Q&A with Jeff Baird: Post-Payment Audits

Part 2 of a Four-Part Series: The following
questions and answers from health care attorney Jeff Baird of Brown
& Fortunato are Part 2 of a four-part series addressing
prepayment
reviews; post-payment audits;
a comparison of reviews conducted by the DME MACs with audits
conducted by the ZPICs; and in the final installment, contractor
abuses and the steps that the American Association for Homecare and
industry stakeholders are taking to correct the abuses.

Question: What type of post-payment audits do DME MACs
conduct?

Answer: MACs conduct medical review audits.
Post-payment medical review of claims requires that a benefit
category review, statutory exclusion review, reasonable and
necessary review, and/or coding review be made after claim payment.
These types of reviews are designed to give the MAC the opportunity
to make a determination to either affirm payment of a claim (in
full or in part) or deny payment and assess an overpayment.

Question: What are CMS’ objectives pertaining to medical
review post-payment audits?

Answer: CMS’ stated objectives are to increase
the effectiveness of medical review payment safeguard activities;
exercise accurate and defensible decision-making pertaining to
medical review of claims; and collaborate with other internal
components and external entities to ensure correct claims payment
and to address situations of Medicare fraud, waste and abuse.

Question: What do medical review functions
include?

Answer: Analyzing data; writing and reviewing
local coverage determinations; reviewing claims and educating
providers; comprehensive error rate testing; advance determination
of Medicare coverage; probe reviews; supplier education; and
medical review of claims not for benefit integrity purposes.

Specific efforts may include proactively identifying potential
medical review-related billing errors concerning coverage and
coding made by providers through analysis of data and evaluation of
other information; placing emphasis on reducing the paid claims
error rate by notifying the individual billing entities of medical
review findings and making appropriate referrals to provider
outreach/education and ZPIC Benefit Integrity units; taking action
to prevent and/or address the identified error; and publishing LCDs
to provide guidance to the public and medical community about when
items and services will be eligible for payment.

Question: How is a medical review post-payment audit
initiated?

Answer: The MAC is required to give the
provider written notice of the following: that the provider has
been selected for audit and the specific reason for such selection;
if the basis for selection is comparative data, the contractor must
provide comparative data on how the provider varies significantly
from other providers in the same specialty payment area or
locality; the list of claims that require medical records; and the
OMB Paperwork Reduction Act collection number.

Question: How does the MAC make its coverage
determination?

Answer: The contractor may review a claim
regardless of whether an NCD, coverage provision in an interpretive
manual or LCD exists for that service. A contractor must first
consider coverage determinations based on the absence of a benefit
category or based on statutory exclusion.

Next, a contractor then considers whether the claim was
“reasonable and necessary.” A service is reasonable and necessary
if the contractor determines that the service is safe and
effective; not experimental or investigative (subject to a narrow
exception); and appropriate, including the duration and frequency
that is considered appropriate for the service, in terms of whether
it is furnished in accordance with accepted standards of medical
practice; furnished in a setting appropriate to the patient’s
medical needs and condition; ordered and furnished by qualified
personnel; one that meets, but does not exceed, the patient’s
medical need; and is at least as beneficial as an existing and
available medically appropriate alternative.

There are narrowly defined exceptions to the “reasonable and
necessary” requirement. A contractor must deny a claim (in full or
in part) whenever there is evidence that the item or service was
not rendered or was not rendered as billed; was furnished in
violation of the self-referral prohibition; was furnished, ordered
or prescribed on or after the effective date of the provider’s
exclusion; or was not furnished or not furnished as billed.

Question: In conducting a medical review post-payment
audit, what documentation does the MAC review?

Answer: The contractor may use any information
it deems necessary to make a post-payment claim review
determination. The contractor may review any documentation
submitted with the claim and request documentation from the
provider or from a third party. A contractor may, but is not
required to, review unsolicited, supporting documentation that is
submitted with a claim.

A contractor may deny a claim without reviewing such
documentation in two instances: when clear policy serves as the
basis for denial; “clear policy” means a statute, regulation, NCD,
coverage provision in an interpretive manual, or LCD that specifies
the circumstances under which a service will always be considered
non-covered or incorrectly coded; or in instances of medical
impossibility.

Question: What is an Additional Documentation Request
(ADR)?

Answer: A contractor may request additional
documentation from a provider by issuing an ADR. The ADR must
specify the specific pieces of documentation needed to make a
coverage or coding determination. The purpose of the documentation
is to support the medical necessity of the item or service
provided.

The treating physician, another clinician or the provider may
supply the documentation. The documentation may take the form of
clinical evaluations, physician evaluations, consultations,
progress notes, physician letters or other documents intended to
record relevant information about a patient’s clinical condition
and treatment.

At the end of the day, what the contractor is looking for are
contemporaneous physician progress notes. If these are absent, then
it is unlikely that the provider will prevail at the audit
stage.

A provider has 30 days to respond to an ADR. The contractor may,
but is not required to, grant an extension. The contractor will
pend the claim for 45 days. A contractor may, but is not required
to, issue (at most) two reminders prior to the 45th day. If the
provider does not submit the requested documentation within 45
days, the contractor will deny the service as not reasonable and
necessary, except for certain ambulance claims.

If the provider timely responds to the ADR, but the
documentation submitted fails to support medical necessity, the
contractor will deny the claim (in full or in part). The contractor
may issue an ADR to a third party (e.g., a physician), but only if
it also first or simultaneously requests the same information from
the billing provider. The beneficiary is not considered to be a
third party.

Question: What time deadlines are imposed on the
contractor, once it receives additional documentation, to report
back to the provider?

Answer: When the contractor timely receives
documentation in response to an ADR, it must make a medical review
determination and mail a notification letter to the provider within
60 days of receiving the documentation. The contractor may begin
counting with the receipt of each medical record in the
contractor’s mailroom; each new medical record will have an
independent 60-day time period associated with it.

Alternatively, the contractor may wait until all requested
medical records are received in the contractor’s mailroom; the date
on which the last of the requested medical records is received will
represent the beginning of the 60-day time period. The 60-day count
is suspended if the matter is referred to a ZPIC.

Question: May a contractor reopen a claim after the
provider is late in responding to an ADR?

Answer: If a contractor receives the requested
information from a supplier after a denial has been issued, but
within a reasonable number of days (generally 15 days after the
denial date), then the contractor may reopen the claim.

If a claim that was denied for failure to submit requested
documentation is appealed, then the appeal department will send the
claim to the contractor for reopening if all of the following
conditions are met: a provider failed to timely submit
documentation requested through an ADR; the claim was denied
because the requested documentation was not received timely; the
requested documentation is received after the 45-day period with or
without a request for redetermination or reopening; and the request
is filed within 120 days of the date of receipt of the initial
determination.

Series

• Q&A: HME
  Prepayment Reviews
• Q&A: HME
  Post-Payment Audits

To read more of Baird’s comments on HME legal issues,
see his Law School columns in
HomeCare.

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].