The Errors in the Error Rates

Providers of home medical equipment and services continue to brace against an unprecedented storm of Medicare audits. These audits were precipitated by a 2008 report from the Department of Health and Human Services’ Office of Inspector General (HHS OIG) that found a high “error” rate in Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) billing, as calculated by CERT contractors.

CERT, which stands for comprehensive error rate testing, measures the accuracy with which CMS contractors pay Medicare claims. For example, CERT audits measure whether claims were paid that should have been denied, or whether claims were denied that should have been paid. In 2008 the DMEPOS Medicare error rate was in the single digits.

But the OIG review determined that Medicare contractors were not strictly enforcing medical policy and documentation requirements when they performed the audits that they used to determine the error rate. When the OIG analyzed claims using a strict interpretation of the guidelines, the error rate for DMEPOS skyrocketed to nearly 60 percent. This suggested that 60 percent of home medical equipment (HME) claims were paid improperly. 

Since then it has been the goal of HHS to reduce the error rate for HME. However, the goal remains elusive. The high error rate for some items, such as diabetic supplies and oxygen, has only generated more intense audits of claims for these items. Recent prepayment reviews of diabetic supplies yielded error rates of 99.5 percent in Jurisdiction B and 71 percent in Jurisdiction A. The error rate for a widespread prepayment probe audit of CPAP claims in Jurisdiction A was 57 percent. These figures simply aren’t credible. Obviously there are severe problems in how error rates are measured and reported. 

The American Association for Homecare is troubled by the impact of these audits on HME providers who have to divert precious staff time responding to them, and yet see little progress in lowering the error rate. As long as the error rate remains high, there will be no reduction in the number of audits. The high error rate generates more audits so that CMS and the contractors can assess whether the error rate is improving, creating what appears to be an unending cycle of yet more audits.

The high error rate also reinforces the view of suppliers as noncompliant, which feeds into initiatives to control or reduce spending in the DMEPOS benefit. While CMS points out that an error rate is not an indicator of fraud, there is little effort in the HHS Office of Inspector General to make sure reporters do not conflate the two issues in colorful but factually inaccurate news stories about fraud. 

At the same time, in 2010 and 2012, top officials at the OIG testified before Congress that fraud has moved out of the HME sector. Surety bonds and accreditation requirements in Medicare for HME providers took effect in 2009. Nearly all the recommendations made in the AAHomecare 13-point anti-fraud legislative action plan, presented to Congress in 2009, have been adopted into regulation or legislation.

HME providers must find ways to reduce their error rates, and we must all work together to make sure that the audit process and error reporting are accurate and fair. To help association members meet the continuing audit challenges, AAHomecare created an audit education work group to develop educational materials and tools that providers can use in their business to better respond to audits. We continue to collaborate with CMS and the Medicare contractors to come up with solutions that work for all of us.