At some time or another, every HME provider has most likely received a copy of a prepayment or postpayment audit letter. Prepayment letters are generated
by Jane Bunch

At some time or another, every HME provider has most likely
received a copy of a prepayment or postpayment audit letter.
Prepayment letters are generated by the DME Medicare Administrative
Contractor, while postpayment letters come from the Program
Safeguard Contractor.

Unfortunately, many providers do not give proper attention to
these letters, causing much more serious problems down the road.
You and your employees need to treat any audit notices with a
Priority One status.

These letters will list one or more beneficiaries the DME MAC or
PSC is requesting more information about. These letters will also
have a date by which they must be returned. If you miss the date,
or if you do not provide all of the information requested, you are
guaranteed not to be paid in the case of the prepayment letter, or
to be issued an overpayment in the case of the post-payment audit

The same results can also happen even if you get the information
back to the MAC or PSC in time with all the required information
— but without the documentation to support the medical
necessity of the item.

The end result of “failing” a prepayment audit will
not only mean not being reimbursed for the item but it will most
likely trigger more prepayment audits in the near future. It can
also cause the PSC to look at past claims and issue postpayment

The situation can create a vicious cycle that may prove nearly
impossible to get out of. Think of it like sharks circling. Once
they smell blood, they move in for the kill.

In most cases, all of this can be avoided by explicitly
following the instructions in the development letter and sending in
all the qualifying information requested within the time frame

One of the biggest errors providers make is sending in a
Physician Order or CMN in place of physician notes. That is not
acceptable. These documents are never enough, by themselves, to
prove medical necessity. You always have to back them up with
documentation from the physician's record to prove medical
necessity. The PO and CMN are only considered a part of the
physician notes.

In addition, remember that the physician notes you use to
provide medical justification generally need to be from within
three months of dispensing the item.

If you do not currently collect physician notes, it's highly
recommended that you implement this policy within your
organization. Your referring physicians' offices will, of course,
resist, as it will require extra time on their part to provide you
with this information.

Unfortunately, you, as the provider, will have to re-educate
physicians and their staffs about the fact that the notes proving
medical necessity are just as important as the CMN or the Physician
Order they already provide to you in the case of an audit.

The fact is you really should collect physician notes on all
equipment, but it may be easier to start by getting notes on highly
audited items, such as those that require a KX modifier. If you
choose not to collect physician notes as a part of your company's
intake process, please be aware that they will be asked for in any
audit situation.

Don't count on being able to go back and obtain physician notes
or other supporting documentation in the case that you are audited,
because you may not be able to get them within the time limit you
have been given. For audits on older paperwork, for example, the
physician may have moved or retired. If so, the paperwork you need
may no longer be available and, again, that will result in a denial
or overpayment.

To avoid an immediate overpayment or sending in an unprepared
audit, call the BIU investigator who is in charge of your audit and
ask for an extension.

In the case of audits, an ounce of prevention is worth a pound
of cure.

This month's column was co-authored by Kevin R.

Jane Bunch is vice president, HME consulting, for Atlanta-based
CareCentric. A reimbursement specialist, Bunch delivers educational
seminars worldwide, helps develop corporate compliance plans and
serves as a consultant for fraud and abuse cases. She can be
reached at 678/264-4495 or via e-mail at