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 jbaird@bf-law.com.