logo - Liles Parker PLLC
(202) 298-8750 (800) 475-1906
Washington, DC | Houston, TX
Baton Rouge, LA

We Defend Healthcare Providers Nationwide in Audits & Investigations.

OIG’s Renewed Interest in Orthotic Audits and Investigations: What Your DME Company Needs to Know

Download PDF

UPIC Audits of Medicare Orthotic Claims are Increasing(February 8, 2019):  A series of recent reports out of the Department of Health and Human Services (HHS), Office of Inspector General (OIG) underscore the Federal government’s renewed concerns with respect to orthotic braces, including underlying medical need for these items.  From 1994 to 2000, OIG issued half a dozen reports pertaining to orthotics audits and investigations.  However, since 2000, OIG’s focus shifted to other areas of program integrity concern (such as home health and hospice).  Between November 2018 and January 2019, however, OIG issued three reports regarding orthotic braces, highlighting that these items are on OIG’s radar once again. These three OIG reports are: “Medicare Improperly Paid Suppliers for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Provided to Beneficiaries During Inpatient Stays” (A-09-17-03035) (November 2018); “Pacific Medical’s Billing of Medicare for Orthotic Braces” (A-09-17-03027) (December 2018); and “Kelley Medical Equipment and Supply, LLC, Received Unallowable Medicare Payments for Orthotic Braces” (A-09-17-03030) (January 2019).   Over the past month, we have seen a significant uptick in the number of new orthotic audits and investigations by Medicare contractors, including Unified Program Integrity Contractors (UPICs).  The purpose of this article is to discuss a number of the program integrity issues that Durable Medical Equipment (DME) suppliers are facing in connection with UPIC audits of orthotic claims billed to Medicare. 

I.     Medicare Coverage and Payment Requirements

Medicare Part B covers Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS), including orthotic braces. To be paid by Medicare, a service or an item must be reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member. Orthotic braces are defined as rigid and semi-rigid devices which are used for the purpose of supporting a weak or deformed body member or restricting or eliminating motion in a diseased or injured part of the body.” Examples of orthotic braces include back, knee, and ankle-foot braces.

The DME Medicare Administrative Contractors (MAC) have developed Local Coverage Determinations (LCDs) for most covered orthotic braces (one of the most notable exceptions, however, is shoulder braces). The LCDs outline the conditions under which DME MACs will pay suppliers for those braces. For example, the LCD for back braces or “spinal orthoses” (LCD L33790) provides that: “A spinal orthosis (L0450 – L0651) is covered when it is ordered for one of the following indications:

  1. To reduce pain by restricting mobility of the trunk; or
  2. To facilitate healing following an injury to the spine or related soft tissues; or
  3. To facilitate healing following a surgical procedure on the spine or related soft tissue; or
  4. To otherwise support weak spinal muscles and/or a deformed spine.

Before submitting a claim for an orthotic brace to the DME MAC, a supplier must have on file the following:

  • Written documentation of a verbal order or a preliminary written order from the treating physician,
  • A detailed written order from the treating physician,
  • Information from the treating physician concerning the beneficiary’s diagnosis,
  • Any information required for the use of specific modifiers, and
  • Proof of delivery of the orthotic brace to the beneficiary.

The Medicare Program Integrity Manual specifically emphasizes that a supplier should obtain as much documentation from the beneficiary’s medical record as it determines necessary to assure itself that the orthotic brace meets Medicare requirements”.

II.    OIG’s Recent Reports:

In the first of OIG’s recent reports, dated November 2018, OIG found that Medicare should not have paid suppliers any of the $34 million for DMEPOS items that were provided during inpatient stays. Notably, 43% of the total overpayment identified by OIG was for prosthetics and orthotics, including braces. Separate from the $34 million figure, OIG determined that Medicare beneficiaries inappropriately paid $8.7 million in deductibles and coinsurance to the suppliers for the DMEPOS items. Generally, during an inpatient stay, Medicare should not pay a supplier for DMEPOS items provided to a Medicare beneficiary. The items are supposed to be provided directly by the inpatient facility or under arrangements between the facility and the supplier. This is because the Medicare payments made to the facilities represent payments in full for all inpatient hospital services, including DMEPOS items. OIG attributed the inappropriate payments for these supplies, in part, to inadequate Common Working File (CWF) pre-payment and post-payment edits which failed to prevent or detect the overpayments. OIG determined that if the system edits had been designed properly since 2008, Medicare could have saved $223.1 million and beneficiaries could have saved $56.3 million in deductibles and coinsurance. Based on its findings, OIG recommended in part that the Centers for Medicare & Medicaid Services (CMS) recover the $34 million and that the suppliers refund the deductible and coinsurance amounts to the Medicare beneficiaries.

OIG’s other two reports, dated December 2018 and January 2019 respectively, were quite similar to one another. OIG audited a supplier of orthotic braces in Tracy, California and a supplier of orthotic braces in Durant, Oklahoma for the same audit period, January 1, 2015 through March 31, 2017. In both cases, the overpayments identified by OIG were exclusively attributed to the failure on the part of the suppliers to establish medical need for some of the orthotic braces. In the California case, OIG determined that the supplier billed for orthotic braces that were not medically necessary for nine claims and could not provide medical records for two claims. In the Oklahoma case, OIG determined that the supplier billed for orthotic braces that were not medically necessary for 67 beneficiaries and could not provide medical records for nine beneficiaries. OIG stated verbatim with respect to both suppliers: These deficiencies occurred because [the supplier] did not always obtain sufficient information from the beneficiaries’ medical records to assure itself that the claims for orthotic braces met Medicare requirements.” An example of a medically unnecessary back brace was provided by OIG as follows:

Medicare paid [the Oklahoma supplier] $754 for providing a back brace to a 62-year-old beneficiary. According to the physician order dated March 7, 2017, the brace was prescribed for lower back pain. However, the medical records did not indicate a complaint of back pain, and there was no mention of a back brace. Rather, according to the medical records, the beneficiary saw his physician on March 2, 2017, for relief of persistent cough and chest congestion. As a result, the independent medical review contractor found that the back brace was not medically necessary.

Based on its findings, OIG recommended to both suppliers that they (1) refund the identified overpayments; (2) assess their claims outside of OIG’s audit period and refund any identified overpayments within 60 days; and (3) obtain as much information from beneficiary medical records as the suppliers deem necessary to assure themselves that claims for orthotic braces meet Medicare requirements.

III.   Our Recommendations for Suppliers of Orthotic Braces:

Given the audit and investigation activity surrounding suppliers of orthotic braces, it is important for suppliers to reassess Medicare coverage and payment requirements and their documentation practices. In particular, suppliers need to ensure they are obtaining and maintaining sufficient medical records from the ordering providers. As we have discussed in previous articles, while suppliers are not entitled to make determinations regarding medical need, they are tasked with evaluating medical records and ensuring that the records support the Medicare beneficiary’s medical need for the orthotic brace prescribed. The OIG reports make very clear that the party responsible for an overpayment is the supplier, and not the ordering provider. In order to ensure you are satisfying your documentation obligations, we recommend that you:

  1. Consult with your healthcare attorney and have them review a sample of claims. The best way to ensure that your claims are satisfying Medicare coverage and payment rules, and that you are meeting your documentation obligations, is to have a third party with strong knowledge in this area assess a sample of your claims who can then give you objective feedback and constructive recommendations.
  2. Train and retrain your staff on Medicare coverage and payment rules and supplier documentation requirements. As a business owner, you are likely relying on a team of employees to obtain and review the necessary documentation and to process the claims for the orthotic braces. You are only as strong as your weakest link, as they say. Sharing these OIG reports with your employees and setting up a team conference to discuss them would be a great start! Your healthcare attorney can likely arrange a conference agenda and guide your team through OIG’s reports, as well as effectively educate you and your employees on Medicare coverage and payment rules and supplier documentation requirements.
  3. Implement a compliance plan tailored to the scale of your business and the DME supplies you distribute so that compliance will persist in the long-term. Ultimately, regular auditing of claims and regular training of employees, as well as sound policies and procedures, are the most effective ways to ensure long-term, ongoing compliance throughout the life of your business. Medicare rules and audit activity are constantly evolving. A compliance plan is the way to stay on your game.

We anticipate ongoing UPIC audits and investigations pertaining to orthotic braces on account of OIG’s findings and concerns. Our attorneys can assist you if you have received notice from your local UPIC, or if you are interested in taking proactive steps, like developing a compliance plan or auditing your claims internally.

Lorraine Rosado Healthcare AttorneyLorraine Rosado, JD, CMCO, CMRS, Lorraine Rosado, JD is an experienced health law attorney with the firm, Liles Parker, Attorneys & Counselors at Law.  She is also a Certified Medical Compliance Officer (CMCO) and a Certified Medical Reimbursement Specialist (CMRS). Lorraine represents DME suppliers and a wide variety of other healthcare providers around the country in connection with Medicare, Medicaid and private payor audits and investigations. You can reach Lorraine at (202) 298-8750



ZPIC Audits / UPIC Audits: The Impact of Transmittal 768 on the Medicare Appeals Process Timeline

Download PDF

Transmittal 768(April 12, 2018): A big concern with the Medicare appeals process is the ghastly backlog at the Office of Medicare Hearings and Appeals (OMHA) for an Administrative Law Judge (ALJ) hearing coupled with the government’s authority to recoup alleged overpayments after the second level of appeal (reconsideration). There is renewed buzz regarding the backlog and potential recourse given the Fifth Circuit’s decision on March 27, 2018 in Family Rehabilitation, Inc. v. Azar, No. 17-11337, which affirmed the possibility for providers to sue for an injunction to prevent Medicare Administrative Contractors (MACs) from recouping overpayments until administrative appeals are concluded under the collateral-claim exception. But what about the snail-like pace of postpayment reviews at the very beginning of this process?  As discussed below, Medicare’s Transmittal 768 may alleviate this continuing problem to some extent.

I.  Continuing Delays by ZPICs / UPICs in Completing an Initial Review – Overview of the Problem:

Before claims are appealable, they have to be denied on review. A major source of massive extrapolated alleged overpayments are postpayment reviews by Zone Program Integrity Contractors (ZPICs) and their successor Unified Program Integrity Contractors (UPICs). Our experience has been that these reviews usually take many months, even years. This is in spite of the fact that providers are required to turn over the requested records in somewhere between 15 and 30 days, maybe even 45 days if the provider requests an extension. The investigators typically remain tight-lipped throughout the review and investigation process. Inquiries about the status of a review are usually met with no response or cryptic feedback like “The review findings will be provided at the conclusion of the review.” In the meantime, providers are expected to sit on their hands. Then one day, a letter arrives which often reflects an unmanageable alleged overpayment figure for the provider and the provider is left to dispute the alleged overpayment through “Medicare’s Byzantine four-stage administrative appeals process” – in the words of Circuit Judge Jerry E. Smith in Family Rehabilitation, Inc. v. Azar.

II.  New Timelines Under Transmittal 768 for ZPICs / UPICs to Complete a Postpayment Review:

There has been a development that may effectuate speedier postpayment reviews by ZPICs and UPICs. The Centers for Medicare and Medicaid Services (CMS) issued guidance, which imposes a new timeline and requirements on these contractors effective March 1, 2018. Specifically, the transmittal adds the following requirements to Chapter 3 of the Medicare Program Integrity Manual:

the UPICs / ZPICs shall complete postpayment medical review and provide the lead investigator with a final summary of the medical review findings that includes reference to the allegations being substantiated/not substantiated by medical review, reasons for denials, and any observations or trends noted within 60 calendar days” and “[t]he counting for the 60-day time period begins when all of the documentation is received by the UPIC / ZPIC contractor.”

Please note, however, that this is an internal timeline for the contractors (as between the medical reviewer(s) and lead investigator), meaning that providers should not expect to receive the postpayment audit results within 60 days of having submitted the records to the UPIC / ZPIC. However, Transmittal 768 may be useful to put pressure on the contractors when reviews are pending for months or years on end.

For a detailed discussion of the ZPIC program and process, please see: ZPIC Audits.

Healthcare LawyerLorraine A. Rosado, J.D., is a Senior Associate at Liles Parker and has extensive experience representing Medicare providers and suppliers around the country in administrative claims audits, suspension and revocation cases.  She is also performed a number of IRO reviews in connection with annual CIA reviews by HHS-OIG.  Should you have any questions regarding an administrative enforcement action, please feel free to call Lorraine for a free consultation.  She can be reached at: (202) 298-8750.

HHS Issues Final Rule to Address Record High Medicare Appeals Backlog

Download PDF

Medicare appeals backlog(January 20, 2017): The Medicare appeals backlog has reached its all-time worst. If you’re a healthcare provider or supplier waiting for a hearing before an Administrative Law Judge (ALJ) at the Office of Medicare Hearings and Medicare Appeals (OMHA) – the third level of the Medicare appeals process – you’ve likely been waiting years to have your case heard or, at least, you’re expecting such a wait. This wait time has persisted despite that ALJs are statutorily required to issue a decision within 90 days of receipt of a hearing request. The reasons for the backlog depend on who you ask: the American Hospital Association (AHA) and others have contended that the Recovery Audit Program is the “primary culprit in creating and sustaining” the backlog because Recovery Audit Contractors (RACs) “receive a cut of any improper payments they recover […] and can challenge claims going back as far as three years.”  The U.S. Department of Health and Human Services (HHS) agrees that the Recovery Audit Program has contributed to the backlog, but believes there are other reasons as well, like an increase in Medicare beneficiaries and a growing practice among some providers to appeal virtually every claim denial through ALJ review (coupled with only modest increases in funding for the agency, thereby limiting their ability to address the growing number of appeals and backlog).

I.  Statistical Overview of the Medicare Appeals Backlog:

In any event, the statistics are astounding:

  • The number of ALJ appeals filed grew 936%, from 41,733 to 432,534, between fiscal years (FY) 2010 and 2014.
  • By the end of FY2014, 767,422 appeals were pending at ALJ.
  • ALJ decisions are issued well after the 90-day statutory deadline: in FY2014, it took OMHA an average of 415 days to process an ALJ appeal; in FY2015, it took OMHA an average of 662 days to process an ALJ appeal; and in FY2016, it took OMHA an average of 877 days to process an ALJ appeal.

The backlog has been a significant source of frustration for healthcare providers and suppliers (and their representatives) stuck in the lingering appeals process – and not just because it takes so long to achieve a final judgment by the Secretary. The delay often has significant financial consequences because Medicare can statutorily recover the alleged overpayment shortly after a second level (reconsideration) appeal decision issues, despite that the appeals process is not over and despite that the first two levels of appeal are littered with problems (e.g., we see chronic misapplication of Medicare coverage and payment rules by appeals contractors at the first two levels of appeal).

II.  Order by the U.S. District Court:

Thanks to the efforts of AHA and other plaintiffs who sought relief in court, we may see the backlog resolve over the next few years. On 12/05/2016, the United States District Court for the District of Columbia ordered that the HHS Secretary reduce the backlog according to the following timeline:

  • 30% reduction from the current backlog of cases pending at the ALJ level by 12/31/2017;
  • 60% reduction by 12/31/2018;
  • 90% reduction by 12/31/2019; and
  • 100% reduction by 12/31/2020.

III.  Other HHS Efforts to Address the Medicare Appeals Backlog:

In an effort to meet these mandated backlog reduction timelines, HHS issued a final rule on 01/17/2017 titled “Medicare Program: Changes to the Medicare Claims and Entitlement, Medicare Advantage Organization Determination, and Medicare Prescription Drug Coverage Determination Appeals Procedures”. The final rule includes an assortment of initiatives to reduce the backlog which become effective 03/17/2017, including:

  • Giving select Medicare Appeals Council decisions precedential effect. The final rule provides that designated “Medicare Appeals Council decisions […] have precedential effect and are binding on all CMS components, on all HHS components that adjudicate matters under the jurisdiction of CMS, and on the Social Security Administration to the extent that components of the Social Security Administration adjudicate matters under the jurisdiction of CMS.” This is significant because, currently, even if the Medicare Appeals Council interprets a Medicare authority or provision in a specific way in a decision, that interpretation only applies to the case at hand (even though the decision represents the final decision of the Secretary). In other words, an Appellant can’t contend that the interpretation of a Medicare authority or provision in a previous Medicare Appeals Council matter is binding in their case as well, even if the facts and issues are very similar. HHS hopes the precedential nature of Medicare Appeals Council decisions as of 03/17/2017 will create consistency in the appeals process. It’s possible, though, that the discretion given to the Departmental Appeals Board (DAB) Chair to decide which cases have precedential effect may impact how effective this change will ultimately be.
  • Expanding the pool of adjudicators at OMHA to include attorney adjudicators. An attorney adjudicator is a licensed attorney employed by OMHA with knowledge of Medicare coverage and payment laws and guidance, and authorized to take the actions on requests for ALJ hearing and requests for reviews of QIC dismissals. HHS estimates that the expansion of the pool of adjudicators at OMHA could redirect approximately 24,500 appeals per year to attorney adjudicators who would be able to process these appeals at a lower cost than would be required if only ALJs were used to address the same workload.
  • Creating process efficiencies. These include, for example, allowing ALJs to vacate their own dismissals rather than requiring Appellants to appeal a dismissal to the Medicare Appeals Council and using telephone hearings for certain Appellants.

For more information on these and numerous other initiatives, please refer to the Federal Register. The hope is that the finalization of this rule and the Secretary’s accountability to the District Court – the Court retained jurisdiction of the case to review the quarterly status reports the Secretary is required to prepare and to rule on any challenges to unmet deadlines – will achieve the intended result: complete elimination of the backlog by 2020.

The Centers for Medicare and Medicaid Services (CMS) has taken steps in the past to improve the appeals process, and these steps have not always achieved the intended result. For example, with regard to appeals stemming from a post-payment review, CMS directed redetermination (first level) and reconsideration (second level) appeals contractors – effective August 2015 – to restrict their review on appeal to (in most cases) only the issues alleged by the reviewing contractor (i.e., the contractor that requested the records and issued the initial audit results). The purpose was to avoid a moving ball – where one Medicare contractor alleges one issue and the Appellant addresses it, but then another contractor alleges another issue, requiring the Appellant to then address a different issue with regard to the same claim. However, we have seen the redetermination and reconsideration appeals contractors repeatedly disregard this CMS directive and continue to try and add new denial reasons to the administrative record. We have also seen the initial auditing contractors increasingly allege more than one denial reason, throwing everything but the kitchen sink at providers and suppliers. It seems that Medicare is hoping for at least one denial reason to persist through the appeals process.

Judicial oversight is the difference this time around and could be the key to reducing the backlog. We’ll be monitoring HHS’s progress closely and hoping for expeditious relief for our current and future clients, and healthcare providers and suppliers everywhere.

Lorraine Ater, JDHealthcare Lawyer is a health law attorney with the firm Liles Parker.  She is also a Certified Medical Compliance Officer (CMCO) and a Certified Medical Reimbursement Specialist (CMRS).  Lorraine represents healthcare providers and suppliers around the country in connection with Medicare audits and appeals.  Liles Parker is a boutique health law firm with offices in Washington, DC; across the State of Texas; and in Baton Rouge, LA.  Need assistance?  For a free consultation, please call: (202) 298-8750.



AHA v. Burwell, 2016 U.S. Dist. LEXIS 126840 (D.D.C. Sept. 19, 2016).

AHA v. Burwell, 2016 U.S. Dist. LEXIS 167291, 2016 WL 7076983 (D.D.C. Dec. 5, 2016).

Federal Register, Volume 82, Number 10, Pages 4974-5140, “Medicare Program: Changes to the Medicare Claims and Entitlement, Medicare Advantage Organization Determination, and Medicare Prescription Drug Coverage Determination Appeals Procedures” (01/17/2017). Available at https://www.federalregister.gov/documents/2017/01/17/2016-32058/medicare-program-changes-to-the-medicare-claims-and-entitlement-medicare-advantage-organization.

HHS, “FACT SHEET: HHS Issues Final Rule to Improve the Medicare Appeals Process”.

HHS, OMHA, “Average Processing Time By Fiscal Year” (11/18/2016). Available at https://www.hhs.gov/about/agencies/omha/about/current-workload/average-processing-time-by-fiscal-year/index.html#.

DME Audits are Back! Are Your Claims Compliant?

Download PDF

ZPICs are Conducting DME Audits

DME audits by ZPICs are on the rise. Is your DME company ready?

(December 22, 2015): The number of durable medical equipment (DME) audits conducted by Zone Program Integrity Contractors (ZPICs) and Program Safeguard Contractors (PSCs) have surged in recent years. Medicare contractors have gradually increased their scrutiny of DME suppliers’ claims. This has resulted in increased postpayment audits of DME suppliers’ claims and associated overpayment demands made against DME suppliers. A previously unenforced standard is being enforced: DME suppliers are responsible for maintaining patient medical documentation that establishes the medical necessity for the DME item. In addition to the documents traditionally required to be maintained by DME suppliers – i.e., physician (or dispensing) orders, Detailed Written Orders (DWO), Certificates of Medical Necessity (CMN), DME Information Forms (DIF), and proofs of delivery (POD) – DME suppliers are also expected to obtain and review supporting medical documentation from the ordering physician, including office visit progress notes, radiology reports, and so on. Yes, you heard that correctly – even though DME suppliers are not themselves allowed to decide whether a DME item is medically necessary for a specific beneficiary, they are required to obtain and assess  patient medical documentation from the ordering physician to ensure that the documentation supports the medical necessity for the DME item ordered prior to distribution of that item. If DME suppliers do not secure and maintain this medical documentation, they can and are being held liable for DME supplies they have distributed which has been found non-covered because the documentation on record with the DME supplier does not support the medical necessity for the DME item distributed to the patient.

ZPICs and other Medicare program integrity contractors have been actively enforcing this rule through postpayment audits.  For example, the number of DME audits initiated by Health Integrity, LLC, the ZPIC for Zone 4 (which includes Colorado, New Mexico, Oklahoma, and Texas); and TriCenturion, Inc. in its capacity as the PSC for DME Jurisdiction A (which is comprised of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, and Washington, DC), have increased over the past year and will be rising in 2016.

I. Medicare guidelines expressly require that DME suppliers maintain sufficient documentation to establish the medical need for the DME item ordered.  ZPIC audits of DME claims will be focusing on this mandate.

Most DME suppliers understand that there are certain fundamental pieces of “supplier documentation” that they are required to maintain as a condition of payment. Medicare guidelines, for example, provide that DME suppliers must have on file a dispensing order, a DWO, a CMN (if applicable), a DIF (if applicable), and a POD for each DME item the supplier distributes. However, fewer DME suppliers are aware of the requirement that they must maintain sufficient ordering provider medical documentation from the patient’s medical record. Medicare guidelines provide that, “The supplier should also obtain as much documentation from the patient’s medical record as they determine they need to assure themselves that coverage criteria for an item have been met.” This language may at first blush seem permissive. However, the Medicare guidelines leave no room for doubt that the supplier is required to maintain this medical documentation, or else risk liability for any overpayment associated with the claim: “If the information in the patient’s medical record does not adequately support the medical necessity for the item, the supplier is liable for the dollar amount involved unless a properly executed ABN of possible denial has been obtained.” (emphasis supplied). Therefore, if you are not doing so already, you need to institute a policy whereby you collect medical records immediately upon receipt of a physician order. It is our strong recommendation that you do not distribute an item unless and until you have received the necessary medical records. The time-consuming nature of this task and the delay in distribution of the DME item is far less painful than the probable extrapolated overpayment demand resulting from a postpayment medical review audit that will likely take years and significant financial resources to defend against.

II. Time is the enemy — If you fail to secure the requisite ordering physician documentation prior to the distribution of the DME item, it will be much more difficult to secure down the line.

The nature of postpayment auditing is that the claims can be quite old, sometimes as old as four years (or even longer if fraud or similar fault is suspected!). If a DME supplier has not been vigilant about collecting medical records, this could pose a real problem. There are two major issues that DME suppliers face in this regard: (1) physicians are unwilling or cannot produce the medical documentation when it is requested after so much time has passed; and (2) physicians do produce the medical documentation requested but the documentation blatantly does not support the medical need for the DME item that was supplied. In regard to the latter, an example of this type of situation is where a patient has been prescribed a back brace for low back pain or lumbago but the medical record associated with the date of the order does not discuss back pain or back-related issues and does not even reference the order for the back brace. Believe it or not, we have seen this type of situation over and over again. In either scenario, there is nothing the DME supplier can really do to rectify the missing or deficient medical records. The DME supplier, and not the physician, is then stuck with the liability if a Medicare contractor audits your DME claims and determines the claims are non-covered.

III. The Office of Inspector General’s Work Plan for Fiscal Year 2016 highlights renewed interest in adequate DME supplier documentation.  DME audits will be a focus in the upcoming year.

The United States Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently released its Fiscal Year 2016 Work Plan. This annual publication identifies new and ongoing investigative, enforcement, and compliance activities HHS-OIG has decided to allocate resources to. For 2016, HHS-OIG has added the review of Medicare Part B payments for orthotic braces to its agenda. Specifically, HHS-OIG intends to determine whether DME suppliers’ claims were medically necessary and were supported in accordance with Medicare requirements because prior OIG work indicated that some suppliers were billing for items that were medically unnecessary “or were not documented in accordance with Medicare requirements.” (emphasis supplied). There are also ongoing agenda items pertaining to power mobility devices and nebulizer machines (and related drugs) to ensure supplier compliance with Medicare requirements. Based on the Work Plan, DME suppliers should expect that postpayment medical review audits will continue, if not increase, this coming fiscal year.

IV. DME audits are here to stay but there are a number of steps a supplier can take to reduce their level of risk.

DME audits in 2016 aren’t mere speculation — they are a certainty. Fortunately, even though this requirement is burdensome, there are steps DME suppliers can take to mitigate their risk. These include,

  • Instituting a policy whereby you collect patient medical records immediately upon receipt of a physician order. As discussed previously, you should not distribute a DME item unless and until you have received the necessary medical records. Again, the time-consuming nature of this task and the delay in distribution of the item will be far less painful than the probable extrapolated overpayment demand based on a contractor’s audit that will likely take years and significant financial resources to defend against.
  • Educating your team, including your local representatives, regarding the documentation that you need on file in order to distribute an item.
  • Educating the provider community about what you need in order to process a DME item for distribution.
  • Hiring a third-party like a health care attorney to audit a sample of your claims on an annual basis (or more frequently, depending on the size of your company and the types of DME items your company distributes).
  • Regularly checking up on and reviewing payor guidance. For example, you should regularly be searching the Medicare Local Coverage Determination database for guidance on all Current Procedural Terminology codes billed by your company.

Implementing these measures will be critical to the ongoing success of your company.

Healthcare LawyerLorraine Ater, JD is a health law attorney with the firm, Liles Parker, Attorneys & Counselors at Law.  She is also a Certified Medical Compliance Officer (CMCO) and a Certified Medical Reimbursement Specialist (CMRS).  Lorraine represents DME suppliers and a wide variety of health providers around the country in connection with Medicare, Medicaid and private payor audits.  Liles Parker is a boutique health law firm with offices in Washington DC, Houston TX, McAllen TX and Baton Rouge LA.  Need assistance?  For a free consultation, please call: 1 (800) 475-1906.