CERT Report Uncovers CMS Problems; OIG Studies RAC Results

WASHINGTON — New medical record review methodologies, not
fraud, helped pump up the DME MAC error rate to 51.9 percent in
2009, CMS said in a recent Comprehensive Error Rate Testing
report.

Overall, the national error rate for Medicare-fee-for-service
claims ballooned more than 100 percent, from 3.6 percent in FY 2008
to 7.8 percent in FY 2009. That equates to $23 billion in
overpayments, CMS said, and $1.1 billion in underpayments, with
durable medical equipment being by far the most error-plagued of
the claims.

In a rare admission, CMS, in its “Improper Medicare
Fee-for-Service Payments Report.” said the DME MAC error rate 
“is not a measure of fraud.”

Indeed, the agency said, “It should be noted that due to changes
in the review methodology, the 2009 error rates are not comparable
to previous years’ error rates since we cannot quantify the impact
these changes had on the measurement process.”

CMS officials said plainly that “stricter adherence to policies
disproportionately affected DME claims.”

“More DME claims were determined to be paid in error because of
the more strict enforcement of documentation requirements rather
than allowing for clinical review judgment. In the past, reviewers
applied clinical review judgment to claims to fill in gaps of
knowledge where documentation was missing,” CMS said in the report.
“Once CMS clarified that clinical review judgment may not override
documentation requirements, more errors were found on DME
items.”

Last year, CMS began requiring enhanced documentation for HME
claims. Providers have argued the documentation requirements are
especially burdensome because they must obtain much of that
information from physicians and other referral sources and it is
often not forthcoming.

CMS acknowledged the difficulty in its report.

“It is often more difficult for DME contractors to obtain the
proper documentation because they (contractors) requested
documentation from the supplier who billed for the item, not the
medical professional who ordered the item,” CMS said. “The supplier
is then responsible for submitting documentation to CMS that they
have collected from the ordering provider. The involvement of
multiple parties can cause a delay in documentation receipt and
incomplete documentation.”

The report prompted the Midwest Association of Medical Equipment
Services and other HME organizations to encourage their members to
send letters to their referring physicians, explaining the need for
increased documentation.

The letter, drafted by the DME Task Force, reads in part:

“DMEPOS suppliers can only provide to the CERT contractor the
documentation that the physicians provide to them. In order for
DMEPOS suppliers to continue to provide the necessary items/service
to your patient, they must be able to rely on your cooperation in
providing any additional documentation requested. Since physicians
are the ones treating the beneficiaries and are responsible for
maintaining records to support medical necessity of the services
they provide, this typically means copies of your office notes,
pertinent test reports, and other pertinent healthcare records
maybe required to support the DMEPOS items/service ordered.”

To address the growing error rates across the board, CMS said it
will “design new, innovative approaches to reduce improper
payments, particularly in high-risk areas such as DME and home
health. As previously stated, the error rate is not a measure of
fraud; however, it may be an indication of a program weakness that
requires more oversight and diligence by CMS.”

To view the report, go to www.cms.hhs.gov/cert/.

Meanwhile, in a report released last month, the Office of
Inspector General said that Recovery Audit Contractors referred
only two cases of potential fraud to CMS during a three-year
demonstration project from 2005-2008.

Staged initially in California, Florida and New York, the
demonstration project was designed to curb fraud by detecting
improper payments. The RAC contractors were to funnel information
to CMS to deter any future problems.

According to the OIG, the same RAC reported the two cases, which
involved rehabilitation service providers and allegations that the
providers had altered medical records after providing service. The
RAC alerted CMS via letters, but the agency claimed it received no
RAC referrals during the demonstration period.

The OIG recommend that CMS:

• Conduct a follow-up on the two fraud referrals;
• Implement a new system to track fraud referrals; and
• Institute formal fraud identification training for RACs.

CMS agreed with the findings and said it is in the process of
implementing the OIG’s recommendations.