WASHINGTON (July 17, 2014)—As a barrage of government audits cripple many home medical equipment companies, legislation proposed in the House would restrict the audits and bring relief to the beleaguered providers. These companies supply Medicare beneficiaries with critical equipment such as oxygen therapy, power wheelchairs and diabetic testing materials.
For years, rampant audits have been a financial burden for providers—many small or family-owned businesses. But the problem peaked last December when Chief Administrative Law Judge Nancy Griswold suspended the assignment of new appeals because of the backlog of cases. There are now more than 600,000 cases awaiting appeals.
The scope of the backlog is astonishing: Judge Griswold reported that her office was receiving 15,000 new appeals requests per week—three times the amount received in fiscal year 2012. And it certainly appears that home medical equipment providers were being targeted because they represented 25 percent of the appeals even though this equipment is only 1.4 percent of the annual Medicare spending.
Previous to her ruling, providers often had to repay the government or be delayed in getting paid during the appeals process, but most appeals were ultimately won by providers and they received the money owed for providing home medical equipment to Medicare patients. Thus, shutting down the appeals process left providers with no recourse, even though it sometimes took up to three years for appeals to be heard.
“This has been as unfair as it can possibly get,” said Thomas Ryan, president of the American Association for Homecare (AAHomecare). “An out-of-control process fueled rampant audits, and then the victims of these audits no longer had an appeals process to challenge the findings. We applaud Rep. Renee Ellmers (R-NC) and other sponsors of the legislation for recognizing that something had to be done to protect the rights of providers across the country.”
Ryan noted that one of the major causes of the out-of-control audits is a government policy that rewards contractors for using audits to pursue payment denials or adjustments with providers. “That policy has to be changed,” Ryan said. “Audits have skyrocketed because of the incentives, but many are reversed in the appeals process. What is that proving?”
Moreover, the audits are making it difficult for providers to adequately serve Medicare beneficiaries. Under Medicare regulations, much of the equipment received by beneficiaries is through rentals or is ongoing supplies that sustain the patients for years. When a claim is denied during an audit, the government also denies other claims for the same item during that rental period—a process that can shut off access for patients.
In addition, with audits and the bidding program significantly affecting the revenue flow for many companies, providers are often forced to reduce their services, refuse to serve Medicare patients or close their businesses—actions that force beneficiaries into the time-consuming process of finding a new supplier and obtaining required medical documentation to get approved for their supplies, medications and home medical equipment.
Another cost factor for providers is the amount of time and resources needed to comply with the audits that seem to come from all directions. Medicare has hired a variety of contractors that conduct audits of providers—Durable Medical Equipment Medicare Administrative Contractors (DME MACs), Zone Program Integrity Contractors (ZPICs), Recovery Audit Contractors (RACs) and the Comprehensive Error Rate Testing Contractor (CERTs). At times, these various contractors even audit the same claims, which is a waste of government resources.
The audit issue has received attention from both political parties. At a recent hearing by the House Oversight and Government Reform Subcommittee on Energy Policy, Health Care and Entitlements, Rep. Michelle Lujan Grisham (D-NM), said, “I have some serious concerns that the current system of post payment audits…is resulting in a significant burden on some providers.”
The legislation would increase transparency, education and outreach, and reward suppliers that have low error rates on audited claims. The AIR Act would apply to all MACs, RACs, and all other contractors performing audits on durable medical equipment (DME) providers. Key provisions in the legislation include:
- Requiring the reporting of error rates on audited claims after adjustment for those audited claims that have been overturned on appeal
- Requiring each audit contractor to establish an education and outreach program that would help providers better understand the regulations and how to document medical necessity for Medicare patients
- Allowing HHS to ensure that all suppliers are audited at least once every two years and those with low error rates can be excused from some or all audits during that two year period
“This legislation will not cure all the problems related to audits, but it is a significant step in the right direction,” said Ryan. “Providers need assurances that they can provide equipment and services to Medicare beneficiaries without having to confront an onslaught of audits that needlessly drain their time and resources.”
For more information visit aahomecare.org.
