A look ahead at 2010: Prepare for a new compliance environment

YARMOUTH, Maine - This year-end, HME providers find themselves in a familiar place—preparing for a new year in which so many policies that can change their business plans remain unresolved. They also have a greater sense of urgency than in the past. Providers are struggling to meet the needs of patients whose oxygen equipment “capped” in 2009, and they are concerned about the future of their businesses under national competitive bidding. Congress, meanwhile, continues to debate health reform legislation that may change payment for HME and create new regulations. In fact, so much is unsettled, that it is hard to anticipate much of what 2010 will bring. Even so, you should be prepared for more emphasis on HME provider compliance and documentation, if not from Congress, then certainly from CMS and its contractors.

At press time in December, it was not clear whether Congress could agree on what health reform should be, but bills in both the House of Representatives and the Senate contained provisions that would affect your reimbursement and business operations. The Senate bill, for example, would expand and accelerate the competitive bidding program, revise payment for power wheelchairs, adjust fee schedule updates and impose a new tax on medical device manufacturers. All of these provisions raise the specter of lower reimbursement in 2010.

There has been less interest in other provisions that, if enacted, would also influence how you do business by imposing new compliance and documentation standards. It is not immediately obvious, but these compliance standards have the potential to change your business plans as much, or even more, than cuts to reimbursement. For example, the Senate bill would require practitioners who order HME to be enrolled in Medicare. The recent PECOS initiative showed everyone how quickly this requirement can affect the bottom line.

Other provisions in the bill would require beneficiaries to have a face-to-face encounter with a physician as a condition of payment for HME. Not only would it be impractical to condition payment for every type of HME on an in-person physician visit, but documenting that the visit occurred and that the medical record contains the information that the local coverage determination (LCD) dictates will pose operational challenges for providers. The pending bills also would require HME providers to have compliance plans that include the elements identified by the Office of Inspector General (OIG) and extend the recovery audit contractor (RAC) program to state Medicaid programs. This emphasis on compliance and documentation will force providers to revise their business processes and perhaps even rethink the value of doing business with some referral sources.

Although these provisions must be passed by Congress and signed by the president, CMS often moves ahead in anticipation of Congress' actions. The postponed PECOS initiative is a fresh example. In fact, CMS has already begun initiatives that emphasize provider compliance and documentation, or the lack thereof. Among these, contractors are now auditing orders based on whether a physician's signature is legible. They are also requiring medical necessity documentation for a specific date of service, even though that date may be years after the initial date of service. These new requirements surreptitiously change the documentation requirements in many LCDs, and because contractors lack direction on what documentation to request, very often the records they seek have no bearing on whether the HME item is medically necessary. High payment error rates that include results from audits with these arbitrary documentation requirements will be misleading.

These misleading statistics will be important for your business notwithstanding the outcome of health reform. Last year, the president issued Executive Order 13520, directing the Office of Management and Budget (OMB) to identify federal programs with the highest dollar value or majority of government-wide improper payments. Once identified as such, the agencies that oversee these “high risk,” “priority” programs must publish their strategy and methodology for assessing improper payments. The agency's inspector general will assess its risk level and propose changes to its payment error reduction plans.

Executive Order 13520 is short on details; the president is delegating the OMB to fill those in. It is likely, however, that the Medicare program will top the list of high-risk programs, and CMS and its contractors will be under pressure to reduce the high payment error rate. This means that in 2010 providers will see more audits and they will see them more frequently than at anytime in the past.

At year end, we do not know what will happen to health reform, but there is not much speculation in saying that providers must be prepared for a new compliance environment in 2010 and factor that into their business plans.

Healthcare attorney Asela Cuervo is based in Washington, D.C.