CMS Owns Up in CPAP Flap

Incorrect application of policy in Jurisdiction D RAC audits led to improper recoupments.

After considerable industry alarm that began last week, CMS has acknowledged that a misinterpretation of Medicare CPAP policy had led Recovery Audit Contractors (RACs) in DME Medicare Administrative Contractor Jurisdiction D to recoup of money for CPAP and supplies if the provider did not have a sleep test paid for by Medicare. Because of this CMS said it will not be continuing with automated audit reviews in this area.  

CMS said that if it does suspect problems, it will use discretion to conduct complex reviews.  Staff also indicated that they would be refunding money that had been collected due to the misapplication of the policy.

CMS was first alerted to the problem when providers notified the American Assocaition for Homecare that RAC audits in Jurisdiction D had been (and still are) targeting CPAP equipment and supplies claims for audits, and had been improperly tagging claims for audits when the sleep test had not been paid for by Medicare.

The issue came down to incorrect interpretation of wording. Auditors read that the sleep test had to be “approved by Medicare” as being paid for by Medicare. So the RAC marked claims for recoupment when the sleep test was not paid for by the Medicare program.  

AAHomecare brought issue to the attention of staff at the DMEMAC carrier level as well as with CMS staff who oversee RAC activities in an effort to correct the interpretation now being applied by the RAC contractor.

Based on advice from the Association’s CPAP workgroup, which is part of the AAHomecare HME/RT Council, the Association recommended several reminders and steps for providers that have been targeted for one of these types of RAC audits:  

  • Make sure it is a RAC audit.
  • Remittance advice remark code N432 is used to identify RAC adjustments.  This code appears on the claim level header detail line of your Medicare remittance advice.
  • Offset of the overpayment will occur on day 41 from the date of the demand letter if payment has not been made or there a request for an appeal.
  • File a Medicare DME redetermination request form.

About the Author

David Kopf is the Publisher and Executive Editor of HME Business and DME Pharmacy magazines. Follow him on Twitter at @postacutenews.

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