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Patrick Naeger
Executive vice president at Healthcare Equipment & Supply Co.

Editor’s note: This is an email that provider Patrick Naeger sent to the office of Sen. Claire McCaskill, D-Mo, following the congressional hearing to review provider business practices and Medicare audits. McCaskill leads the Subcommittee on Financial & Contracting Oversight, which held the hearing.

After watching the hearing yesterday I am a bit frustrated. Clearly, the one thing missing was the DME provider. While the hearing did not shed a good light on the industry, as a whole, it did bring attention to the bad providers who are illegally soliciting Medicare beneficiaries. In that regard, I can assure you, that the overwhelming majority of providers are on the senator’s side and we want to help fight the fraud and we have solution. All of us want the bad ones gone!

Clearly there was some frustration on the part of the senators. It seemed no one from CMS did a very good job providing quantifiable answers so that any of the senators could wrap their heads around the issues of fraud, improper payments and the alphabet soup of contracted auditors. I know how they feel—this is my world and I understand this frustration because these are the folks we deal with daily! Clearly by their own testimony, they provided profound evidence that the system is broken and I am glad the senators saw this first hand. In fact, after hearing Dr. Peter Budetti's exchange with Sen. Johnson, I expect to see the good doctor on Dancing With The Stars next season. While the answers, or lack thereof, were comical, this was no laughing matter.

Furthermore, the statement Mr. Laurence Wilson made to Sen. Tammy Baldwin's concerns about the effect of competitive bidding on rural providers was blatantly misleading at best. Mr. Wilson stated, "The program doesn’t affect areas other than metropolitan areas and surrounding suburban area at this point, so true rural areas are not affected by competitive bidding" In fact, I have a letter that was sent to Marilyn Tavenner, acting CMS Administrator at the time, from Sen. McCaskill asking that they look at the St. Louis CBA and give consideration to rural counties like Washington and Crawford. Mr. Jonathan Blum, deputy administrator, made a visit to Washington County at the request of Rep. Emerson to see and hear firsthand how rural Washington County really is. Washington County only has one hospital. In fact, this hospital enjoys the designation of a rural hospital because it serves a rural community. Washington County, Mo. has 33 people per square mile. This is not urban or suburban by any definition. In fact nine out of the 15 counties in the St. Louis CBA have less than 100 people per square mile. In St. Louis, there could be more oxygen patients per square mile than people per square mile in Crawford County.

Furthermore to show how bad competitive bidding really is and to Sen. Baldwin's point, the only two locally owned independent full line DME providers in Washington County who have invested in brick-and-mortar operations did not get bids. And one of them is ME! Mr. Wilson may paint this picture that all is OK but he is wrong again. The only thing left after bidding out the 10 most costly product categories are crumbs! While I applaud Sen. McCaskill for going after those who are illegally soliciting seniors, we must be mindful not to throw the baby out with the bath water.

Home care is the cure, in my opinion, for keeping Medicare costs down. Home care is the most affordable, most economically feasible solution. Ten thousand baby boomers are retiring every day and the demand for products and services has never been greater, and will continue that way for the next two decades. Now is not the time to eliminate those who are most capable of providing this affordable care to our seniors. Competitive bidding in its current form will destroy the DME industry. The industry has a plan we just need to be heard.

I think this committee could do great work to ensure seniors have the services they will need available to them. In fact, I would ask this committee to have a hearing on how the competitive bid rates were determined. It seems no one can get an answer from CMS and I believe Sen. McCaskill, through her committee, could get this done. While this should be a very easy endeavor it has become impossible. The bids were made, they were open, they were validated and awarded. All notices are out and the bid amounts were announced, but somehow no one—and I mean not even members of Congress—can see how the bids were determined, yet Mr. Wilson is touting how well this is working and will continue to work. While we are told these numbers come from actual suppliers, CMS will not let the sun shine in, unlike in every other government bid opportunity. The providers who will see their businesses destroyed deserve to see why. Furthermore as I understand it, the competitive bidding law was written to expressly exclude any opportunity for administrative or judicial review—surely that can't settle well with any lawmaker and especially with Sen. McCaskill. Obviously, there is more to come and I plan on bringing it to you next month during my visit to Washington.

In the meantime, my offer is still on the table as it has been for several years now. I would love to show the senator firsthand the day-to-day operations of a three-generation DME company. She or any staff is welcome to come and spend as much time as they like. In addition, for any additional hearings she might have looking into the DME realm, I am more than happy to offer my services and give my perspective based on 25 years of experience. Please share this letter with the senator. I hope to hear from you soon about how the senator feels regarding my point of view. Like the good doctor from Chesterfield, Mo., who inspired this past hearing I hope my concerns and experience shared, here, inspire her, as well.

Patrick Naeger is executive vice president at Healthcare Equipment & Supply Co.

Editor's note: The following is in response to a recent article written by the Associated Press and picked up by news outlets across the country.

We are very disappointed in the AP’s reporting on a recent story about power scooters sales and believe that a correction, or at a minimum, a clarification is warranted. The story, which has appeared in media outlets worldwide, contains incomplete and misleading information in two specific areas. We strongly believe that if left uncorrected the perceptions created could do irreparable harm to the manufacturers and providers of power mobility equipment.
 
In the first instance, the story talks about “a nearly $1 billion U.S. market for power wheelchairs and scooters.” While the need for power mobility devices, which include both power wheelchairs and scooters, has increased, Medicare expenditures have decreased significantly. In 2006—the year of highest spending on power mobility—Medicare spent just over $1.1 billion on these items. In contrast, Medicare spent only $397 million on power mobility in 2011. The story then makes references to Medicare, leaving a strong impression on readers that Medicare is paying for scooters that are unnecessary and that taxpayer dollars are being misused. However, that is far from the truth. In fact, utilization records from the Centers for Medicare & Medicaid Services (CMS) clearly show that scooters account for a mere two percent of all power mobility devices received by Medicare patients.
 
Secondly, the story says, “Government inspectors say up to 80 percent of the scooters and power wheelchairs Medicare buys go to people who don't meet the requirements.” This statement comes from a July 2011 report from the U.S. Department of Health and Human Services Office of Inspector General (OIG). The OIG took the liberty of including “claims that lacked sufficient documentation” in the same category with those that they say didn’t meet medical necessity requirements. Perhaps they were chasing headlines, because combining these two very different conditions badly overstated the facts. A close reading of the OIG report reveals that medical necessity was actually only questioned on nine percent of the claims for power mobility devices that were reviewed in 2007. Of that nine percent, seven percent simply needed a different type of power wheelchair, while only two percent needed a less expensive piece of equipment. The 80 percent figure is clearly tainted.

Furthermore, many claims do not meet requirements because the CMS documentation system is subjective, haphazard, and inconsistent. Through AAHomecare, the industry has been working to address the documentation error rate:
 
·         developed a clinical medical template with the help of providers and physicians that outlines all the mandated requirements established in CMS’ coverage policy;
·         encouraged CMS to provide additional education to physicians and providers on documentation and coverage requirements; and
·         supported and lobbied for an effective and efficient prior authorization program to fix documentation errors prior to CMS paying claims.
 
The recent OIG report on the CMS handling of surety bonds should alert the media and Capitol Hill to the management lapses at CMS that are impacting Medicare beneficiaries and DME providers. The AP story has done a disservice to Medicare beneficiaries, as well as the DME providers who are dedicated to assisting some of the most vulnerable people in our society. We call on the AP to correct the public record, and provide more comprehensive reporting in the future.

Tyler Wilson is the president of AAHomecare.

Discussion leads to change to ‘disruptive’ automated audit in Jurisdiction C

MiraVista, in collaboration with providers of Group 3 products, successfully initiated discussions with the Jurisdiction C RAC, Connolly Healthcare, to secure modifications to a disruptive automated review. The implications of the exercise should bring hope to all suppliers that auditing contractors can be rational and make responsive changes when merited.

Providers of Group 3 air-fluidized beds in Jurisdiction C started getting bombarded with automated recoupments from Connolly Healthcare in December, and they could not figure out why the claims were being recouped without development.

When researching a RAC audit, the first step is to visit the RAC website and locate the CMS-approved audit issues. We discovered that the web sites post a shortened version of the audit issues, and with automated reviews providers do not get development letters that contain the full version of the audit issue direct from the RAC. Therefore, they do not get an opportunity to view the full description of the audit logic. Attempts to figure out the true root of the audit logic were elusive until a dialogue began with senior RAC officials.

Connolly officials directed us to a very helpful, but widely unknown resource. Connolly has a Provider Portal in place that provides access to audit activity for a given provider.  This portal is the only place where providers can find the detailed description of auditing logic on automated reviews.  If you service Jurisdiction C beneficiaries, you can log in yourself and view the provider-specific data the RAC maintains for your company using your PTAN, State, and a CCN that has been pulled for RAC review by visiting the following link: https://cmsprovider.connollyhealthcare.com/.  When you log into the portal, you can see the history of all the claims audited by this contractor, dollar amounts, service dates, status of the review, and a detailed rationale for the edit. This data can also be exported to Excel.  Through the portal, providers can see other detailed elements, such as the maximum number of complex reviews the RAC can pull for your company in a 45-day period (as this is provider-specific; limited to 10% of your annual volume of claims submission in a year).

Upon viewing the detailed rationale, we discovered that the claims were being recouped based on a provision in the LCD that requires the use of a Group 2 support surface 30 days prior to initiation of therapy with a Group 3 bed. We dug in a little bit deeper and researched claims from the audited sample and found that most fell into two categories: 1) either the patient had a Group 2 in their history that had capped out and was no longer actively billing, or 2) the patient obtained a Group 2 from another insurer. In all cases, the patients had used a Group 2 support surface prior to the Group 3, but the problem was that none of the claims had a payment for a Group 2 immediately before the first service date for the Group 3.

Connolly was receptive to meeting with us to discuss our concerns that the logic structure was targeting too broad a sample. There are a number of logical reasons that there will be no payment history immediately preceding the Group 3 delivery. In our dialogue with Connolly, we pointed out that many patients will be on Group 2 therapy for extended periods of time prior to initiation of Group 3 therapy. The Group 2 products are capped rentals and they convert to purchases after 13 months of rental. Connolly officials actively listened to our concerns and agreed the logic should be modified. As a result, the audit was converted from a fully automated review to a semi-automated review.  Connolly additionally modified the logic so that if it finds any history of a Group 2 in the data they have available, the claim will not be targeted for recoupment or further review.  However, when these provisions cannot be established, the claims will be developed for a complex review/response from the provider to prove the patient had used the Group 2 prior to the Group 3. This is a huge win for providers in this product space!

We are very pleased to report that the logic has already been corrected as of our March conversation and will not affect claims going forward. However, any appeals in the works for previously targeted claims will have to be resolved through normal channels. Separate from this audit issue, Connolly has another complex review that is targeting Group 3 claims for development and this audit will require providers to establish documentation that fully complies with all aspects of the LCD to support medical necessity. When claims are developed for complex review, providers are given 45 days to send in a response to the request.

Audits aren’t going anywhere, and in the course of an increasing number of audits, mistakes will be made by contractors and providers alike. The key take-away here is that it is possible to establish a reasonable dialogue with contractors. These dialogues can lead to a meaningful modification of audits with unintended consequences.

Andrea Stark is a reimbursement expert for MiraVista in Columbia, S.C.

Editor's note: This is one of three letters to the editor about competitive bidding that will appear in the April issue.

The overwhelming question that came to everyone's mind after the latest single payment amounts (SPAs) were released for Round 2 of competitive bidding was: "What do we do now?" Pundits and providers alike were shocked that the SPAs came in so low. Most of us across the country believe that these bid amounts simply can't be accurate and are arguably unsustainable. Surely, this isn't real.

Well, guess what? The SPAs are real regardless of whether or not they are accurate. After conferring with industry experts and providers throughout the U.S., the prevailing sentiment is that we have to work harder to convince Congress that this program is fatally flawed and will unceremoniously crash under the weight of suicide bids by desperate providers. But I propose that may not be the case. 

For too long we have prognosticated to members of Congress that, if allowed to continue, the competitive bid program would wreak havoc on the home healthcare system. And what have been the results? A delay that cost the industry a reimbursement cut of 9.5%, a re-bid of Round 1 with worse SPAs than the original Round 1, the creation of the MPP program that nobody really wants, and now a devastating Round 2. Well, perhaps it is time to let Armageddon occur. If we so vehemently believe what we are saying about an impending crash then why don't we stop asking to replace it and start saying to Congress: "We've done all we can to stop this, the blood is now on your hands." 

This approach offers more hope than any other course of action. First, contracted suppliers will get what they ask for:  contracts. Now they can figure out what to do with them. Certainly, the rates aren't sustainable and service and product availability will have to be forsaken. This is bad for Medicare beneficiaries. They won't get their equipment in a timely manner, if at all, and will be forced to pay cash for it from providers who don't have contracts. This is good for all the remaining non-contracted providers, as they will be in high demand. 

And what is bad for Medicare beneficiaries will not be welcomed by members of Congress. As news starts percolating of long delays and beneficiaries paying cash instead of receiving the great savings they were promised, Congress will have to realize it made a tremendous mistake. They will invite us back to the table to discuss a solution that we may not want to listen to. The idea that somehow our industry must "pay for" a solution suggests that we are somehow at fault for the current problem. Well, we are not. You don't see the American Medical Association (AMA) offering up "pay fors" to push off the “doc fix” every year, do you? They simply state the facts and say, “It's on you, Congress.” Congress acknowledges this and every year they push off the “doc fix” until the next year. 

If I were to offer our industry a bold plan of action going forward, it would be this: Stop pushing MPP and start saying, "We can no longer be held responsible. We tried and nobody listened. Now face the music."

Come July 1st, with the help of state associations, I would run full-page ads in every competitive bid area every week asking Medicare beneficiaries to call their congressmen if they are unhappy with the equipment and service Medicare is providing them. List the representatives and senators in the ads and their phone numbers. 

Forget about going forward with MPP and start talking about full repeal of competitive bidding. Offer instead to work with CMS to find new payment allowables and payment modalities that benefit all of us—Medicare, beneficiaries and providers. Many state associations have been very successful in this approach with Medicaid. It can also work for Medicare.

We shouldn't look at Round 2 as the end of the world. Conversely, we should look at it as a new beginning. A beginning that clears us of this train wreck and places us back in control of our collective businesses. We offer a lot more than we take from society and now society will find out how valuable this truly is. 

—Anonymous

A top priority for the complex rehab industry in the new year and new Congress will be the reintroduction of the legislation “Ensuring Access to Quality Complex Rehabilitation Act,” which strives to create a separate benefit category for complex rehab technology. In last year’s Congress, this legislation garnered 38 co-sponsors, which provides a good foundation for the industry to build additional support and, ultimately, to get it passed into law.

The first task early this year will be to get the legislation reintroduced in the new Congress, so the advocacy efforts can begin in earnest. We all know as providers, clinicians, consumers, and manufacturers why a separate benefit is important, but how do we effectively convey that message to our legislators?

As a life-long complex rehab technology user myself, as well as a mobility industry veteran and advocate, I've learned that legislation isn't about papers, but people. It’s not just a bill, sitting on Capitol Hill, as School House Rock coined; rather, it’s a people effort, face-to-face meetings and engaged conversation that help legislators begin to understand why a specific bill isn't just a bill, but is truly a personal responsibility to pass into legislation. It’s really about making the subject personal in a way that legislators can relate with and are compelled to act upon.

Fortunately, when it comes to complex rehab technology, it’s truly among the easiest of legislative subjects to personalize because it’s about just that, people. The message that we need to convey to policymakers is that complex rehab technology isn’t an abstract, disassociated fiscal matter, but one that affects the quality of life of millions with severe disabilities and, ultimately impacts society. It is precisely that conversation, in real terms, face-to-face—of how protecting access to complex rehab technology serves both the individual and society—that must be communicated by each of us with legislators.

The fact is, policymakers of all sorts—from our elected officials, to their staffs, to the government bureaucrats managing daily operations for the Medicare program—are real people, with little to no disability experience. A wheelchair to many is four wheels and a seat, with no understanding of the vast array of technology and individual needs. I’ve been on Capitol Hill with well-intended industry advocates using terms like “foam-in-place seating” and have seen legislators completely baffled by the lingo, eyes glazed over. Therefore, for starters, in our advocacy roles, we need to have patience with policymakers, recognizing that they don’t know complex rehab technology, and we must start with the basic fundamentals.

The fundamentals go back to people. We must educate legislators about precisely who uses complex rehab technology. I know that sounds obvious, but too often in our meetings, we jump right to technology, forgetting that legislators may not be aware of those with disabilities overall. A first-person account is truly priceless, where, for example, policymakers can see my cerebral palsy in-person, and it’s unmistakable where the physicality comes in. However, every industry advocate should have a compelling story to share about one with a disability. It’s so vital to put a real face on the subject.

Next, legislators need to know not just what complex rehab technology is, but what it allows. The medical need may be evident; yet, quality-of-life is compelling. Explaining to legislators how complex rehab technology allows one with a severe disability to pursue education, career, family and community is a powerful tool. “Imagine if you awoke this morning, and you didn’t have the ability to leave your home. Imagine if you didn’t have the mobility needed to get to college, to get to work, to attend your child’s soccer games or school plays—where would your quality of life land?” These are the realities that must be shared. Legislators must feel the effect the legislation at hand has on real people, in a very empathetic context.

Lastly, let us never forget to end by explaining the ultimate result; complex rehab technology takes individuals from being on the system, to saving the government money, to actually increasing tax revenue. Provide those in need with the right seating technologies and it’s estimated to save $11 billion annually in health care. Even more, provide someone with the right mobility technology to achieve a bachelor’s degree, and he or she statistically goes from government beneficiary to mainstream employment—that is, a taxpayer. Yes, these are astounding fiscal outcomes, but they’re also even more meaningful quality-of-life outcomes.

Mark Smith is the consumer research and market outreach manager for Pride Mobility Products Corporation, and founding editor of wheelchairjunkie.com. Mark can be reached at msmith@pridemobility.com.

Our first goal as business owners or managers is to bring clear thinking to our companies. Every day, ideas and decisions come from our desks that result in hundreds of ideas and decisions from the professionals in our organizations. As an owner or manager, how do we know if we are thinking clearly about our day-to-day decisions? 

I am always interested in hearing what other business leaders are thinking and doing. I read books and articles. I engage business mentors and friends who are successful. Day to day, I rely on an honest relationship with my partner and my operations manager. Success for our team is a daily struggle to defeat the demons that pop up from our routines and slowly shifting focus. 

The areas I have been interested in lately break down loosely into 4 areas: people, motivation, skills and technology. All of these ideas may not be practical for your business model, but they can stimulate your thinking, which is always a good thing.

People: work together

How your people work together is critical to the success of your organization. Building processes that encourage communication is the key. The most efficient path is not always the direct path to success. For example, review is a work process not an after-event. Working in teams multiplies brainpower, improves quality and saves time. Staff members are each other’s best teachers. Their work is so inter-related that peer groups or work teams that constructively review each other as a normal part of the process can predict or solve problems effectively.  Encouraging peer groups and mentor relationships strengthens your staff and better processes will result.

Motivation: hire for attributes, then give free reign

People are motivated differently. It is difficult to institutionalize a plan that motivates your professional staff in a manner that promotes sustainable growth. Consider a hard stop for profit in your process as an alternative for profit-based incentive pay. When hard stop for profit within a small team structure is standard procedure, then everyone will get with the program or they will have a great deal of frustration working with their team. Look for ways to promote the factors that ensure long-term sustainability and growth. Timeliness is our focus. We grade on the scale of how quick we can execute a quality plan of care. Reducing the time between intake and billing is how we determine if we are healthy. For me, hiring for these attributes and then giving my best people the reigns created the desired organizational culture.

Skills: dominate as niche experts

Developing and growing your business is tough work. Usually we think of adding more folks or a bigger territory. Consider developing areas of expertise and growing your business to dominate niche areas. Grow sales and define yourself as a professional/medical entity rather than a wheelchair store. For example, develop a pediatric acumen. Pediatric seating has a bad rap. “It is not profitable,” “The follow up and rework is a killer,” etc. If you train and develop the professional staff to support the business profitably and properly, pediatrics can be a steady addition to your company’s bottom line. Children and their families are repeat customers and have great loyalty if you handle them with a medical/professional orientation. Another growth idea is to develop a complex shapes practice. Molded seating can be profitable, when you take the time to develop the correct model, train the right professional staff and use the correct product for this type of practice. 

Technology: go full bore

Technology and administrative control through that technology are now a way of life. This discipline has kept us alive through the dark days. Technology is very helpful to those companies that embrace it and decide to develop a comprehensive plan. That plan can be phased in over a couple of years but it is difficult to be half paper and half electronic, and really reap the benefit of the technology. We went paperless. Going paperless required discipline to really define our process and get everyone on board. Just a warning: Paperless does not mean no more filing. Success and saving time with a paperless process really depends on how you measure it. We found that our computer screens are now our desktops and had to go to dual, high quality monitors so our professional staff could work quickly with the imaged documents. We did not plan for that cost but are happy with the results.

These are all areas that I have been working on in the last year. What are your areas of expertise? Where do you need to strengthen your skills? Iron sharpens Iron and until I am ready to quit the fight I will always be looking out for a better way to do the work we all love.

Jim Noland, SMS/ATP,CRTS, is the founder of Presque Isle Medical Technologies and Conduit Technology, the parent company of the web-based documentation tool LMN Builder and the forth coming cloud-based clinical documentation tool Conduit Office. Reach him at jnoland@conduittechnology.com.

Andrea Stark
reimbursement consultant, Mira Vista

Gaining insight into the procedures that are most commonly denied by payers and evaluating the reason codes that accompany the denials can help suppliers modify their clinical documentation and billing practices to prevent denials, reduce claims rework, and improve their cash flow.

Below are the top five most commonly denied procedures for HME and DME suppliers during the time period between May 28, 2012, and Aug. 27, 2012. The data was compiled from the RemitDATA database that houses 25% of all national outpatient remittances.

•    E0431 — Portable gaseous oxygen system, rental; includes portable container, regulatory, flowmeter, humidifier, cannula or mask, and tubing
•    E1390 — Oxygen concentrator, single delivery port, capable of delivering 85 percent or greater oxygen concentration at the prescribed flow rate
•    A4253 — Blood glucose test or reagent strips for home blood glucose monitor, per 50 strips
•    A4259 — Lancets, per box of 100
•    E0601 — Continuous airway pressure (CPAP) device

Additionally, below are the top five most common denial reason codes, as compiled by RemitDATA during the same time period:

•    CO-50 — These are non-covered services because this is not deemed a "medical necessity" by the payer
•    CO-18 — Duplicate claim/service
•    CO-176 — Prescription is not current
•    CO-109 — Claim not covered by this payer/contractor
•    CO-A1 — Claim/services denied

An obvious trend emerges when evaluating the top five most commonly denied procedures. The procedures fall into three categories:

1.    Oxygen-related equipment
2.    Diabetes-related supplies
3.    CPAP equipment

Oxygen-related equipment

Both Recovery Audit Contractors (RACs) and Medicare Administrative Contractors (MACs) are taking a more critical look at oxygen-related procedure claims for various reasons. Topping the list of denial reason codes is failing to meet medical necessity criteria (reason code CO-50), which is often cited as the reason for E0431 or E1390 code denials. Organizations that do not have properly completed certificates of medical necessity for these codes will fail medical necessity claim edits.

Other common issues that cause denials for E0431 and E1390 codes include:

•    Being unresponsive to an audit request from a contractor, or not responding by the deadline
•    Face-to-face notes between providers and patients may not be detailed enough
•    Recertification of patient oxygen use is required each year, and failing to recertify will result in a claim denial (reason code CO-176)

Diabetes-related supplies

Perhaps the biggest issue causing claim denials for diabetes-related supplies is duplicate claims and overutilization. Diabetes patients who change suppliers, or reorder supplies, before they are eligible for more supplies, may result in a claim denial with a reason code of “CO-18 — Duplicate claim/service.” Fortunately, the DME MAC in Jurisdiction C has implemented an interactive voice response (IVR) system that allows providers to call and receive information about when patients are eligible for more supplies. Other MACs are considering the addition of this capability within their jurisdictions.

Another issue causing claim denials for diabetes-related supplies is failing to meet medical necessity criteria. In many situations, a modifier indicating whether the patient is or is not using insulin was excluded from the claim, which causes the denial.

CPAP equipment

With CPAP products, there are several situations that may cause denials, including:

•    A duplicate claim/service code (CO-18) can result when patients receive new CPAP equipment before they are eligible, or when there are payment backlogs where prior payments are not posted, or prior medical necessity denials are not appealed timely.
•    Medical necessity denials (CO-50) often occur when providers do not verify that the patient has an ongoing need for the CPAP equipment. Additionally, missing modifiers may cause medical necessity denials.

Other denial reason codes

Reason code “CO-109 — Claim not covered by this payer/contractor” can occur for many reasons, which providers must determine by evaluating the accompanying remark codes. In many situations, the denial is the result of missing supplemental patient information, such as the patient's permanent address, or when a patient’s coverage has changed and they are in a skilled nursing facility or have opted out of Medicare fee for service.

Like reason code CO-109, reason code “CO-A1 — Claim/service denied” must be investigated by evaluating accompanying remark codes to resolve the issue.

Evaluating denials and reason codes

HME companies that take the time to evaluate their denials and reason codes have an opportunity to prevent future situations that may result in denials. Avoiding these situations helps organizations improve their efficiency and cash flow, making the effort a worthwhile investment.

Mike Mallaro
CFO and chief information officer of The VGM Group

Blockbuster Video got outflanked by competitors who found a way to give customers cheaper, more convenient movie rentals. Reading is thriving, yet bookseller Borders died after narrowly defining its business as physical books sold from stores. Kodak forgot it was selling the preservation of memories, not film. Technology made booking travel easy, squeezing out travel agents who didn’t provide value-added insight and trust. 

These are just a few of the many cases of recent business failures driven by inability or unwillingness to change. Change is messy, chaotic and uncomfortable. But it marches on, unstoppable and inevitable. Are you a dealer of oxygen concentrators and bent metal? Or are you a healthcare professional offering people effective solutions to their healthcare needs outside of institutions?

Healthcare needs of the frail elderly and people with chronic health conditions are growing exponentially. The aging of America, an obesity epidemic, broader insurance coverage, new technology and excessive spending on the institutionalization of the aged are all driving huge increases for solutions that you are, or could be, providing. There are 2 million people on oxygen today, double the number from 1998, and that number will double again over the next 10 years. There has been a staggering growth in power mobility users during the past decade, driven by greater consumer awareness. Smart money expects that growth to continue.  One in three people over 55 suffers from chronic pain. More than 30 million Americans suffer from sleep apnea, but have never been tested or treated. One-third of seniors live in their homes, alone. Most of those homes desperately need modifications to be safe and comfortable, given the limitations of the aging resident. Hospitals face daunting new mandates to keep people at home and avoid re-admission. Advancing technology is exploding onto the scene with breakthroughs ranging from nutraceuticals to pain relief to remote monitoring. Organizations providing quality healthcare solutions that improve quality of life and can be executed at a cost less than the value provided will win.

We must also deal with other, perhaps stark, realities. Traditional payers are going to pay less for each unit of health care. With or without competitive bidding, reimbursement rates are going down significantly. Insurers are concentrating their power at a frightening pace, which is bad for all of us. Inadequate business fundamentals are plaguing many healthcare operations, including HME providers. We must get better at standardizing processes, learning and building on best practices, investing in important technology and professionalizing. Government regulation will continue to stifle our work. None of these obstacles are easy, but neither are they insurmountable.  Looking backward is hazardous. A changing world and a changing healthcare marketplace require us to look forward. The pace of change requires us to do it sooner rather than later.

Some companies recognize change, and figure out how they can use it to their advantage. Others see the coming trends, and fight to keep things the same. They see change as a threat to their business. Still others sit back and wait until they’re absolutely sure the trend will stick around before jumping on board. As a result, they’re constantly playing catch-up. Are you reimagining your products, services, and business model to gain your share of the future? Are you building a growth plan for emerging opportunities? Are you networking to find best practices and better ideas? Are you making the changes required of a serious business in changing times? This relevant quote by futurist Alvin Toffler is applicable: “Illiteracy will not be defined by those who cannot read and write, but by those who cannot learn and relearn.” Standing still is deadly.

Starbucks prices its coffee, arguably a commodity product, for twice what competitors do, and wins anyway. Apple solves problems, ones people didn’t even know they had until Apple showed them the better way. Kohl’s is a retail star; it wins in a trendy business using un-trendy, superior execution of business fundamentals. You see it’s not just failures around us. Successes are everywhere. 

The future is bright for many of us in this business. But make no mistake; it is a future that is different from the past. Change happens. Winners adapt, adjust business plans, seize on opportunities that emerge. We are part of a segment that is growing and will be much bigger in 10 years than it is today. Do you want to join Starbucks, Apple and Kohl’s, or would you prefer to go the way of Borders, Kodak and Blockbuster?

Rob Brandt
AMEPA

Medicare has finally released utilization records for Round 1 of its bidding program in home medical equipment and it did not take a Freedom of Information Act request or act of Congress to attain the records. Ironically, Medicare has included the 2011 allowable units, with a corresponding list of HCPCS codes, as part of the Round 1 recompete worksheets.

AMEPA has compared some of the most common codes to the 2008 utilization records published in the Round 1 rebid worksheets and it is easy to understand why Medicare ignored requests from bid design experts, congressmen and senators.

As a contracted supplier in oxygen I was forced to close my business because I could not afford to supply as many oxygen tanks that a beneficiary needed for less than $22 per month. The utilization records verifies this, because in 2008, 112,795 portable oxygen units and post-36-month refills were allowed in Miami and under the bidding program in 2011 that number was reduced to only 56,057. That is a reduction of more than 50%.

Unfortunately, this is not the only item or area where the bidding program has reduced patient utilization. In Miami, the only area to have support surfaces as a bid category, alternating pressure mattresses dropped from 932 allowed units in 2008 to only 248 units under the bidding program in 2011. That is a reduction of more than 73%. The other main HCPCS code in the support surface category is E0372, powered air overlay for a mattress. That item had 42 allowed units in 2008 reduced to 22 in 2011. The two items make up more than 96% of the support surface category.

It certainly did not help that Miami was part of a Region C prepayment review on alternating pressure mattresses that was initiated after the bidding program began. But how could the CBIC believe that a supplier could cut their reimbursement in half and still provide monthly ongoing documentation proving that a bed bound patient still has multiple decubitis ulcers on their backside. That is an operating cost that an inexperienced company would not have known or probably cared about before bidding—not to mention the sunk cost of discarding an alternating pressure mattress after only a month's use by a bed-bound patient.

Other standout utilization drops in Miami were from commonly used items where "bona fid" bid rules were clearly ignored. These include B4154 enteral formulas, which dropped more than 40% from 3.5 million 100-calorie units allowed in 2008 to less than 2.1 million 100-calorie units in 2011.

E0470 respiratory assist devices dropped 38.8% from 469 allowed units to 287. CPAP chin straps also saw a major decline from 2,676 allowed units in 2008 to 1,426 allowed units in 2011. These are relatively inexpensive items but who can purchase a chin strap, package it, ship it, collect documentation and bill it for the Miami reimbursement of $9.85. It should be no surprise the utilization dropped over 46%, but ask any board certified sleep or critical care doctor if a chin strap is an important accessory in respiratory therapy.

Walkers had the highest drops in utilization. The failure of the "bona fid bid" rule, requiring suppliers to not have rates below cost of goods and operating expenses, is apparent in many HCPCS item codes in all Round 1 areas. However, the most obvious are in the highly demanded walkers and power wheelchair batteries.

Folding and rigid walkers without wheels are among two of the top three walkers in the 17-item walker category. Nationally, compared to 2008, the utilization for the E0135 folding walker dropped an average of 56.7%. The worst cases were in Cincinnati where there were 822 walkers allowed in 2008 compared to 260 allowed under the bidding program in 2011.

In Miami the utilization dropped more than 54% and it was easy for me to understand. My office was located about a mile from the most prominent hospitals in north Miami-Dade County. Before the bid program stared we delivered at least three walkers a day to patients being discharged from Aventura Hospital. After the program began the hospital discharge planners could not find any contracted suppliers willing to deliver walkers so patients could be discharged.

As the general manager, I had to repeatedly tell case managers and families to purchase a walker at Walgreens a few blocks from the hospital for $79.95, because no "bid winner" would go through the process of providing it for $49.50 ($39.60 if they did not have secondary insurance). The beneficiaries and families understood that contracted walker providers could not collect the documentation, deliver the walker, set the walker height to the patient, train the patient how to use it, bill Medicare, wait a month to be paid, and pray that the patient actually leaves the hospital that day and not the next so the supplier would not refund the possible reimbursement back to Medicare because of a potential RAC audit sometime in the next three years for only $49.50.

They easily understood that if the nation's largest pharmacy chain was selling it for $79.99, then how could a supplier do the aforementioned for 40% less? Perhaps this is where those 54,000 "inquires" came from that Medicare received the first three months of the program.

The other code for E0141 rigid walker was even worse, as the utilization dropped nationally 65.1%. The highest drop was in Dallas, 110 allowed units in 2008 compared to only 2 (yes two) in 2011. Cincinnati had 76 allowed units reduced to only one, and that beneficiary probably does not know how lucky they are.

Rob Brandt works with the Accredited Medical Equipment Providers of America (AMEPA). Reach him at rob@amepa.us.

Jeffrey Baird
chairman, Health Care Group, Brown & Fortunato

Editor’s note: This is the last (Part V ) in a series of commentaries on audits. Also read Part I, Part II, Part III and Part IV.

No matter how you look at it, the contractors are out of control. Examples include: instructions by a ZPIC to the four DME MACs to suspend payments to a supplier because the ZPIC is dissatisfied with the supplier’s documentation and because the ZPIC asserts (without substantiated evidence) that the supplier is violating the telephone solicitation statute; placement of a supplier on a 100% prepayment review because the contractor does not feel that the medical necessity documentation is sufficient; and a supplier having to respond to the same audit request for the same patient on multiple occasions.

Specific contractor abuses

•    There is a glaring failure of CMS oversight of the ZPICs. CMS does not have the staff (with sufficient experience) to know if the ZPICs “are doing things right.” This is compounded by the fact that, too often, a ZPIC contractor has no experience in the areas of fraud and abuse that it is investigating. This lack of knowledge results in incorrect policy applications, errors in data analysis, and unnecessary audits, reviews and investigations.

•    A contractor will disregard medical necessity documentation that is contemporaneous with the physician’s order. There have been a number of incidents in which a CERT contractor has disregarded medical documentation created contemporaneously with the initial order and, instead, requires suppliers to submit patient records that document medical necessity on the date of service that the CERT contractor is auditing.

•    Contractors interpret CMS instructions (pertaining to LCDs and NCDs) to mean that suppliers must document, in unrealistic detail, every element of the coverage criteria in the LCD. The result is that supplier must document ancillary LCD provisions that, in and of themselves, do not affect coverage for the DMEPOS item. In short, contractors are looking for documentation that reflects, word-for-word, the language of the LCD. It is impossible for physician records to recite words and phrases from an LCD with the cookie-cutter precision that the contractors demand.

•    Contractor staff is prohibited from using “clinical judgment” (or “clinical inference”) in reviewing documentation. DME MACs and ZPICs employ clinical staff; unfortunately, the staff has no ability to exercise their clinical expertise. This lack of clinical inference can lead to ridiculous results.

•    There is a lack of consensus among contractors, and even among auditors working for the same contractor, regarding what documents establish medical necessity. Some, but not all, contractors interpret CMS’s audit strategy as a mandate to audit every statement in an LCD no matter how remotely the statement affects coverage of the item. This interpretation results in requests for information that are not relevant to the determination of medical necessity. The same phenomenon occurs within a single contractor: One auditor will adopt a hyper-strict interpretation of what the LCD requires, while another auditor will not take such a strict view.

•    Too often, ZPICs request hundreds of medical records on short deadlines without any explanation about why the documents are being reviewed. ZPICs are not receiving appropriate oversight and monitoring from CMS to ensure that they are complying with CMS guidelines for medical review. Further, the ZPICs are not affording suppliers even the most basic procedural protections set out it in the Program Integrity Manual. This creates hardships for suppliers that remain indefinitely on prepayment reviews.

Responsive steps by the industry

AAHomecare has taken the leadership role in confronting contractor abuses. It has gathered evidence of contractor abuse from multiple HME providers. Through its various committees and councils, AAHomecare has met with CMS on multiple occasions. At these meetings, AAHomecare has presented examples of contractor abuse. AAHomecare has also submitted a detailed white paper to CMS that outlines the problems discussed above and suggests solutions.

State DME associations have been aggressive in presenting the problems to their elected U.S. representatives and senators. VGM and The MED Group have encouraged their members to lobby their elected representatives. Stakeholders have submitted white papers to the Senate Finance Committee that detail contractor abuses.

At the end of the day, it is important for HME providers to educate their customers and physicians regarding the problems that the suppliers are encountering with audits. History has shown that CMS often turns a deaf ear to complaints by providers. To a lesser extent, Capitol Hill does the same. However, when a Medicare beneficiary and/or a physician complains, CMS and Capitol Hill listen.

Jeffrey Baird, Esq., is chairman of the Health Care Group at Brown & Fortunato, P.C., a law firm based in Amarillo, Texas. Reach him at 806-345-6320 or jbaird@bf-law.com.

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