Billing errors can result in audits and repayment of claims by the provider to Medicare
by Justin Buckland

Since its inception in 1965, Medicare has proven to be a great health benefit to seniors. However, it can be a conundrum to providers, and the greatest contributing factor is compliance.

Due to an abundance of policies, regulations and requirements, health care providers across the United States invest countless resources to ensure that they are reimbursed for the products and services they provide to Medicare beneficiaries. This is especially true when providing and billing Medicare Part B-covered medications, equipment and supplies. If providers are unaware of new or changing policies and requirements, they can unknowingly submit claims that are noncompliant or fraudulent.

Audit Basics

To manage the rapidly growing Medicare population, the Centers for Medicare & Medicaid Services (CMS) contracts with private third-party organizations, including payment, program integrity and recovery-audit contractors and benefit administrators.

Billing errors can result in audits and repayment of claims by the provider to Medicare. CMS has noted the error rate for improper payment for HME is 39.9 percent. The most common result in the repayment of claims due to improper documentation.

Prescriptions for HME items rarely provide all the information required for billing Medicare. Unless the prescription contains the required information of a detailed written order (DWO), any reimbursement is subject to recoupment.

A physician’s order/CMN is often required to ensure the proper Medicare-approved information is on file before billing. Orders must comply with the Medicare Local Coverage Determinations (LCDs), which detail coverage criteria and required documentation.

Certain HME items require special review considerations. A few examples from the Program Integrity Manual (PIM) are listed below.

Prescription (Order) Requirements General (PIM 5.2.1)

Items billed to Medicare require a prescription. An order must be signed and dated by the treating physician, kept on file by the supplier and made available upon request.

Items not meeting these prescription requirements must be submitted with an EY (no physician or other licensed health care provider order for this item or service) modifier added to each affected Healthcare Common Procedure Coding System (HCPCS) code. The EY modifier informs the Durable Medical Equipment Medicare Administrative Contractor (DMEMAC) that there is no physician's order for the item.

Additionally, items submitted with the EY modifier must be on a separate claim than those that do not require an EY modifier. While Medicare does not cover HME without a physician's or provider's order, some secondary insurers may approve the item.

Dispensing Orders (PIM 5.2.2)

Equipment and supplies may be delivered upon receipt of a verbal or written dispensing order unless the item requires a written order prior to delivery. The supplier must keep a record of the dispensing order, which must contain the item's description, beneficiary’s name, prescribing physician’s name, order date and start date (if different) and physician signature (written orders) or supplier signature (verbal orders). Items dispensed based on a preliminary dispensing order require a DWO.

Detailed Written Orders (PIM 5.2.3)

A DWO with a physician’s signature and date is required before billing. It must contain:

  • Beneficiary’s name
  • Physician’s name
  • Order date and start date (if different)
  • Detailed description of the item(s): either a narrative description or a brand name/model number
  • Physician’s signature and signature date

For items provided on a periodic basis, including drugs, the DWO must also include:

  • Item(s) to be dispensed
  • Dosage or concentration, if applicable
  • Route of administration
  • Frequency of use for test strips and lancets
  • Duration of infusion, if applicable
  • Quantity
  • Number of refills

Frequency-of-use information must contain detailed instructions for use and specific amounts to be dispensed. Reimbursement is based on the specific use amount only. Orders using PRN or "as needed" are not acceptable (PIM 5.9).

Prescriptions are not considered part of the medical record. Medical information intended to demonstrate compliance with coverage criteria may be included on the prescription but must be corroborated by information in the medical record.

The following rules apply to both dispensing orders and DWOs. Signature and date stamps are not allowed. Signatures must also comply with the CMS signature requirements outlined in PIM 3.3.2.4. For the order date, use the date the supplier is contacted by the physician (for verbal orders) or the date entered by the physician (for written orders). Dispensing orders and DWOs must be available upon request.

In addition to properly documented orders, specific patient documentation must be signed and dated before submitting claims. This includes proof the beneficiary has received a copy of the current Medicare Supplier Standards, Assignment of Benefits, Medical Release Authorization and proof of delivery, explaining the safe and proper use of the product, warranty and emergency contacts. Paper prescription pick-up signature logs do not meet Medicare proof-of-delivery requirements.

Affordable Care Act (ACA)

Industry Regulations
The ACA provided cumbersome regulations on the Durable Medical Equipment Prosthetics, Orthotics and Supplies (DMEPOS) industry. Regulations require providers to have a written order prior to delivery (WOPD) and face-to-face documentation prior to the delivery of equipment on the HCPCS code.

How to Be Prepared for an Audit
Audits are becoming commonplace. To be prepared, you must understand documentation mandates and have tools in place to capture the proper documentation and have it easily accessible.

To understand documentation, make sure your organization is thoroughly familiar with CMS’s Program Integrity Manual requirements. Then, make sure your pharmacy or HME software has the needed tools to make documentation collection and storage automatic. The system should include electronic signature capture that allows a patient to sign once for all Medicare-required documentation.

The system should also be able to reconcile the date of service and the original fill date and hold a claim until the physician’s order is completed and entered into the system.