pspencer100To date, there has been a limited focus on Durable Medical Equipment (DME) by the RACs. Currently, HDI, the Region D RAC, is leading the way with 20 DME issues approved for widespread review. DCS, in Region A, follows close behind with 14 issues, while Connolly and CGI have nine and five, respectively.

In its latest report, the Comprehensive Error Rate Testing (CERT) program determined the payment error rate on DME claims to be 51.9 percent. It is believed that the steep increase in the DME error rate, from 9 percent in a previous report, had to do with changes in review methodology for DME claims. Yet given that this number stands head and shoulders above error rates for all other types of Medicare claims, the lack of RAC attention up to this point is somewhat surprising.

DME MAC Probes

As we’ve come to learn about other types of services, the Medicare Administrative Carriers (MACs), through the use of probe reviews, are making an attempt to fill the audit void on their own. This is especially true for the four DME MACs, which have been busy of late looking at certain claim types in an attempt to gain a clearer picture of payment errors. When it is determined that payment error rates are unacceptable, a few of the DME MACs have been taking the additional step of implementing prepayment review of selected services.

Dismal Results

This past November, NHIC, the Jurisdiction A DME MAC, issued results of three widespread prepayment reviews for select services billed in the third quarter of 2010. The first of these involved the familiar target of power wheelchairs, specifically those covered by HCPCS code K0823. Of 952 submitted claims featuring this code during the time period, 596 were denied, creating a claim denial rate of 62.6 percent. Next up was oxygen and oxygen equipment, with codes E1390, E0431 and E0439 going under the microscope. Three hundred seventy-six out of 478 services submitted were denied, resulting in a denial rate of 79 percent. Rounding out the triumvirate were nebulizers with compressors, represented by code E0570. Two hundred eleven claims were submitted, resulting in 143 denials and a 67.7 percent claim denial rate. Across the three probes, the most common reason for denial was a lack of sufficient documentation necessitating the need or provision of the equipment.

In Jurisdiction B, National Government Services conducted a post-payment probe of blood glucose test strips (HCPCS code A4253). One hundred twenty-five of 137 claims were denied, resulting in a claims error rate of 91.2 percent. The majority of these claims were denied due to a lack of either a valid physician’s order or a key piece of requested documentation.

The Jurisdiction C MAC, CIGNA Government Services, also took it upon itself to review claims for glucose test strips as a prepayment probe. This resulted in a similar claims denial rate of just under 90 percent. CIGNA also followed NHIC’s lead by reviewing power wheelchairs in a prepayment probe, with a finding of a claims error rate of 92 percent. Prepayment reviews currently are underway by CIGNA for such items as enteral nutrition, nebulizer drugs, oxygen contractors and CPAP devices.

Finally, Jurisdiction D’s MAC, Noridian, traveled over ground both familiar and alien to its DME cohorts. Following a prepayment review of blood glucose strips that uncovered a 77 percent error rate, Noridian conducted a complex targeted prepayment review (“complex” in this case defined as “having a larger sample universe”), which found a 72 percent error rate. While any improvement is good, obviously there is a lot of work to be accomplished in the realm of testing strips. Begging equally for intervention are claims for high-strength, lightweight wheelchairs, billed with HCPCS code K0004, which had a 93 percent error rate in a probe review.

Grim Conclusions

Up to this point, most of us in the compliance communityhave operated alongside the RACs with a lingering sense of waiting for the other shoe to drop. There is a whole universe of claims issues ripe for the picking by the contractors, as the above reviews clearly illustrate. Having said that, there is what I see as an accountability gap in regard to how the MACs are processing claims and identifying errors. Not one of the claims reviews above can boast of an error rate of 50 percent. For some of these issues, an error rate as “low” as every other claim being paid in error would be a paradigm shift for the carrier.

To add to the general frustration, parenteral nutrition, home blood glucose strips and power wheelchairs currently appear on the OIG Work Plan for 2011, which also indicates that at least one RAC will be looking at one or all of these issues. When three sets of eyes are identifying the same issue for audit, it appears to me that at least some of the blame for the current climate of “pay-and-chase” can be placed at the feet of the administrative carriers.

Like you, I won’t hold my breath waiting for someone of importance to make this point.

About the Author

Paul Spencer is the Compliance Officer for Fi-Med Management, Inc., a national physician practice financial management company based in Wauwatosa, WI. Paul has over 20 years of experience across all facets of healthcare billing, including 6 years spent with insurance carriers. In his current role with Fi-Med, he acts as a physician educator on issues related to E/M level of service and documentation audits by CMS and other outside entities. Paul has carried the CPC and CPC-H credentials from the American Academy of Professional Coders since 1998.

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