Getting audited is not a question of 'if' but 'when.'
by Wayne H. van Halem

For 10 years, I worked in various roles at various Medicare
contractors, but I spent much of that time in the area of program
integrity working as a fraud analyst, Medicare fraud information
specialist and fraud investigator. In my many years in that role,
it was ingrained in me that durable medical equipment suppliers
were inherently bad. It was my job, as an investigator, to protect
the Medicare Trust Fund.

I remember the moment that things started to change for me. I
had conducted an audit on a small family-owned HME in the Midwest,
a company that had been in business for a very long time. The audit
resulted in a significant overpayment that would have a devastating
impact on the company's ability to remain in business. The
overpayment was identified because, perhaps, the company had become
lax over the years in keeping up with Medicare policies and
guidelines and was not getting supporting documentation up

I remember the owner of the business, who had inherited it from
her father, called me up and cried over the phone, begging me for a
different outcome. My hands were tied, and all I could offer her
were her appeal rights.

I mention this because with the proliferation of audits, the
issue that has, by far, caused the biggest problem for providers is
insufficient physician documentation. The burden of being placed on
prepayment review or appealing large overpayments is costly and
overwhelming for most HME businesses.

After I hung up the phone with the supplier I audited, I
realized that I was quite possibly taking away this woman's
livelihood because of careless mistakes in not following convoluted
policies. The policies did not require that HME companies get
documentation up front, and most companies didn't.

Years later, the industry still isn't getting documentation up
front in most cases. The big difference, though, is the
government's huge increase in funding for audits and increased
oversight that requires suppliers to provide sufficient physician
documentation to support their claims. In this specific case, as
with countless others, the overwhelming majority of claims denied
because the physician documentation was deemed to be

Don't Take the Gamble

I assumed at the time that getting physicians to document things
accordingly was easy. I realize now how very wrong I was.
Unfortunately, most auditors that work for the government or its
contractors haven't yet come to this same realization. I've tried
relentlessly to portray the difficulty in this task, but I'm not
certain the message gets through.

As the agency responsible for administering Medicare, CMS
instructs audit contractors on what to do. These contracts are
enormously sought after. The Zone Program Integrity Contractor
(ZPIC) Zone 5 contract, for example, was awarded at nearly $108
million. Therefore, these companies must be able to show their
worth to CMS. While ZPICs are not reimbursed on a contingency basis
like Recovery Audit Contractors (RACs), they do report "cost
savings" to CMS that is often touted as a measure of their

During my tenure at Medicare, I did play a role in weeding some
really bad guys out of the system, but that was certainly not the
majority of companies I audited. What I saw was that CMS was
drafting more complex and intricate Local Coverage Determinations
when the real fraudulent suppliers don't care what the policies
state. They don't care that there is a face-to-face requirement or
that a detailed written order must contain seven elements. What I
saw was that legitimate suppliers providing a needed service to
Medicare beneficiaries were getting claims denied for reasons often
outside their control, and the policies only made it more difficult
for the good guys.

Here's the thing: We may not agree with the Medicare policies
that are in place, but if you want to accept money from the
Medicare Trust Fund — taxpayer money — then you must
play by their rules. If you have not yet been audited, you will

You must be proactive, and you may need to change the way you've
always operated. You should get as much documentation as you can up
front and review it before filing any claims to Medicare. While
you're not required to do so, if you don't, then you are doing harm
to the industry as a whole by taking a gamble that when asked to
provide the documentation, it will be there and will be

I can tell you now that the odds are not in your favor. In my
experience, it is very rare that physician documentation is
adequate to meet the strict policy requirements. But as the
supplier, you are liable for that payment unless you have a valid
Advance Beneficiary Notice on file. That's a gamble this industry
simply cannot afford to take anymore.

Pushing through the Pushback

Many HME providers that have implemented processes to obtain
documentation up front report getting pushback from physicians and
losing referrals. The most common complaint from physician offices
is that HME companies are asking for too much documentation when
Company XYZ doesn't ask for it or just has them complete a form. So
they end up losing that physician as a referral source and lose
patients to the other company.

This situation may yield short-term results for Company XYZ. But
in an audit, it calls into question the integrity of that company's
services and creates an unacceptable level of risk for their
reputation and their revenue. If Company XYZ gets an Additional
Documentation Request and they provide their "forms," or if the
company attempts to go back to the ordering physicians to get
supporting documentation, often it won't be there. All the money
they've been paid is now going to be recouped or the claims for
equipment they've provided will be denied, causing a significant
cash flow issue for the company.

Physicians are the gateway to the Medicare program, and nothing
can be provided without an order from one. However, they are not
accountable, and it's not clear they ever will be. So now is the
time for the HME industry to take control rather than continue down
this arduous path.

If the industry came together and began educating physicians on
the LCDs and requesting the documentation up front, then the
physician community would be forced to comply. It's time for you to
make physicians a partner in providing services to your patients.
If you tell the physician you can't provide the service to his or
her patient without adequate documentation, and that patient goes
somewhere else and the physician is told the same thing, the
physician will have no choice but to adjust behavior and

Getting Documentation Up Front

Perhaps someday physicians will be held accountable for their
lack of supporting documentation when it comes to other services
they prescribe. I've even heard some talk of physicians being
subject to ZPIC audits if there is a lack of supporting
documentation when reviewing claims. I imagine that could certainly
be used as an incentive to get appropriate documentation.

For now, here are some extra tips in getting sufficient
documentation and keeping your revenue long-term:

  • Train your employees regularly on the "Indications and
    Limitations for Coverage" in the LCDs for all the products you
    so they are familiar with the circumstances in
    which Medicare will pay for equipment. The auditors will review the
    clinical records to see that these criteria are met.

  • Get documentation up front in all instances.
    Your employees should be familiar with the coverage criteria and
    review documentation to assure that the indications are addressed
    in the physician progress notes. If not, contact the physician's
    office to explain what is missing or needed. Maybe once a physician
    is asked to correct documentation on multiple occasions by multiple
    suppliers, he or she will document correctly the next time to avoid
    those recurring requests.

  • In cases where physicians do not cooperate, advise the
    patient that the claim may be denied
    because the physician
    will not document that the patient meets the Medicare coverage
    criteria. Hopefully the patient will get involved and encourage the

  • You have to choose not to supply the patient or get an
    If the physician documentation doesn't specify that
    coverage criteria are met, then the services may be denied for not
    being medically necessary. Complete a valid ABN and have the
    patient review and sign it agreeing to be liable. If the physician
    will not document it, then perhaps the patient does not

  • Stop using forms to document medical necessity
    unless a policy specifically allows for an approved form.
    Otherwise, forms are never acceptable on audit to support
    medical necessity
    . In truth, forms are actually detrimental in
    getting the physician to document anything in the progress notes
    because physicians think filling out the form is all that has to be
    done. When you use a form, you have all but guaranteed that the
    claim will be denied or deemed overpaid on audit and cause you more

  • Educate your referral sources. CMS has placed
    the responsibility for educating physicians and other referral
    sources squarely in the lap of suppliers. This means your options
    are limited. When a verbal order comes in and you have to contact
    the physician to get a detailed written order, send it with a cover
    letter that states the coverage criteria for the product they have
    prescribed and advise that you need the order signed and a progress
    note that specifically addresses how the patient qualifies. If you
    don't get the documentation, don't provide the product. You cannot
    be expected to continue providing equipment for free.

  • Your referral sources should also be made aware that you don't
    necessarily need months and months of progress notes. In
    most instances, one progress note that clearly addresses the need
    for the specific item is sufficient.
    In this case, it's
    quality versus quantity.

  • Educate your physicians that if the equipment they
    prescribe is an ongoing rental, they should schedule follow-up
    visits with their patients
    to address specifically the
    continued need for the equipment. These notes should also be
    provided to you, and someone in your office should follow up to
    remind the physician and obtain these notes.

  • Contact other suppliers in your area and implement this
    approach collectively.
    It is going to take more than one
    or two companies for these changes to be effective.

  • Implement a comprehensive and effective compliance
    Make sure there is an expressed commitment to
    compliance in your organization that is evident from the top down.
    Health care providers have a responsibility to assure that claims
    are filed in accordance with coverage policies and guidelines
    — whether you agree with them or not.

These are considerably difficult recommendations, but if the
industry comes together and implements them, then eventually the
tides will be turned in your favor. It's certainly not an easy
road, but unless sweeping changes are made, the situation will only
get worse. More and more HME companies will close their doors, and
Medicare beneficiaries will lose access to a very vital

I am saddened to see the downfall of some legitimate businesses
that have been servicing Medicare beneficiaries for a long time
being forced to file bankruptcy. I am frustrated that despite
hearing the audit horror stories, many providers aren't heeding the
warnings of those who have been through one.

If the industry doesn't seize the opportunity to take control of
this negative situation and improve its image, it will only get
worse. CMS has already said that it feels there are too many
medical equipment providers. Perhaps the agency is intent on
putting companies out of business. Nothing else can explain the
current aggressive techniques or the lack of communication or
feedback by companies contracted to conduct these Medicare

And the audits are not going to subside. The ZPIC program is
being expanded nationally, and thinking you can avoid an audit and
conduct business as usual is a mistake. It's a mistake that can
cost you and the industry as a whole. Be proactive, be prepared and
work collaboratively with each other.

  • Read "CMS Turns Up
    the Heat
    " for more information on preparing for ZPIC
    audits — and what to do if one hits you — from Wayne
    van Halem.

Author and consultant Wayne van Halem, president of The van
Halem Group, Atlanta, has worked as a fraud analyst, Medicare fraud
information specialist and senior investigator. An Accredited
Healthcare Fraud Investigator and Certified Fraud Examiner, van
Halem provides counsel to all entities involved in the
participation, administration and oversight of public and private
health care plans. You can reach him at 404/343-1815 or