Funding Fundamentals

Avoiding the KX Modifier Trap

CMS will make the KX modifier a prominent tool in its anti-fraud arsenal.

I am going to use a metaphor to try and get my point across: The DME supplier is a harmless, little mouse simply trying to get a piece of cheese. That cheese is a reimbursed claim. Now, CMS is a homeowner trying to rid her house of these mice. So, she sets a trap for the mice with a piece of cheese; just want the mouse wants. The most important part of this metaphor is what that trap represents — the KX modifier.

The KX modifier is going to become a prominent tool in CMS’ arsenal to combat fraud, waste, and abuse. It’s an attestation you put on a claim for payment to the federal government. It is very serious. In most cases where the modifier applies, the policy states that, “Suppliers must add a KX modifier to [Procedure Code] only if all of the criteria in the ‘Indications and Limitations of Coverage and/or Medical Necessity’ section of this policy have been met.” In some cases, it also adds that evidence of such is kept in the supplier’s files.

The reality of the situation is that physicians do not know what those indications and limitations of coverage are unless we have educated them. Even if they do, that certainly doesn’t mean they have documented that clearly. Therefore, in a majority of cases, the documentation is not there to specifically address that the patient qualifies. One might be able to infer this information but that’s not what the attestation above states.

Understanding the Trap

Why is this a trap? Well, because the claim will not get paid unless a supplier uses this modifier. You will not receive reimbursement without it. Right now, in an audit situation, if you do not have the documentation to support the KX modifier, it will result in a claim denial or overpayment that you can fight through the administrative appeals process. I am of the opinion that CMS is leading us down a path that no one wants to go down. If a federal auditor requests documentation from you on a claim with a KX modifier and you either do not have it or it doesn’t show the indications and limitation of coverage from the Local Coverage Determination have been met, they can reasonable accuse you of violating the Federal False Claims Act.

The False Claims Act makes it a federal crime for anyone knowingly presenting, or causing to be presented a false claim for payment or approval. The penalties for violating this Act can be severe. In these instances, they could easily result in Civil Monetary Penalties. The penalty for violating the False Claims Act is $11,000 per violation and/or three times the amount of the falsely claimed charges. Now, each line item on a submitted claim can be considered a violation. So, what if federal claims auditors requested a sample of 100 claims with KX modifiers? The penalties could quickly and easily exceed $1 million.

I think you see where I am going with this. I think our industry is very vulnerable. As a supportive outsider looking in, who also happens to be a Certified Fraud Examiner and Accredited Healthcare Fraud Examiner, I do not want to see this happen. I believe we must take some necessary steps to assure that we are using the modifier correctly, that our staff knows the importance of it, and that we are not putting ourselves and our business at risk for further scrutiny or penalties.

Some Homework for You

Everyone reading this article should go and audit at least 10 charts with KX modifiers. Pull up the LCD and go to the “Indications and/or Limitations of Coverage and/or Medical Necessity” section of that policy and review the criteria. Then, look at the clinical records. Hopefully you have them already in your files since that KX modifier was added, so someone must have checked that before appending the modifier.

Now, wee if your clinical notes support that the criteria have been met. Do not make inferences in your review. Look through the documentation and see if you can determine with certainty that the documentation supports that this patient qualifies for the particular piece of equipment. Do not assume they do because you know the patient or their background.

Look at it from an auditor’s perspective: If you can’t definitively say you can prove that the criteria have been met, then you might have a difficult time defending a false claim violation in the future if they go down that path. Don’t get caught in this trap. Often times, the way CMS tried to deal with perceived fraud in a particular area is to implement more complex payment policies.

A great example here is with power mobility devices. There was a significant amount of fraud and abuse with these particular products. So, over the years, CMS implemented a much more comprehensive and complex policy that makes it difficult for anyone to qualify for reimbursement of these products. Then, they add a KX modifier requirement on these claims. You can see this pattern developing across many healthcare segments that CMS also sees as vulnerable to fraud and abuse, such as physical therapy and home health.

We must be diligent, proactive, and selective in submitting claims with a KX modifier. We should be requesting the documentation up front, reviewing it, and making sure that the documentation supports the criteria before making a decision to append that modifier to that claim. If the government moves forward with false claim violations, it could have devastating impact on our industry, so let’s work together to avoid that from happening.

We must be diligent, proactive, and selective in submitting claims with a KX modifier. We should be requesting the documentation up front, reviewing it, and making sure that the documentation supports the criteria before making a decision to append that modifier to that claim. If the government moves forward with false claim violations, it could have devastating impact on our industry, so let’s work together to avoid that from happening.

This article originally appeared in the August 2014 issue of HME Business.

About the Author

Wayne H. van Halem, CFE, AHFI is President of The van Halem Group LLC (Atlanta, Ga.), a business unit of VGM Group that helps providers navigate complex issues related to Medicare and Medicaid audits, appeals and compliance.

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