Oxygen Audits: Under Medicare's Microscope

An examination of how Medicare audits are affecting the oxygen industry and how respiratory providers are responding.

Oxygen AuditsLike most HME businesses, oxygen providers are concerned about the frequency of audits hitting their sector of the industry and the high error rates involved. Oxygen providers have some unique concerns, as recent CMS actions, such as the delay in assigning ALJs to audit appeals by two years, could hit oxygen providers particularly hard.

Kim Brummett, vice president of Regulatory Affairs, American Association for Homecare, runs an audit task force made up of providers, manufacturers and industry consultants who meet every other month.

“We have been working closely with Congresswoman Rene Ellmers on legislative language that will address audit reform,” Brummett says. “The industry is concerned with the repetitive nature of the audits and when looking at patient new starts on respiratory therapy, the percent audited can be overwhelming. In addition, due to the repetitive nature of our patient claims, the volume of claims that we submit and then that hit the appeals process is overwhelming.”

But before Congress and industry crusaders such as AAHomecare can bring relief to businesses under fire, HME oxygen providers need to understand how audits affect their particular sector of the industry and what they need to do to prepare and survive audits.

Kelly Riley, CRT, RCP, Director, Clinical Networks, The MED Group, feels the biggest concern of the HME industry has been consistent for several months: the large number of audits, also known as additional documentation requests (ADRs), that the HMEs are receiving.

“While the payment for rental products has been drastically reduced, due in many cases to competitive bidding, the cost to respond to these audits is growing,” she says. “Many HMEs have replaced employees that previously held clinical care positions with employees who are more clerical and who are completing administrative tasks (i.e. retrieving paper records, answering questions of patients and healthcare professionals, validating existing data, etc.) to secure the needed information to comply with requirements.

“The removal of clinical inference has also had a negative impact,” she continues. “Previously, a nurse manager with the DME/MAC could review the medical record and clearly see a medical need existed. Today, claims are denied often due to technical errors.”

When it comes to audits and how they affect oxygen providers, Riley said that long-term oxygen therapy (LTOT), along with increasing ambulation and activity, to date, are the only two known interventions that are proven to have a positive impact on the effects of patients diagnosed with COPD.

According to the Medicare LCD for oxygen, the patient record must indicate that the COPD has progressed to a severe state in order for LTOT to be a covered service. Patients who are ordered supplemental oxygen are often some of the sickest patients the HME will provide services for, Brummett explains. When claims are denied and monies recouped, the HME is often forced into a challenging situation of deciding how long they can continue to provide the service to a Medicare beneficiary for free when they have ongoing costs that have to be covered.

What concerns Jeff Mastej, director of Compliance, Audit and Reimbursement for Detroit respiratory provider Wright & Filippis, the most about audits specific to oxygen is the urgency required for discharge purposes in concert with the detailed medical record documentation requirements to satisfy the Oxygen LCD prior to delivery.

“We have care, treatment and service standards which we have to maintain as an oxygen provider,” he says. “Our referrals have the expectation of immediacy. It’s a difficult balance to meet patient and referral source needs and all of the qualification information necessary to satisfy medical policy.”

Mastej said his company sometimes has to delay its service window (which is for all intent and purposes immediate) for hospital discharges.

“When you have to obtain dispensing prescriptions, oxygen testing results within specific parameters, physician notes which support the testing and the specific parameters and Certificates of Medical Necessity, the only success agent is communication and education,” he says. “You have to quickly identify who your partners in care are. You have to continually education referrals where you have difficulty securing the important qualification information. Service decisions may arise with specific referral sources where you have difficulty obtaining all qualifying information.”

Nitpicking or Medical Necessity?

According to Ronda Buhrmester, Reimbursement Specialist for VGM Group Inc., today’s audits seem to be based more on technical denials rather than medical necessity.

“Suppliers are starting to really doubt themselves when receiving a referral for an oxygen patient,” she says. “All suppliers want to do is take care of that patient and meet their medical needs so the quality of life can continue in the home setting. When oxygen suppliers know they have the medical necessity met for the oxygen referral, they now need to make sure all the i’s are dotted and t’s are crossed, documents are legible, etc., to supply home oxygen to a patient.”

For the oxygen industry, Buhrmester says the most recent concern is the face-to-face ruling under the ACA 6407, which was implemented July 1, 2013. While the stationary unit E1390, portable concentrator E1392, and home-filling unit K0738 are not part of the face-to-face ruling, other oxygen equipment is included, such as the portable system, E0431, oxygen content, E0443, liquid oxygen, and some other oxygen HCPCS codes. She notes that with the face-to-face ruling, both the detailed written order and face-to-face evaluation have to be in the suppliers’ hands prior to delivery of the equipment. The detailed order must have been written within six months of the face-to-face evaluation.

“Where this is a problem for oxygen suppliers and hospitals is upon discharge from a hospital setting,” Buhrmester explains. “If a patient needs a stationary concentrator and portable gaseous system to be discharged home, the portable gaseous system requires a written order prior to delivery, which means the supplier cannot deliver the portable system for the patient to be discharged to their home until the written order is received prior to delivery.

“We all know how busy life is in a hospital setting when they’re trying to get patients discharged home,” she continues. “Normally oxygen suppliers receive a prescription that states ‘2lpm home oxygen and portable with supplies.’ This type of order isn’t considered a written order prior to delivery because it’s not detailed enough.”

Buhrmester said that while the supplier can deliver the stationary unit based on that type of referral, the portable cannot be delivered until there is a written order prior to delivery in the DME suppliers’ possession.

“The patient needs the portable to get home because without the oxygen, their oxygen saturations will drop,” she said. “The supplier, then, has to get the written order completed by the practitioner prior to delivery.”

On May 29, CMS issued a release stating the treating practitioner does not need to be the prescriber of the order for the DME item. However, the prescriber must have knowledge and documentation of the face-to-face exam that was conducted. This clarification, Buhrmester explains, should help with the hospital discharges. Suppliers need to makes sure there is communication between the treating practitioner, the prescriber, patient, and themselves.

In the same release, it states that RAC, ZPIC, DME MACs, and other program safeguard contractors cannot actively audit on the face-to-face evaluation requirement until “a date” in 2014. The WOPD started to be actively audited on Jan. 1, by the DME MACs. This delay in enforcement does not apply to the CERT auditors.

According to Buhrmester, with oxygen equipment, they are mostly seeing audits on the stationary concentrator, E1390, and the portable system, E0431, as well as the liquid oxygen equipment. These are prepayment results and are mix of oxygen equipment.

  • Jurisdiction A: 44 percent (E1390, E0431, E0439)
  • Jurisdiction B: 52 percent (E0431)
  • Jurisdiction C: 61 percent (E1390)
  • Jurisdiction D: 67 percent (E0439, E0434)

Brummett says that the repetitive nature of rental claims makes it very challenging in the audit process. Due to timely filing limitations, suppliers continue to submit claims that they know will be denied and need to be appealed.

“This is really a very big issue,” she says. “In addition, the volumes of ‘clarifications’ to the oxygen LCD have been onerous to say the least. It seems to be the most analyzed LCD. I do believe the days of incredible scrutiny on oxygen are beginning to back off. The MAC prepay audit quarterly denial rates indicate that oxygen denials are actually significantly lower than other product categories being audited.”

ALJs Audit Appeal Delays

A recent letter from Nancy Griswold, the chief judge of CMS’ Office of Medicare Hearings and Appeals (OMHA), said there was going to be a delay assigning an Administrative Law Judge (ALJ) to any new audit appeals for two years. The reason cited was a backlog of 357,000 claim appeals stacked up in the system that were pushing the current turnaround time for an appeal to 16 months.

“The delay is significant,” said Wayne H. van Halem, President, The van Halem Group. “Once it gets assigned, it could be another year or two before a hearing is scheduled. If a supplier undergoes a large audit and has a high volume of denied claims or a significant overpayment identified, then it could cause cash flow issues for suppliers who will have to wait to get paid or have to refund the money while waiting for a hearing. Recently, we’ve heard of an increase in ALJ cases getting dismissed for reasons we’ve never seen before. I’m afraid they are going to start dismissing cases citing Code of Federal Regulations (CFR) citations that have never been referenced or enforced before in an effort to reduce the workload. The ironic thing is that when they do this, it’s usually well after the 90-day deadline specified in the CFR, so they hold you accountable to one section of the CFR while blatantly violating another.”

As a result of the delay, Riley said HMEs need to protect their financial stability by not dispensing product until all the documentation is in hand.

“Gone are the days when the intake process consisted of patient name, liter flow, duration of use, and SpO2 or PaO2 level,” she said. “Now the HME must ensure the patient evaluation (face to face) speaks succinctly to the reason for oxygen, as well as what other therapies have already been employed. They must also ensure that the patient is not being concurrently treated with positive airway pressure (CPAP/Bi-level) for OSA and that qualifying testing was done within the guidelines.”

Brummett called the ALJ delay “a very big deal for oxygen providers.” Since the services provided are reoccurring, suppliers have to submit claims every month, even if they know they will be denied because the first month was pulled in a pre-pay audit, she said.

“The issue is the limitation on timely filing for claims,” Brummett said. “Since suppliers never know when the first claim will be overturned, they can’t risk not submitting subsequent claims. The ALJ delay simply compounds the problem for suppliers. AAH has been working with CMS to implement an exception for this situation that not only would be good for suppliers and contractors, but it would also prevent DME claims from accumulating at the ALJ level. Currently we have been advised that there are over 600,000 appeals at the ALJ level with DME accounting for 25 percent of them. Interesting when you think that DME is 4 percent of Medicare spend and 25 percent of appeals.”

For suppliers, Brummett said there are only three options to prepare for the delays:

  • Continue to provide oxygen and wait out the system
  • Have patients sign ABN and pay privately
  • Start the patient over with a new clinical visit and retest

“As the backlog continues,” she said, “I am hearing of more providers electing option two or three, as they can no longer wait for years to be paid.”

Buhrmester said that DME suppliers need to make sure that the medical coverage criteria is met before submitting the claim. Before hitting that submit button, review the information again, making sure the coverage criteria is met, ultimately submitting a clean claim the first time. Be proactive rather than reactive; implementing processes, not making projects. Following the medical policies, knowing the types of denials being reviewed, education of staff AND referral sources as well as understanding the processes are what will enable suppliers to remain in business.

van Halem said that without a doubt, providers must implement some proactive internal controls to assure claims get paid up front. A frustrating statistic from the results of the most recent widespread review was that 57 percent of the denials were for missing documents, such as the initial evaluation, the test results, or the delivery ticket or due to an incomplete or missing Certificate of Medical Necessity.

How to survive audits

Our article experts give their best tips to oxygen providers on surviving audits.

Jeff Mastej, director of Compliance, Audit and Reimbursement, Wright & Filippis:

  • Ensure all staff (intake, clinical and delivery) are well versed in all LCD requirements.
  • Revise (or establish) policy and procedure for oxygen services provided to Medicare beneficiaries.
  • Share Dr./physician letters with your physicians and referral sources.
  • Assure all qualification documents align: valid testing, physician chart notes and values populated on to your CMN and Detailed Written Orders.
  • Internal audit (what gets measured is a key component of what gets managed in your facilities).
  • Establish audit staff by job description; have staff members in place to immediately respond to audits.

Kelly Riley, CRT, RCP, director of Clinical Networks for The MED Group:

  • Know which referral sources are going to work with you, to ensure you will be paid so that the HME can continue to provide products and services.
  • Get all medical necessity documents prior to delivery of product.
  • Obtain or create easy to understand tools to assist in education of referral sources.
  • Perform “mock audits” at your company. Know what to look for in the medical record. Just because the patient saw the doctor within the designated time frame does not prove that the need for the oxygen was even discussed or entered into the patient’s medical record.
  • Being willing to say “no.” A referral who will not provide the documentation to prove medical necessity for oxygen is a referral you can do without.

Ronda Buhrmester, Reimbursement Specialist for the VGM Group Inc.:

  • Educate and have communication among staff and referral sources, and even the patients. Use the documentation checklists that are available and use the quarterly results that each Jurisdiction releases on the listservs as educational tools.
  • Have a strong intake or customer service staff that understands the medical policies and is not afraid to ask questions. When the medical records are received, make sure to read the information to ensure that coverage has been met.
  • Make sure to perform internal audits on a regular basis to make sure you are compliant with the medical policy and its requirements. It’s also a good idea to have external audits performed. This means to bring in an outside source/consultant to perform the audit to ensure compliance.
  • Have desk procedures and make sure they are followed; compliance plans are important.
  • Keep files in order with correct paperwork, legible signatures or use signature log; watch the dates.

Wayne H. van Halem, president of The van Halem Group:

  • Implement a compliance program.
  • Conduct internal audits.
  • Request and review documentation for all equipment.
  • Track and record all audits and outcomes to identify weaknesses.
  • Educate and regularly train employees and referral sources on coverage policies.
  • Sign up for all contractor listservs to stay on top of widespread issues and problems.

Kim Brummett, vice president Regulatory Aff airs, American Association for Homecare:

  • Know all of clarified regulations and requirements.
  • Teach all operational and sales staff the details of the requirements.
  • Evaluate each patient with a critical eye.
  • Set patients up correctly; either they meet criteria or they don’t.
  • Get ABNs when appropriate and hold patients accountable financially.

This article originally appeared in the August 2014 Respiratory & Sleep Management issue of HME Business.

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