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

Phone: 305.436.5030
Fax: 305.436.0086
E-mail Address: info {at] LEEDerGroup [dot] com

2012-10 DMEPOS Activities Revealed in OIG’s 2013 Work Plan

October 10, 2012

DMEPOS Activities Revealed in OIG’s 2013 Work Plan – Excerpts

[For the full PDF download-CLICK-HERE ]

  • The Department of Health & Human Services (HHS), Office of the Inspector General (OIG), has issued its 2013 Work Plan, which includes OIG’s forthcoming activities related to suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). This annual publication is released in advance of the coming year. It provides healthcare industry stakeholders with a broad overview of the OIG’s activities in the coming year as they relate to its enforcement priorities and issues it will review and evaluate during that fiscal year. The OIG Work Plan priorities often result in additional enforcement action, significant change in Centers for Medicare & Medicaid Services (CMS) policy, or both.

The following is a summary of issues that will directly impact O&P.
  • Quality Standards—Accreditation of Medical Equipment Suppliers (New)
    This review will examine accreditation organizations’ (AO) requirements and processes for granting accreditation to ensure that medical equipment suppliers meet each of Medicare’s quality standards.Failure to meet quality standards could pose a threat to beneficiary safety and quality of care as well as place Medicare resources at risk. Medical equipment suppliers must become accredited by a
    CMS-approved AO and must comply with quality standards to maintain their billing privileges. CMS oversees AOs through validation surveys. This review will also evaluate CMS’s procedures for conducting validation surveys. Such surveys help CMS determine whether an AO’s accreditation procedures are adequately ensuring that suppliers are complying with Medicare’s quality standards. (OEI; 00-00-00000; expected issue date: FY 2014; new start) Internet retail prices for back orthoses are also significantly less than what Medicare pays. (Work in progress.)
  • Program Integrity—Reliability of Service Code Modifiers on Medical Equipment Claims
    We will determine the appropriateness of Part B payments that Medicare made on the basis of specific service code modifiers that suppliers entered on the claims. Such modifiers indicate that suppliers have required supporting documentation on file. Suppliers must provide, upon request, the documentation to support the claims for payment. Payments to service providers are precluded unless the provider maintains and furnishes upon request the information necessary to determine the amounts due.(Social Security Act, § 1833(e).) Reviews of suppliers conducted by Medicare claims processing contractors found that suppliers had little or no documentation to support their claims, suggesting that
    many of the claims submitted may have been improper and should not have been paid by Medicare.(OAS;W-00-11-35305; W-00-12-35305; various reviews; expected issue date: FY 2013; work in progress)
  • Program Integrity—Use of Surety Bonds To Recover Medical EquipmentSupplier
    Overpayments
    We will review CMS’s use of surety bonds to recover overpayments made to medical equipment suppliers. We will determine the extent to which CMS maintains complete and accurate surety bond information for medical equipment suppliers. We will also determine the number of medical equipment suppliers with overpayment debt, the extent to which these suppliers had surety bond coverage, and the amount of overpayment debt that could have been recovered through surety bonds since October 2009. Certain medical equipment suppliers must provide and maintain a surety bond of no less than $50,000.(Balanced Budget Act of 1997 (BBA), § 4312(a)(16).) By requiring medical equipment surety bonds, CMS
    aims to limit fraud risk to Medicare by ensuring only legitimate suppliers are enrolled and to recoup overpayments resulting from fraudulent or abusive billing practices. (OEI; 03-11-00350; expected issue date: FY 2013; work in progress)
  • Lower Limb Prostheses—Supplier Compliance With Payment Requirements(New)
    We will review Medicare Part B payments for claims submitted by medical equipment suppliers for lower limb prosthetics to determine whether the requirements of CMS’s Benefits Policy Manual, Pub. 100-02, ch. 15, § 120, were met. Payments to service providers are precluded unless the provider has and furnishes upon request the information necessary to determine the amounts due. (Social Security Act, §1833(e).) Medicare does not pay for items or services that are “not reasonable and necessary.? (Social Security Act, § 1862(a)(1)(A).) OIG conducted a national review of suppliers of lower limb prosthetics and identified 267 suppliers that had questionable billings. Prior OIG work found that suppliers frequently submitted claims that did not meet certain Medicare requirements; were for beneficiaries with no claims from their referring physicians; and had other questionable billing characteristics (e.g., billing lower limb prostheses for a high percentage of beneficiaries with no history of an amputation or missing limb). Such claims are improper and should not be paid by Medicare.(OAS;W-00-13-35702; various reviews; expected issue date: FY 2013; new start)
  • Power Mobility Devices—Supplier Compliance With Payment Requirements(New)
    We will conduct a series of reviews related to power mobility devices (PMD). The reviews will focus on whether Medicare payments for PMD claims submitted by medical equipment suppliers were made in accordance with requirements at 42 CFR § 410.38©(2). Medicare does not pay for items or services that are “not reasonable and necessary.” We will also determine whether savings can be achieved by Medicare for PMDs that are not affected by the Affordable Care Act, § 3136, which eliminated the option of a lump-sum purchase for certain PMDs. Prior to the enactment of the Affordable Care Act, a beneficiary was given the option to make a “lump sum? purchase of a power-driven wheelchair at the time it was furnished instead of renting it. (OAS; W-00-13-35703; various reviews; expected issue date: FY 2013; new start. Affordable Care Act.)
  • Vacuum Erection Systems—Reasonableness of Medicare’s Fee Schedule Amounts
    Compared to Amounts Paid by Other Payers(New)
    Our review will determine the reasonableness of the Medicare fee schedule amount for Vacuum Erection Systems (VES). We will compare Medicare payments made for VES to the amounts paid by non-Medicare payers, such as private insurance companies and the Department of Veterans Affairs (VA), to identify potentially wasteful spending. We will estimate the financial impact on the Medicare program and on beneficiaries of aligning the fee schedule payments for VESs with those of non-Medicare payers. (OAS; W-00-13-35705; various reviews; expected issue date: FY 2013; new start)
  • Back Orthoses—Reasonableness of Medicare Payments Compared to Supplier Acquisition Costs
    We will compare Medicare reimbursement amounts for the back orthosis procedure code L0631 to supplier acquisition costs to evaluate the reasonableness of Medicare’s spending. Back orthoses, which are covered by Social Security Act, § 1832(a)(2), are supplied by Medicare medical equipment suppliers who purchase them from wholesalers or directly from orthotics manufacturers. For 2011, the median Medicare reimbursement amount for an L0631 back brace was $929. OIG has encountered suppliers who can purchase these back orthoses for prices significantly lower than Medicare reimbursement rates. Internet retail prices for back orthoses are also significantly lower than Medicare pays. (OEI; 03-11-00600; expected issue date: FY 2013; work in progress)
  • Parenteral Nutrition—Reasonableness of Medicare Payments Compared to Payments by Other Payers
    We will compare Medicare’s fee schedule for parenteral nutrition with fees paid by other sources of reimbursement to evaluate the reasonableness of Medicare’s spending. We will identify reimbursement amounts paid by public and private payers for parenteral nutrition services. Parenteral nutrition is the practice of feeding a person intravenously to replace the function of a permanently
    inoperative or malfunctioning internal organ and is covered under the prosthetic device benefit of the Social Security Act, § 1861(s)(8). In 2009, Medicare paid more than $137 million for parenteral nutrition supplies. Previous OIG work found that Medicare allowances for major parenteral nutrition codes averaged 45 percent higher than Medicaid prices, 78 percent higher than prices available to Medicare
    risk-contract health maintenance organizations (HMO), and 11 times higher than some manufacturers’ contract prices. (OEI; 04-12-00640; expected issue date: FY 2014; work in progress)
  • Frequently Replaced Supplies—Supplier Compliance With Medical Necessity, Frequency, and Other Requirements
    We will review claims for frequently replaced medical equipment supplies to determine whether medical necessity, frequency, and other Medicare requirements are met. For supplies and accessories used periodically, orders or certificates of medical necessity must specify the type of supplies needed and the frequency with which they must be replaced, used, or consumed. (CMS’s Medicare Program Integrity Manual, Pub. 100-08, ch. 5, §§ 2.3 and 5.9.) Beneficiaries or their caregivers must specifically request refills of repetitive services and/or supplies before suppliers dispense them. (CMS’s Medicare
    Claims Processing Manual, Pub. 100-04, ch. 20, § 200.) Suppliers may not initiate refills of orders, and suppliers must not automatically dispense a quantity of supplies on a predetermined regular basis. Medicare does not pay for items or services that are “not reasonable and necessary.? (Social Security Act, § 1862(a)(1)(A).) Prior OIG work found that suppliers automatically shipped continuous positive airway pressure system and respiratory-assist device supplies when no physician orders for refills were in effect. Such claims are improper and should not be submitted to Medicare for payment. (OAS;W-00-13-35240; various reviews; expected issue date: FY 2013; new start)
  • Continuous Positive Airway Pressure Supplies—Reasonableness of Medicare’s
    Replacement of Supplies Compared to That of Other Federal Programs (New)
    We will determine the extent to which Medicare’s supply replacement schedules for supplies related to continuous positive airway pressure (CPAP) machines (equipment used to treat obstructive sleep apnea) vary from those of Medicaid, VA, and Federal Employees Health Benefits programs. We will also identify savings that might be achieved by adopting alternative schedules to avoid wasteful spending. Medicare Part B covers medical equipment and the services and supplies that are essential to its effective use . Separate charges for replacement supplies, such as masks, tubing, and filters, are covered if a beneficiary either rents or owns a CPAP machine. There are no national coverage determinations for the frequency of replacement of CPAP supplies; rather, this is at the discretion of designated Medicare payment contractors. The contractors have established identical CPAP supply replacement schedules. (OEI; 07-12-00250; expected issue date: FY 2013; work in progress)
  • Diabetes Testing Supplies—Supplier Compliance With Payment Requirements for Blood Glucose Test Strips and Lancets
    We will review Medicare Part B payments for home blood glucose test strips and lancet supplies to determine their appropriateness. The local coverage determinations (LCD) issued by the four Medicare contactors that process medical equipment and supply claims require that the physician’s order for each item billed to Medicare include certain elements and be retained by the supplier to support billing for those services. Further, the LCDs require that the supplier add a modifier code to identify when a patient is treated with insulin or not treated with insulin. The amount of supplies allowable for Medicare reimbursement differs depending on the applicable service code modifier. Medicare does not pay for items or services that are not “reasonable and necessary.? (Social Security Act, § 1862(a)(1)(A).) (OAS;W-00-11-35407; W-00-12-35407; various reviews; expected issue date: FY 2013; work in progress)
  • Diabetes Testing Supplies—Potential Questionable Billing for Test Strips in 2011
    We will review Medicare claims data from 2011 to identify suppliers with inappropriate payments and/or questionable billing for diabetes test strips. We will also analyze the geographic location of suppliers that had questionable billing and the extent to which the suppliers were associated with claims for beneficiaries residing in competitive bidding areas in 2011. Recent investigations and prior Office of Inspector General studies have found that diabetes test strips are vulnerable to improper claims, fraud, waste, and abuse. (OEI; 04-11-00330; expected issue date: FY 2013; work in progress)
  • Diabetes Testing Supplies—Improper Supplier Billing for Test Strips in Competitive Bidding Areas (New)
    We will determine the extent to which suppliers improperly billed Medicare non-mail-order diabetes test strips in Competitive Bidding Areas (CBA) in 2011. We will also describe billing trends for test strips in CBAs between 2010 and 2011 and the extent to which suppliers conducted activities that we determined to be inappropriate (i.e., waiving copayments, contacting beneficiaries, sending unsolicited test strips in 2010 or 2011. There is concern that suppliers may be undermining the Competitive Bidding Program by billing for non-mail order test strips that are actually provided via mail order to receive a higher reimbursement amount and/or may be providing incentives to beneficiaries to receive test strips via non-mail order rather than via mail order, such as by waiving Medicare Part B copayments for beneficiaries. In 2011, the Competitive Bidding Program started in nine CBAs, resulting in lower reimbursement rates for mail-order test strips than for non-mail-order test strips. (OEI; 04-11-00760; expected issue date: FY 2013; work in progress)
  • Diabetes Testing Supplies—Supplier Compliance With Requirements for Non-Mail-Order Claims(New)
    We will determine whether Part B payments for non-mail-order diabetes testing supplies (e.g., supplies purchased from suppliers that have physical locations) were made in accordance with Medicare requirements. Federal law required a 9.5-percent reduction in fee schedule payments for certain items included in Round 1 of the Durable Medicare Equipment, Prosthetics, Orthotics, and Supplies Competitive Bidding Program, including diabetic testing supplies delivered by mail. (Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), § 154(a)(2).) The reduction applied to items provided on or after January 1, 2009, in any geographical area. Suppliers are required to use the service code “KL? modifier on claims for such supplies delivered to Medicare beneficiaries by mail (e.g., common carrier). Claims with the KL modifier are paid at the lower rate. We will review claims billed without KL modifiers to confirm whether the resulting higher payments were proper. (CMS’s Medicare Claims Processing Manual, Pub. 100-04, ch. 36, § 20.5.4.1.) (OAS; W-00-13-35704; various reviews; expected issue date: FY 2013; new start)
  • Competitive Bidding—Mandatory Review
    We will review the process CMS used to conduct competitive bidding and to make subsequent pricing determinations for certain medical equipment items and services in selected competitive bidding areas under rounds 1 and 2 of the competitive bidding program. Federal law requires OIG to conduct postaward audits to assess this process. (Medicare Improvements for Patients and Providers Act of 2008
    (MIPPA), § 154(a)(1)(E).) (OAS; W-00-12-35241; W-00-13-35241; various reviews; expected issued date: FY 2013; work in progress and new start)