LEEDer Group Inc.
8508 North West 66th St.
Miami, Florida 33166 USA

Phone Toll-free: 866.814.0192 or 305.436.5030
Fax Toll-free: 866.818.0373 or 305.436.0086
E-mail Address: orders {at] LEEDerGroup [dot] com

2012-03 MLN Matters SE1213 Questionable Billing of Lower Limb Prostheses

MLN Matters® Number: SE1213 Related Change Request (CR) #: N/A Related CR Release Date: N/A Effective Date: N/A Related CR Transmittal #: N/A Implementation Date: N/A
Questionable Billing By Suppliers of Lower Limb Prostheses
  • Provider Types Affected
    This MLN Matters® Special Edition Article is intended for providers who bill Medicare for lower limb prostheses. No new policies are contained in this article.
  • What You Need to Know
    This article highlights the August 2011 report from the Department of Health and Human Services (DHHS), Office of Inspector General (OIG) study titled “Questionable Billing By Suppliers of Lower Limb Prostheses.” It also discusses Medicare policy regarding the coverage of lower limb prostheses under its Part B Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) benefit.
  • The study was designed to meet the following objectives:
    1. Identify payments for lower limb prostheses in 2009 that did not meet certain Medicare requirements;
    2. Identify Medicare payments for lower limb prostheses in 2009 for beneficiaries with no claims from their referring physicians;
    3. Identify suppliers of lower limb prostheses that had questionable billing in 2009; and
    4. Describe the program safeguards in place in 2009 and the first half of 2010 to prevent inappropriate payments for lower limb prostheses.
Background

Between 2005 and 2009, Medicare spending for lower prostheses increased 27 percent, from $517 million to $655 million. The number of Medicare beneficiaries receiving lower limb prostheses decreased by 2.5 percent, from almost 76,000 to about 74,000.
Medicare policy requires that a supplier have an order from the referring physician before providing prostheses to the beneficiary. Upon receipt of the referring physician’s order, the supplier can move forward with the prostheses fitting for the beneficiary with the applicable prostheses. Medicare policy also requires that suppliers follow local coverage determination policies. These policies provide guidelines for determining the beneficiary’s potential functional level and specify how suppliers must submit claims for certain types and combinations of prostheses.
The study completed by the OIG was based on an analysis of Medicare Part B claims for lower limb prostheses from 2009 and Part A and Part B claims from 2004 to 2009 for beneficiaries who received lower limb prostheses in 2009. OIG staff also completed interviews with the four DME Medicare Administrative Contractors (MACs), three Zone Program Integrity Contractors (ZPICs), and two DME Program Safeguard Contractors (PSCs). The OIG considered a paid claim did not meet the requirements if the supplier:
• Billed for a prosthesis for both limbs on the same date using two claims;
• Did not meet potential functional level requirements;
• Billed for a higher number of units of a prosthesis than allowed on a claim;
• Billed for combinations of prostheses that were not allowed; or
• Billed for prostheses that were not covered.
Claims data was an additional component of the OIG’s analysis to determine the number of claims for beneficiaries with no claims from their referring physicians during the last 5 years and the Medicare payments for these claims. The following elements were analyzed to identify suppliers that had questionable billing:
• Suppliers that had at least 10 beneficiaries, and
• Suppliers that were paid at least $100,000 for lower limb prostheses in 2009.
This sample included 1,632 of the 4,575 Medicare suppliers who had a paid claim for lower limb prostheses in 2009, which accounted for 92 percent of the $655 million who billed for lower limb prostheses.

Findings

In 2009, the study found that:
1. In 2009, Medicare inappropriately paid $43 million for lower limb prostheses that did not meet certain requirements. These payments could have been prevented by using claims processing edits.
2. Medicare paid an additional $61 million for beneficiaries with no claims from their referring physicians.
3. In 2009, 267 suppliers of lower limb prostheses had questionable billing. Approximately 136 suppliers frequently submitted claims that did not meet certain Medicare requirements or were for beneficiaries with no claims from their referring physicians. An additional 131 suppliers had other questionable billing. This included billing for a high percentage of beneficiaries with no history of an amputation or missing limb or a high percentage of beneficiaries with unusual combinations of
prostheses.
4. Medicare contractors conducted varying degrees of program safeguard activities related to lower limb prostheses.
• The four DME MACs had varying claims processing edits in place, but none had edits for all requirements.
• None of the DME MACs conducted medical reviews, and not all had conducted data analyses or provided education related to lower limb prostheses.
• All ZPICs and DME PSCs conducted data analyses and opened investigations related to lower limb prostheses.

Recommendations

The Centers for Medicare & Medicaid Services (CMS) concurred with five of the six recommendations made by the OIG. In response to the first recommendation, to implement additional claims processing edits, CMS concurred and stated it would instruct the DME MACs to implement consistent claims processing edits based on local coverage determination requirements.
In response to the second recommendation, to strengthen monitoring of billing for lower limb prostheses, CMS concurred and stated it would issue guidance to the DME MACs and instruct them to consider the measures used in the OIG report as supplemental criteria for detecting high-risk suppliers.
In response to the third recommendation, to implement requirements for a face-to-face encounter to establish a beneficiary’s need for prostheses, CMS concurred and stated it is exploring its current authorities to implement such requirements. CMS also stated that it would issue an educational article to further explain policy requirements for lower limb prostheses and to providers and suppliers.
In response to the fourth recommendation, to revise the local coverage determination, CMS concurred and stated it would review the definitions for the functional levels and develop refinements as appropriate. CMS also stated it would consider adapting an algorithm to guide determination of the
functional status of the beneficiary.
In response to the fifth recommendation, to enhance screening for currently enrolled suppliers of lower limb prostheses, CMS did not concur and stated that it has in place sufficient tools that allow for increased scrutiny of existing DMEPOS suppliers. CMS noted that if an existing supplier meets one of several triggering events, that supplier automatically is elevated to the high-risk level.
In response to the sixth recommendation, to take appropriate action on the suppliers with questionable billing, CMS concurred and stated it would share the information with the DME MACs and the Recovery Audit Contractors. Recovery Audit Contractors review Medicare claims on a post payment basis to identify inappropriate payments.
The following section reviews Medicare policy for coverage of lower limb prostheses.

Key Points
  • Medicare Requirements for Lower Limb Prostheses
    Provisions of the Social Security Act (the Act) govern Medicare payment for all items or services, including lower limb prostheses. The Act states that Medicare will cover only services and items considered reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body part. In addition, Medicare requires that a supplier have an order from a physician before providing prostheses to the beneficiary. This physician is known as the referring physician. Upon receiving the order, the supplier consults with the referring physician, as needed, to confirm the order and recommend any necessary changes and evaluates the beneficiary. The supplier fits the beneficiary with the most appropriate prostheses. The supplier then determines the group of codes that best describes the prostheses provided, choosing from 178 Healthcare Common Procedure Coding System (HCPCS) codes that are specific to lower limb prostheses.
    Further, local coverage determination policies provide additional Medicare requirements for lower limb prostheses. These policies, consistent with policies for other DMEPOS, are identical across the country. The local coverage determination specifies how suppliers must submit claims for certain types and combinations of prostheses. In particular, it states that each claim must include a modifier to indicate whether the prosthesis is for the right or left limb. When a supplier provides prosthesis for each limb on the same date, the supplier must submit only one claim and include both the right and left modifiers on the claim. The local coverage determination also has guidelines for determining the beneficiary’s potential functional level. Specifically, it states that a beneficiary is placed at one of five potential functional levels based on the reasonable expectations of the supplier and the referring physician. When determining the potential functional level, suppliers must take into account the beneficiary’s history, current condition, and desire to walk. The supplier then uses a modifier on the claim to indicate the beneficiary’s potential functional level (K0 to K4). Prostheses are not considered medically necessary if the beneficiary has the lowest potential functional level (K0), which indicates that he or she does not have the ability or the potential to walk. In addition, for some prostheses, the local coverage determination specifies the minimum potential functional level that the beneficiary must have for the prosthesis to be considered medically necessary.
    Further, the local coverage determination limits the number of certain prostheses that can be billed on a claim. If the number of units of these prostheses exceeds the limit, the additional items will be denied as not medically necessary. The local coverage determination also considers certain combinations of prostheses to be medically unnecessary. For example, certain sockets are not allowed for use with temporary base prostheses. Finally, the local coverage determination states that
    HCPCS L5990, a specific type of foot addition, will be denied as not medically necessary.
    In addition, CMS recently established new screening procedures for provider enrollment. For example, screening may include licensure and criminal background checks. CMS created three levels of screening – limited, moderate, and high – based on the risk of fraud, waste, and abuse. New DMEPOS suppliers were placed at the high risk level, while currently-enrolled DMEPOS suppliers were placed at the moderate risk level.
    Lastly, recent legislation established a face-to-face encounter requirement for certain DMEPOS. For specified DMEPOS that require a written order prior to delivery, the referring physician must document that a physician, physician assistant, nurse practitioner, or clinical nurse specialist has had a face-to-
    face encounter with the beneficiary before writing the order for the item.
    Note: You should ensure that any items or services submitted on Medicare claims are referred or ordered by Medicare-enrolled providers of a specialty type authorized to order or refer the same. You must also place the ordering or referring provider or supplier’s NPI on the claim you submit to Medicare
    for the service or item you provide. You may want to review MLN Matters® Article SE1201 at-CLICK-HERE for important reminders on the requirements for Ordering and Referring Physicians.
Additional Information

If you are unsure of, or have questions about, documentation requirements, contact your Medicare contractor at their toll-free number which may be found at-CLICK-HERE on the CMS website.

The entire OIG report titled “Questionable Billing By Suppliers of Lower Limb Prostheses” is available at-CLICK-HERE on the OIG website.