Those who appreciate a good horror story will enjoy this article, which illustrates how very minor mistakes can spiral into abject disaster.

A physician group that provides various prosthetics to patients recently had a durable medical equipment (DME) validation survey. When the surveyor sent an email with many typos, the physician group doubted the authenticity of the surveyor’s assertion that he was authorized by Medicare to gather information, even though the surveyor followed the process Medicare outlines for surveyors. The group refused to allow the surveyor past the receptionist, and the surveyor asserted that he was unable to verify the clinic. When the clinic appealed the loss of its DME number, the hearing officer declared that they should have been more proactive in verifying the authenticity of the surveyor – and the revocation was upheld. That was only the beginning of the trouble, however.  

Any adverse action like this can result in classification as a “high-risk” provider or supplier by Medicare. High-risk organizations now are obligated to provide fingerprints of their owners. So Medicare sent a letter to one clinic demanding fingerprints. The clinic obtained fingerprints from its current shareholders, but the list of owners Medicare had was outdated. The clinic hadn’t sent in new 855 forms when one physician went part-time and surrendered his shares, or for another physician when she retired. As a result, Medicare concluded that they hadn’t met the fingerprint requirement for all owners and sent a letter notifying the clinic that its Medicare number would be revoked if they didn’t submit a corrective action plan within 30 days.  

When they received the letter, the addressee was on vacation. Whoever opened it didn’t realize its significance. They contacted me on the 29th day after the date of the letter. They were sending in new 855 forms and figured that would solve the problem. The letter also indicated that the clinic can seek reconsideration of the decision within 60 days, so they figured they had plenty of time.  

What the clinic didn’t realize is that CMS takes the position that when you seek reconsideration of a decision, they will only ask one question: at the time the initial decision, were you in violation of the rules? Since the clinic hadn’t updated the 855 forms, it was in technical violation. There was an easy cure, of course, but that required a valid corrective action plan. Despite the fact that this was a minor record-keeping error, the odds of prevailing in a reconsideration request were extremely low. Unless the corrective action plan was submitted and accepted, this clinic was almost certain to lose its ability to bill Medicare for two years.

There are many lessons from this story, some obvious, but some far less so.

First, because it was so close to the time limit for submitting the plan, it was vital to know exactly when the letter was received. But the clinic hadn’t kept the envelope, nor had it used a “received” stamp on its incoming mail. Envelopes are evidence, not trash. 

When someone is on vacation, correspondence from the government can’t await their return.  

Whenever someone comes, or goes, or changes their ownership status, or gets disciplined by a licensing body or Medicare, consider whether an 855 update is needed. Many different things trigger the 855 duty. Know them. 

And finally, while I always hope that someone will call me to help solve a problem, no lawyer enjoys getting a call on the day a response is due. People often hesitate to call out of fear of the cost. That is horribly ironic. This minor record-keeping error could have been fixed with little effort and almost no legal expense had it been handled promptly. The delay added both expense and peril.  

Most horror fans would agree that the genre is far more palatable when it’s fiction. With some care, you can avoid being the subject of a true crime story. 

About the Author 

David M. Glaser, Esq., is a shareholder in Fredrikson & Byron’s Health Law Group. David helps clinics, hospitals, and other healthcare entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement, and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes. David’s goal is to explain the government’s enforcement position and to analyze whether the law supports this position. David is a popular panelist on Monitor Mondays and is a member of the RACmonitor editorial board.

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