Q&A with Jeff Baird: PIM Provisions for DME MAC Prepayment Reviews

It’s no secret that the HME industry is under siege from the
implementation of DME MAC and Zone Program Integrity Contractor
(ZPIC) prepayment reviews. “If the prepayment review is conducted
as a Medical Review (MR) by a DME MAC, then certain rights are
given to the HME provider. On the other hand,” points out health
care attorney Jeff Baird of Brown & Fortunato, “if the
prepayment review is conducted by a ZPIC under the guise of
‘benefit integrity’ (the ZPIC is looking for fraud), then most of
these rights disappear.” The following questions and answers from
Baird focus on the rights given to HME providers when they are the
targets of a Medical Review prepayment review.

Question: What types of prepayment reviews may the
contractor conduct?

Answer: When reviewing claims, contractors may
employ one of three types of reviews: automated prepayment review,
routine prepayment and postpayment review, or complex prepayment
and postpayment review. Automated prepayment review uses electronic
information to assess claims. This review does not require the use
of contractor personnel. Trained personnel primarily handle routine
reviews, which involve “rule-based determinations.”

When contractors engage in a complex review, they employ the
expertise of licensed medical professionals to assess the medical
necessity of a claim. Prepayment reviews are further categorized as
either service-specific or provider-specific. Service-specific
edits review claims for services identified as susceptible to
abuse. Provider-specific edits review claims submitted by a
particular provider. Initially, contractors could also conduct
random prepayment reviews. However, the Program Integrity Manual
(PIM) provides that “[c]ontractors may no longer operate any random
edits.”

Question: What steps should a contractor follow when
conducting a prepayment review?

Answer: The PIM details the steps contractors
should follow when structuring a prepayment review for a particular
provider and service. First, contractors identify potential
problems through data analysis, complaints, and information from
other organizations. This information is not needed to support a
limited review in two situations: new providers, and providers who
previously received overpayments.

In the latter situation, Congress enables contractors to
“request the periodic production of records … for a limited
sample of submitted claims to ensure that the previous practice is
not continuing.” In regard to new providers, CMS directs
contractors to pay special attention to “ensure correct coverage
and coding from the beginning.” Thus, the Medicare contractors have
the discretion to conduct a limited prepayment review of these
providers. The review should involve between 20 and 40 claims.
Contractors must document this information before reviewing a
provider. Then contractors employ either a prepayment or
postpayment probe review to verify that an unauthorized practice
exists and to determine the parameters of the problem.

If the probe review does not reveal any actual threats, the
contractor must cease the review immediately. On the other hand, if
a threat exists, the contractor will use the information from the
probe review to tailor the scope of a prepayment review.
Contractors must test each edit before implementation and determine
the impact on workload and whether the edit accomplishes the
objective of efficiently selecting claims for review.

Depending on the size of the problem, further review activities
may include suspension of payments and 100 percent prepayment
review. Note that CMS does not require contractors to conduct 100
percent prepayment review when suspension is imposed. However, if
the contractor does not conduct a 100 percent prepayment review,
then it must conduct a 100 percent postpayment review. Finally,
contractors remove providers from review once follow-up data
indicates that the provider is in compliance with the Medicare
program.

Question: What requirements must the contractor follow
in terms of communicating with the HME provider?

Answer: At each step in the process, CMS
expects contractors to communicate with affected providers. In
particular, contractors must inform providers of the reasons for
the reviews. As soon as a provider is selected for review, the
contractor is required to notify the provider of the “specific
reason for such selection.” Moreover, if the contractor used
comparative data to select the provider, then the contractor
“must provide comparative data on how the provider varies
significantly from other providers in the same specialty
payment area or locality.”

Generally, contractors should include the following information
in notice letters: the reasons for medical review; previous review
findings (if applicable); planned medical review (level of review
and duration), potential for continuation of or increase in medical
review levels (if identified problems continue, additional problems
are identified, etc.); and description of the specific actions the
provider must take to resolve the problems identified in the
medical review process.

Contractors have the authority to request “any information they
deem necessary” from providers. CMS does, however, place some
limits on the contractors’ ability to request additional
documentation. First, the documentation must relate to the claims
under review. These documents may include “physician’s office
records, hospital records, nursing home records, home health agency
records, records from other health care professionals and/or test
reports.” Also, the contractors must actually need the documents to
make a coding or coverage determination.

Question: What is a probe review and what part does it
play in prepayment reviews?

Answer: Contractors conduct probe reviews in
response to outliers identified in data analysis, complaints, and
information provided from other agencies and organizations. The
goal of these probe reviews is to validate that a billing problem
exists and to target further review activities at the identified
problem. Generally, the review involves enough claims to gather
credible evidence. At the same time, CMS states that the number of
claims should be small enough to avoid overloading contractors and
burdening providers.

For provider-specific problems, the PIM directs contractors to
review 20-40 claims from that provider. For service specific
problems, contractors should take and review 100 claims from across
all providers in that area of service.

Attempting to decrease administrative burden, CMS provides two
further limits on probe reviews: 1) contractors should subject a
provider to only a single review at a time, unless the provider is
a large biller that will not experience an undue burden from
multiple probes; and 2) during service specific probes, contractors
should target only providers with abnormal practices. As indicated
above, contractors must communicate with providers during this
process. An affected provider should know that a probe is being
conducted and the results from the review.

Question: What is a tailored review and what part does
it play in prepayment reviews?

Answer: Contractors have the authority to
design the prepayment review. Contractors determine what
information to review and set guidelines on evaluating that
information. Their design, however, must comply with the policy and
limitations set forth in the PIM. Throughout the manual, CMS
instructs contractors to tailor the scope of the review to the
extent of the problem identified.

Contractors should make sure that administrative actions are
commensurate with the seriousness of the problem identified, after
a limited probe is done to understand the nature and extent of the
problem. Further, CMS juxtaposes the tools contractors should
employ when reviewing serious versus small problems.

For claims posing a substantial threat to the Medicare Trust
Funds, contractors can utilize administrative actions “such as 100
percent prepayment review, payment suspension, and use of
statistical sampling for overpayment estimation of claims.” The
manual provides the following example for when 100 percent
prepayment review is appropriate:

“Forty claims are reviewed. Twenty claims are for services
determined to be not reasonable and necessary. These denials
reflect 50 percent of the dollar amount of claims reviewed. One
hundred percent prepayment review is initiated due to the high
number of claims denied and the high dollar amount denied. The
contractor provides notification to the provider about specific
errors made and makes a priority referral to POE [Provider Outreach
and Education Advisory Committee] to inform them of the severity of
the problem.”

However, CMS cautions that “the claims volume of the Medicare
program prohibits review of every claim.” Therefore, when providers
identify a small level of non-compliance with Medicare’s rules and
regulations, CMS directs contractors to communicate with the
providers to correct the problem.

The following example illustrates what CMS considers a “moderate
problem” and how CMS expects contractors to handle such
problems:

“Forty claims are reviewed. Thirty-three claims are denied.
These denials reflect 25 percent of the dollar amount of the claims
reviewed. The contractor provides notification to the provider
about specific errors made. The contractor initiates a moderate
amount (e.g., 30 percent) of prepayment medical review to ensure
proper billing.”

A small level of non-compliance would not warrant 100 percent
prepayment medical review. Rather, CMS expects contractors to
educate providers who have a low level of non-compliance. While
savings are realized through denials for inappropriate provider
billing, the optimal result occurs when providers no longer bill
for non-covered or incorrectly coded services. Factors that
contractors should consider to tailor the review include the
provider’s error rate, the provider’s history, and the total dollar
value of the unauthorized practice.

Jeffrey S. Baird, Esq., is chairman of the Health Care Group
at Brown &
Fortunato, P.C., a law firm based in Amarillo, Texas. He
represents pharmacies, infusion companies, home medical equipment
companies and other health care providers throughout the United
States. Baird is Board Certified in Health Law by the Texas Board
of Legal Specialization. He can be reached at 806/345-6320 or
[email protected].