HME industry group cites 15 audit problems, recommendations

WASHINGTON, July 16, 2012—Medicare’s audit system needs better oversight, clearer regulations, standard policies, transparency and accountability, according to a white paper produced by the VGM Group and several independent providers, with assistance from the law firm of Munsch Hardt Kopf & Harr, P.C.

Written at the request of the Senate Finance Committee—and prepared by Edward Vishnevetsky, Esq.—the 31-page whiteQ paper lists 15 problem areas and recommendations for the ZPIC (zoned program integrity contractor), RAC (recovery audit contractor), MAC (Medicare administrative contractor) and CERT (comprehensive error rate testing) audit system. Summaries and recommendations for each of the 15 problems cited are:

1. The initial determination process imposes unilateral deadlines against DMEPOS suppliers.
RECOMMENDATION: Require that ZPICs/MACs also be held to deadlines and require them to issue an initial determination within 30 days of receiving an ADR response. If the deadline is not met, require automatic claim approval.

2. Existing redetermination and reconsideration deadlines are often not followed by MACs/QICs.
RECOMMENDATION: Enforce regulatory deadlines for MACs/QICs. If a MAC/QIC does not respond in a timely manner to an appeal request, require that the claim be automatically approved.

3. DMEPOS suppliers are penalized for problems with medical documentation submitted by professionals over whom suppliers have no control.
RECOMMENDATION: Relieve DMEPOS suppliers of penalties related to documentation issues beyond their control. Use lesser sanctions and provide opportunities for DMEPOS suppliers to correct documentation problems.

4. The Competitive Bidding Program and ZPIC audit processes are misaligned and create unnecessary conflict.
RECOMMENDATION: Integrate competitive bidding and the audit processes.

5. Contractors fail to provide objective benchmarks for removal of suppliers from prepayment audits.
RECOMMENDATION: Require ZPICs to prepare and notify DMEPOS suppliers of specific and objective actions and benchmarks necessary to be removed from prepayment audits.

6. ZPICs, MACs and QICs are allowed to deny claims without accountability.
RECOMMENDATION: Require all alleged claim deficiencies to be identified during initial determination, and prohibit ZPICs, MACs and QICs from denying claims for reasons not identified at initial determination.
 
7. DMEPOS suppliers are penalized when claims are improperly denied.
RECOMMENDATION: Require contractors to pay interest on claims that are improperly denied and then properly paid.

8. National coverage determination (NCD), local coverage determination (LCD) requirements and coverage provisions in interpretive manuals are vague, ambiguous and subjected to documentation necessary to establish medical necessity.
RECOMMENDATION: Give providers concise and objective requirements for establishing medical necessity. Create a template or checklist format for each DME item, and provide concrete examples of what constitutes medical necessity.

9. Based on complaints, auditors are empowered to limit a DMEPOS supplier’s contractual right to Medicare payments without due process.
RECOMMENDATION: Establish due process for providers before action is taken. Require contractors to: provide notice of an investigation to the DMEPOS supplier; provide the supplier with all exculpatory evidence regarding the investigation; and allow the supplier to respond to complaints in a meaningful way at a meaningful time.

10. ZPICs rarely employ non-punitive sanctions.
RECOMMENDATION: Education should be incorporated as a method of preventing fraud and abuse. Define when a ZPIC can impose punitive sanctions on a supplier; otherwise, first employ non-punitive sanctions.

11. Contractors may reopen previously paid claims without providing evidence of a problem.
RECOMMENDATION: Require contractors to provide evidence to a supplier prior to reopening a claim; if the reopened claim is approved, appeal costs should be paid by the contractor.

12. Contractors are allowed to unilaterally dismiss Advanced Determination of Medicare Coverage Determinations (AMDC).
RECOMMENDATION: Prohibit contractors from auditing AMDC-approved claims on the basis of medical necessity. Require contractors to provide evidence of incorrect information when auditing an ADMC-approved claim.
 
13. There are no defined standards for “continued medical need” and “ongoing use” for rental items.
RECOMMENDATION: Prevent contractors from auditing claims for monthly rental DMEPOS items that already have been initially approved.

14. The post-payment audit system encourages and fosters extrapolation findings that are arbitrary and unfathomable.
RECOMMENDATION: Prohibit contractors from employing methods that lack a basis in fact or statistical methodology. Require contractors to properly justify and support statistical sampling and extrapolation calculations.

15. There is duplication, inconsistency and inefficiency between accreditations and audits of suppliers.
RECOMMENDATION: Distinguish between the roles of audits and accrediting organizations.