Stark: In Current Audit Climate, You’re ‘Guilty until Proven Innocent’

COLUMBIA, S.C. — HME providers face situations every day that fall into areas of gray, but the unforgiving climate of Medicare audits is all black-and-white.

Industry consultant Andrea Stark of MiraVista LLC detailed the current “guilty until proven innocent” audit environment in a March 22 webinar cosponsored by HomeCare. The requirements for receiving Medicare payments are detailed and specific, she said — and the impact of non-compliance can be swift and costly.

“There are a lot of audits and prepayment reviews going on, and this impacts the cash flow you need to run your business,” Stark warned providers. “All these persnickety details don’t change the inherent facts. Let’s use some reasonableness here.”

While she is hopeful the situation could ease in the future, Stark said, today’s reality is that more and more HME companies are facing tough scrutiny from RACs and ZPICs, two of the latest weapons in Medicare’s audit arsenal. It usually takes appeal to an Administrative Law Judge before there is any leeway in the picture, she said.

“A lot of these errors are being reversed in the appeals process, which represents money Medicare has tied up related to a claim that was paid properly,” Stark said. “DME errors are not the same as fraud.”

Still, the proliferation of audits means life is getting harder for HME providers already dealing with reimbursement cuts and increased regulation.

The four Recovery Audit Contractors align with MAC jurisdictions, and their operations expanded to all 50 states last year, Stark said. RACs focus on overpayments, identifying companies and individuals that are billing Medicare at a higher-than-average rate.

RAC post-payment audits are retroactive for three years and include both automated reviews (based on statistical data) and complex reviews. For complex reviews, documentation requests are capped at a maximum of 250 records per 45 days.

If a provider receives a payment demand (for automated reviews) or review results letter (for complex reviews), supporting documentation can be submitted to reverse the decision during a 15-day “discussion period,” Stark said.

But the discussion period doesn’t slow down the collection process, she noted, so it’s wise to begin an appeal simultaneously.

ZPIC audits can be particularly deadly, Stark said, pointing out there are few, if any, guidelines that Zone Program Integrity Contractors must follow. Unlike RACs, ZPICs can initiate unlimited prepayment claim reviews. Also unlike RACS, there are no defined limits to the number of documentation requests a ZPIC can impose.

ZPIC audits do not allow suppliers to open a discussion period, so an appeal is the only option. Providers have 120 days from the date of the payment demand; if an appeal is rejected, they have another 60 days to request a reconsideration. But if the appeals fail, payments are recouped or offset with interest from day one.

The Program Safeguard Contractors are transitioning to ZPICs to better align with MAC jurisdictions, Stark said. So far, Zones 4 and 5 (in the Southwest and Southeast) began operating in 2009, and Zone 7 (Florida) ramped up in January 2010.

If you haven’t been audited yet, watch out if you provide oxygen, power wheelchairs or hospital beds, Stark said. Medicare auditors are also looking at claims for enteral nutrition, replacement supplies for PAP and RAD devices and diabetic testing supplies, among other products.

Being placed on prepay review or appealing large overpayments can be costly, but there are proactive steps providers can take to preserve their businesses, Stark said. She reviewed a number of “hot audit triggers,” such as billing patients for denied services without a valid ABN. She also listed billing mistakes to avoid, among them routinely appending the KX modifier to claims without ensuring that documentation requirements are met.

“To catch errors internally before they come to the attention of a Medicare contractor, [you need] tools that will standardize the way you look at your patient files and risk exposure,” Stark said.

If you missed Stark’s webinar, pick up a digital recording for only $99 at www.miravista.com. (Scroll down to “Andrea’s 2011 Audit Outlook.”) Check all of Andrea Stark’s tips for avoiding common billing errors that could increase your odds of being audited, the options if you are caught in a ZPIC or RAC audit and simple procedures you can implement to protect your business.