Respiratory Audits: Under the Microscope
As the new RAC comes online, and as the 2017 HHS OIG Workplan is in effect, what can respiratory providers expect?
- By David Kopf
- Apr 01, 2017
Audits are a constant frustration to providers across the spectrum of
home medical equipment, but some feel the pinch more than others.
Case in point: respiratory providers.
Respiratory providers, in specific, often find themselves being
subjected to detailed inspection by audit contractors because their claims
represent sizable reimbursement and because they serve a high volume of
patients. If anything, audits simply come with the territory for these providers.
That said, respiratory providers’ audit game plan needs to shift with the audit
contractors’ priorities, methodologies and agendas, so that they can ensure clean
claims, have the right documentation, respond quickly to auditor requests, and
minimize the impact audits have on their bottom lines.
Bearing that in mind, HME Business sat down with two industry audit experts,
Wayne van Halem, CFE, AHFI, president of audit consulting firm The van Halem
Group, a Division of VGM Group Inc., and Andrea Stark, one of the managing
partners of HME consulting firm MiraVista LLC, to understand what changes are
afoot for respiratory providers, and determine how best to respond.
HME BUSINESS: WHAT ARE THE AUDIT PROGRAMS THAT ARE FOCUSING
ON RESPIRATORY PROVIDERS RIGHT NOW?
Van Halem: Right now, there are numerous contractors who have identified
a focus on respiratory providers. The DME MACs continue to audit oxygen,
CPAP, and BiPAPs claims as part of their widespread prepayment review
efforts. The Supplemental Medical Review Contractor, or SMRC, is just finalizing
a project that included an audit of 106,000 respiratory claims including
oxygen, PAP, nebulizers and inhalation medications. The new national
Recovery Audit Contractor also identified an automated review related to
nebulizers billed without an appropriate diagnosis code as well as complex
reviews of High Frequency Chest Wall Oscillation devices.
Some of these contractors focused efforts could be related to issues
identified in the 2017 Office of Inspector General (OIG) Workplan.
Specifically, the OIG noted a focus on nebulizer machines and the related
drugs indicating that for calendar year 2014, Medicare paid approximately
$632.8 million for inhalation drugs. With an improper payment rate of 42
percent, inhalation drugs were sixth on a list of the top 20 DMEPOS services
with the highest improper payments in the 2014 CERT report. They also
identified PAP supplies as well based on volume, indicating that Medicare
payments for CPAP and BiPAP supplies in 2014 and 2015 was approximately
$953 million and prior OIG work found that suppliers auto-shipped supplies
when refills were not requested by the beneficiary and also that the physician
orders were incomplete in regards to the types of supplies needed and
frequency of use.
Stark: Well certainly the DME MACs are the preponderance of the audit
volume that we see right now in the respiratory market. Virtually all of the
DME MACs are auditing oxygen and CPAP equipment. And, that extends
beyond just the DME MACs that are auditing those major product categories.
You also have the RACs that just came online, and, they have seven new
audits, and two are semi-respiratory related.
One is an automated review of the nebulizers. Automated reviews mean
they have “if, then” logic. They are not going to ask you to refute it. They’re
just going to go ahead and recoup if you don’t meet the criteria. And,
that’s really based on the diagnosis code: Did you file with the covered
diagnosis code? If you didn’t, then you can certainly appeal it and get
medical records that prove that the code is there, but it doesn’t meet the
criteria for your claim.
The other one is more broad and it’s a complex audit, where they’re
asking for medical records, proof of delivery, and all the supporting
elements that go with that on tracheostomy supply, suction catheter,
suction pumps, and those types of products. That hasn’t been as big of a
focus area for the DME MACs, but again the RACs believe that there’s a
vulnerability there, so they’re digging in.
Van Halem: The new RACs will likely be adding more respiratory products
to their list of approved issues, which could be as often as monthly. Another
development is the decrease in audits of ventilators, which was definitely
a significant focus in 2016. The previous RAC has ventilators listed as an
approved issue already, so the new RAC could potentially also request
approval for that, but that remains to be seen.
Stark: Suppliers are periodically inundated with SMRC audits. Pretty much
all of the DME-related audits on that contractor’s side have been respiratory
related. Focusing again, it’s nothing really new, but back in the Fall of 2015
they ran a couple of series of these audits where they develop 40 records at
a time for CPAC, others on oxygen. And, the third audit is nebulizers.
So the SMRC is exclusively focused on respiratory products right now.
They don’t have any other DME that they’re really looking at, at this time.
And, they’ve kind of gone quiet. The last new audits that they posted were
back in August 2016. They’re probably overdue for starting a new audit, but
they really just ratcheted up some of the CPAP audits recently, and issued
results on that.
In jurisdiction C, the ZPIC recently deployed an automated edit in
December that was placed on jurisdiction C suppliers. It had a fatal flaw in it
— a calculation error — that caused a lot of claims to partially pay. But, that
erroneous edit has been fixed and all of the claims have been reprocessed
that have been denied for that. But, we do know that the ZPIC hunts and
pecks for vulnerable areas.
We saw the OIG issuing reports just last year on ventilators, and the
vulnerabilities and spike in utilization. So, we know that’s on their radar; and
the DME MACs actually backed off on some of the audits that they were
doing, because the guidance on ventilators is very minimal. The technology
has advanced so much that we’re really overdue for an expansion and
direction and clinical guidance. Because there are a lot of inconsistencies
even with the clinical community. Also, there is confusing terminology with
equipment since he clinical terminology is often different from Medicare
terminology. There’s mixing and matching that goes on there that contributes
to this gray area.
I think that the MACs have at least acknowledged that there is some
additional guidance that they need and support to be able to take a more
aggressive stand on ventilators. But, I think that the CMS actually received a
reconsideration request to revisit ventilators and draft a local coverage determination
policy with new guidelines with input from the clinical community.
That’s really riding in the background. I know that it has CMS’s attention,
but there are no deliverables there. But, respiratory is just going to account
for a fair amount of the volume of claims that are submitted to Medicare,
simply because the nature of the population.
HMEB: WHAT ABOUT THE UPICS? THOSE ARE SUPPOSED TO COME
ONLINE LATER THIS YEAR TO REPLACE THE ZPICS. WHAT ARE THEY
GOING TO BE LOOKING AT? WHEN IS ALL THAT HAPPENING?
Stark: It’s starting to happen. One of the first UPICs was just announced
not too long ago. Safeguard Services was just awarded the UPIC for
the Northeastern part of the United States. It has been a contractor in
the benefit integrity realm, so they are certainly not strangers. But, the
UPICs actually just changed their focus in that they are looking at not
only Medicare claims. Most of these contractors are focused on Medicare
activity, but UPICs actually have dual focus on Medicare and Medicaid.
So they’re simultaneously auditing both of those programs for their jurisdiction.
So the Northeastern jurisdiction actually consists of Connecticut,
Delaware, Maine, Massachusetts, Maryland, New Hampshire, New Jersey,
New York, Pennsylvania, Rhode Island, Vermont, and Washington D.C. So
that’s a pretty big territory, and they are tasked with both lines of business.
HMEB: SO, THE UPICS COVER MEDICAID, AS WELL. IS THERE A LOT OF
RESPIRATORY FOR MEDICAID?
Stark: Generally, Medicaid is when it’s primary. Certainly there’s a lot of
secondary coverage because Medicaid is secondary to Medicare in a lot
of the cases. So, the patients who are on Medicare, and also are qualified
Medicare or Medicaid beneficiaries, QMB customers. They will have
Medicaid benefits. Generally, straight Medicaid is going to be for your
disabled or for children, and for low-income beneficiaries. So, there are
still needs for respiratory intervention. Medicaid and nebulizers are huge
because there are a lot of children who have asthmatic or reactive airway
disease conditions. So, there’s a lot of nebulizers sold to Medicaid recipients.
HMEB: TO REVIEW, WE HAVE SEVERAL CONTRACTORS HERE, AND
WE’RE GOING TO SEE A CONTINUED FOCUS ON RESPIRATORY. WHAT
DO RESPIRATORY PROVIDERS NEED TO BE DOING? AND, WHAT ARE
SOME COMMON PITFALLS THEY NEED TO SIDESTEP?
Stark: Well, ultimately, they need to be very familiar with vetting coverage
criteria from making a sale or reimbursement; and who’s paying for the
product. Because, a lot of times we have a tendency to blur those lines,
and we think, “Well I’ve got to do everything I can to make the patient fit
this cookie cutter coverage criteria.” When, in fact, the coverage criteria
is designed so that not every patient is going to qualify for reimbursement.
That doesn’t necessarily mean that the patient shouldn’t have those
products, or that the sale should not take place. But suppliers definitely
need to be more adept at vetting the medical records before delivery, and
that’s just really where we’re at right now. There’s no other way to protect
your investment, to protect your revenue stream, without having those
records in your possession.
We need to leverage our position and the fact that the patient wants
something from us, the physician wants something from us, and we do have
an obligation to turn that equipment around quickly; but with more doctors
charting electronically we can get access to these medical records much
more quickly than we were able to before. But, not every supplier has jumped
on board to say, “I’ve got to have it before I will move forward. I’m going to
put that line in the sand, and I’m going to make it everybody else’s inconvenience
before I subsidize this delivery” — which is what they’re doing.
Providers must be comfortable looking at those medical records and
being comfortable with the policies, and knowing when the patient has
a clear cut case that, “Yes, you qualify so we’re going to bill your insurance,”
or “No, you don’t qualify and I am still happy to sell this. I think
you should have it. Your doctor wants you to have it, and we just need to
file this on a non-assigned basis as long as you’re non-participating with
So, doing more cash sales and holding the patients accountable. That
requires advanced beneficiary notice, so being adept with those forms
and really being transparent with your customers. But, the bottom line
is the suppliers have to be the experts. They have to own that, and, have
that confidence to be able to pass those audits. Ultimately all you’re trying
to do is make a decision of who should you be pursuing your reimbursement
from. And, it’s going to one of two sources. Either the patient is
going to responsible or the insurance company, and the guidelines for the
insurance are pretty prescriptive; and when a patient doesn’t meet those
criteria, then you disclose that, leverage that expertise, and share that
with the customer so they are informed. And, they can decide, do I want
to move forward?
HMEB: WHAT STEPS SHOULD RESPIRATORY PROVIDERS BE TAKING TO
ENSURE THEIR CLAIMS DOCUMENTATION IS SOLID?
Van Halem: It all comes down to communication and education with the
referral sources. Unfortunately, CMS puts that burden onto the supplier
and most physicians don’t know the documentation requirements. There
should be some sort of internal QA or prior approval process. These days,
it is not enough to just request documentation — you should also review it
and determine whether the patient qualifies. Many suppliers are now being
forced to turn away patients and transfer liability to them because they can’t
get the documentation that they need to substantiate reimbursement.
Thinking Like an Auditor
When trying to isolate the key types of claims or specific aspects of
claims that auditors are really focusing on, a good way to approach
the problem is to think like an auditor. To that end, Wayne van Halem,
CFE, AHFI, president of audit consulting firm The van Halem Group, a
Division of VGM Group Inc. highlights the recent results of prepayment
reviews being conducted by Noridian in Jurisdiction D. Those reviews
included oxygen, nebulizers and PAP devices.
The results can be found online at: http://med.noridianmedicare.com.
“You can click on results and see the specific issue,” van Halem explains.
“There are still a number of technical issues identified because
of the complex requirements and physician documentation remains a
significant challenge for suppliers.
“Good or bad, Noridian does a good job of summarizing the common
issues,” he adds. “The error rates are still pretty significant.”
This article originally appeared in the April 2017 issue of HME Business.