly patients from being bullied into purchasing DME over the phone,  Jeff Baird, a healthcare attorney with Brown & Fortunato in Amarillo, Texas, says the OIG’s interpretation of it is both overreaching and illogical.

“It is a matter of convenience for the patient for the supplier, upon receipt of the physician’s order, to call the patient and arrange for delivery,” said Baird. “This scenario comes nowhere close to the “unsolicited telemarketing” concerns raised by the OIG in the updated alert.”

Several industry advocates have already begun drafting response letters to send to the OIG.

(See: http://oig.hhs.gov/publications/docs/workplan/2010/Work_Plan_FY_2010.pdf)

The Office of Inspector General (OIG) has released its 2010 fiscal year Work Plan. The Work Plan outlines which areas within the Department of Health and Human Services (HHS) are currently on the OIG’s radar for assessment and audit. Per the OIG’s mission statement, the goal of their investigations is to “protect program integrity and the well-being of program beneficiaries by detecting and preventing waste, fraud, and abuse; identifying opportunities to improve program economy, efficiency, and effectiveness; and holding accountable those who do not meet program requirements or who violate Federal laws.”

Per the Work Plan, effective October 2009, the OIG will begin examining the following DMEPOS reimbursements, regulations and programs for compliance issues or areas in need of improvement: 

• Physician Self-Referral for DME Services
• Medicare Payments for Various Categories of DME
  • Includes: power mobility devices (scooters), hospital beds, oxygen concentrators and enteral/Parenteral nutrition.
• Medicare Payments for DME Claims with Modifiers
• Comprehensive Error Rate Testing (CERT) Program: DME Corrective Actions
• Appropriateness of DME Categorization
• Enteral Nutrition Therapy Services in Nursing Homes
• Medicare Pricing for Parenteral Nutrition
• Medicare Part B Payments for Home Blood-Glucose-Testing Supplies
• Medicare Payments for Power Wheelchairs
• Medicare Payments to DME Suppliers of Power Wheelchairs
• Repair and Servicing of Capped Rental Durable Medical Equipment
• Medicare Enrollment and Monitoring for Supplier of DMEPOS and Home Health Agencies

Upon completion of an investigation, the OIG has the authority to suggest improvements, impose civil monetary penalties (CMPs) and even impose administrative sanctions.

Specific details on what the OIG will be looking for in each of the above investigations, as well as any actions or audits implemented as a result of an investigation will be included in the December issue of Vista Notes.

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By: Michelle Duncan

DMEPOS providers and suppliers may soon be required to pass stringent compliance reviews, disclose information about their business in a national database and make details about their relationships with physicians public. That is, if a proposed healthcare reform policy released by Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Charles Grassley (R-Iowa) becomes law.

Entitled Transforming the Health Care Delivery System: Proposals to Improve Patient Care and Reduce Health Care Costs, the policy is “the first of three sets of potential option papers” that will be discussed and debated by Finance Members as they work to create a comprehensive proposal for healthcare reform, according to a Committee on Finance press release, issued April 28, 2009.

Note: Throughout this article, page numbers have been included to cite the location of quotes within the proposed healthcare reform policy. A full copy of the 48-page policy may be downloaded here.

Public comment on any of the policy’s suggested reform options may be directed to: Health_Reform@finance-dem.senate.gov. The deadline for comments is May 15, 2009.

Guilty until Proven Innocent

Among the reform options in senators Baucus and Grassley’s healthcare policy, is a proposal to grant the Secretary of Health and Human Services (HHS) the power to utilize various screening techniques – including criminal background checks and even requiring fingerprint submissions – to evaluate an enrolling Medicare provider’s risk of noncompliance.

As part of the evaluation, all prospective providers would be required to disclose to the Secretary any “previous affiliations with enrolled entities that have uncollected Medicare or Medicaid debt,” potential grounds for the Secretary to deny their enrollment applications (p. 42).

Furthermore, the proposed reform option grants the Secretary the ability “to require surety bonds of up to $500,000 (commensurate with the size of the business) and to impose moratoria on the enrollment of new providers as determined to be necessary to prevent or combat fraud” (p. 43).

Upon passing their evaluations, new providers and suppliers would be required to go through a “provisional participation” period of 6-to-12 months. During this time, some providers may be subject to “enhanced oversight, such as prepayment review[s] and payment limitations” (42.)

The two senators propose covering the costs of screenings by charging Medicare enrollment application fees. Monetary penalties would also be imposed on those omitting or providing false information on their applications.

One PI: Big Brother is Watching

If you have any skeletons in your DME closet, they may soon be available for all of Big Brother to see.

The implementation of a new “One PI” healthcare database is another reform option proposed in senators Max Baucus (D-Mont.) and Charles Grassley’s (R-Iowa) policy.

The new database would potentially consolidate multiple healthcare databanks, including the HHS Office of the Inspector General’s (OIG) Healthcare Integrity and Protection Data Bank (HIPDB), into one comprehensive data source, One PI.

The current HIPDB contains information on providers such as:

• Civil Judgments
• Federal or State Criminal Convictions
• Actions Taken by Federal or State Licensing Agencies
• Exclusions from Medicare and Medicaid 

According to the proposal, the One PI database would combine the HIPDB with other provider databanks into a national “sanctions data system,” able to be accessed by “state licensure boards and federal and state law enforcement agencies” (p. 44).

Along with the above information, One PI would also contain the following about each Medicare provider: 

• Provider Ownership
• Provider Business Relationships
• History of Adverse Actions
• Results of Site Visits and Other Monitoring
• Fraud Settlement Data

One of the ideas behind developing One PI is to give agencies such as the OIG and Department of Justice (DOJ) the ability to investigate potential fraud and abuse via a centralized data source. If voted into law, Medicare applicants would need to be verified in the One PI database, “prior to [receiving] provider/suppler numbers” (p. 44).

Physician Relationships Exposed

The creation of a new policy aimed at making physician relationships transparent is also among the reforms proposed in the healthcare policy draft.

Under the subheading “Physician Payment Sunshine,” senators Baucus and Grassley propose amending “part A (General Provisions) of title XI of the Social Security Act” to require manufacturers of a covered drug, device, biological, or medical supply, to make public any relationships in which they provide “payments and other transfers of value” to a physician (p. 26).

The proposed policy would require those manufacturers to report the following information electronically to the Secretary of HHS on an annual basis beginning March 31, 2012, and on the 90^th day of each year thereafter: 

• The name and address of all physicians paid
• Amount/value of each payment
• Dates of payment
• A description of the form of payment
• The reason for payment (i.e. marketing, education, research)
• The name of any covered drugs, devices, biological or medical supplies related to the reason for payment
• National Provider Identifier
• The name of any entities or individual the payment was transferred to at the physician’s request 

Some payments and transfers would be excluded from the reporting requirement. Those transfers not required to be reported to the Secretary include: 

• Payments or transfers of $10 or less
• Samples intended for patient use
• Patient educational materials
• Short-term loan of a covered device
• Discounts and rebates
• In-kind items used for charity care
• Profit distributions from publicly traded companies 

Under the newly proposed policy, the above listed manufacturers would also be required to provide the Secretary with electronic, annual reports of “any ownership or investment interest (other than in a publicly traded security and mutual fund) held by a physician (or an immediate family member)” (p. 26).

Beginning September 30, 2012, electronic reports submitted to the Secretary would be compiled and made available via “an Internet website” (p. 26). In addition to compensation information, the website would include the following: 

• Enforcement actions during the preceding year
• Background information on physician-industry relationships
• A separate listing of payments related to clinical research 

To ensure payments are reported, Baucus and Grassley suggest imposing a civil monetary penalty (CMP) of $1,000 to $10,000 for each unreported payment, with a maximum total annual CMP of $150,000. For those who “knowingly fail to submit information,” an increased CMP of $10,000 to $100,000 per purposely withheld payment would apply. In this case, the maximum total annual CMP would be $1,000,000 (p. 26).

By: Michelle Duncan

Negative pressure wound therapy pump (NPWT) suppliers are over-reimbursed, according to an Office of Inspector General (OIG) comparison report of 2007 pump costs and reimbursement rates.

In the report, released in March of 2009, the OIG contends that Medicare’s purchase price of $17,165 is nearly four times greater than the average pump price tag of $3,604 paid by DME suppliers.

Based on these figures, Medicare’s monthly reimbursement rate of $1,716 for the first three months allows suppliers to recover the full, average cost of an NPWT pump in just two months,  according to the OIG.

The OIG also found that DME suppliers acquired nearly one-fourth of new NPWT pumps by means other than purchasing (i.e. lease-to-own, renting, exchanges), and that most suppliers were not  communicating with their patients’ treating clinicians in accordance with Medicare regulations.

As a result, the OIG has recommended that CMS reduce the reimbursement rate for NPWT pumps and include the pumps in the Competitive Bidding program. CMS has responded, saying it will look into the potential for reimbursement cuts and will consider including NPWT pumps in the second round of Competitive Bidding.

The OIG’s full report, entitled Comparison of Prices for Negative Pressure Wound Therapy Pumps may be found here: http://www.oig.hhs.gov/oei/reports/oei-02-07-00660.pdf.