Q&A with Jeff Baird: Prepayment Reviews
Part 1 of a Four-Part Series: The following
questions and answers from health care attorney Jeff Baird of Brown
& Fortunato are Part I 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.
The HME industry is young. In its present form, it has been
around for about 30 years. Compare this to physicians, hospitals
and pharmacists who have been around for thousands of years. The
industry grew up relatively unregulated. HCFA (now CMS) did not
know what we did.
And then approximately seven years ago it is as if CMS woke up
one morning and asked, “Who are these people and why are we paying
them money?” Added to this was bad publicity emanating from
Operation Wheeler Dealer in Houston and blatant fraudulent schemes
in South Florida.
Another challenge is that few people with CMS and on Capitol
Hill have ever set foot in an HME company. Young, healthy people go
to doctors, hospitals and physicians. As a general rule, senior
citizens (whose bodies break down as they age) use HME companies.
The 28-year-old legislative staffers and the 50-year-old CMS
employees have had no reason to visit (much less understand) what
an HME company does.
As the government is famous for doing, it overreacted. In a
relatively short timeframe, the industry got hit with increased
regulations, decreased reimbursement, competitive bidding and
aggressive post-payment audits and prepayment reviews.
The pendulum will eventually swing back toward the middle. Until
that time, however, the HME industry will have to deal with
intrusive government scrutiny.
What is interesting is that the demand for what the industry has
to offer will only increase exponentially. There are 78 million
baby boomers (people born between 1946 and 1964). They are retiring
at the rate of 10,000 per day. The boomers will live until they are
85, their bodies will start breaking down at 70, they will expect a
good quality of life until they die and they will not want to live
in a long term care facility — they will want to live at
home.
The mantra of health care cost containment will be to keep
Medicare beneficiaries away from physicians and hospitals. The
demand, then, for what HME providers have to offer will be huge. I
call this the “irresistible force” (demand) meets the “immovable
object” (Medicare is broke).
So while we are in strange times, the future is bright for
well-run, innovative HME providers. One of the biggest challenges
facing providers today is preparing for and responding to
post-payment audits and prepayment reviews. There is abundant
contractor abuse in how the audits and reviews are being conducted.
AAHomecare and industry stakeholders are working with CMS to
correct these abuses.
Nevertheless, audits and reviews will be a permanent part of the
landscape.
Question: Why is there such an increase in audits and
reviews?
Answer: Audits and reviews are moneymakers for
the government. For every dollar expended by the government to
chase a recoupment, the government recovers many more dollars.
There is an increase in utilization of HME; this is to be
expected in light of the “graying of America.” Generally speaking,
HME is expensive. This, by itself, will capture the government’s
attention.
Health care providers (not just HME providers) have become the
new bogeyman to the government. The bogeymen used to be Big Oil,
then Big Tobacco, then Big Pharma — and now fraudulent health
care providers. Recovering money from fraudulent health care
providers makes an easy sound bite for politicians. Health care
providers are “low-hanging fruit” for recoupment actions by the
government.
It is a priority of CMS to uncover and prevent fraud in the
Medicare fee-for-service program, and the agency’s contractor
auditors are becoming more sophisticated in reviewing HME
claims.
Question: What is the difference between a post-payment
audit and a prepayment review?
Answer: A post-payment audit can be conducted
by a MAC, CERT, RAC or ZPIC. With a post-payment audit, the
provider has previously received payment from the MAC. Now the
Medicare contractor is trying to determine if the MAC should have
previously paid the claim. If the answer is “no,” then the
contractor will ask the provider to repay the money.
While a post-payment audit is unpleasant, it is not life
threatening. In other words, in a post-payment audit, the provider
has already received its money, meaning that it can pay its light
bills and make payroll.
On the other hand, a prepayment review can be life
threatening in the sense that the contractor will not initially pay
the claim until the provider submits documentation confirming to
the contractor (in its discretion) that underlying documentation is
proper.
Only MACs and ZPICs conduct prepayment reviews. If a claim is
denied at the prepayment review stage, and the provider goes
through the administrative appeal process and eventually ends up
before an Administrative Law Judge (ALJ), then it may take the
provider up to nine months to receive payment for the claim.
If the provider is under a 100 percent prepayment review for a
product line, and if it takes the provider up to nine months to get
paid for the products, then in the worst-case scenario, this may
cause the provider to close its doors.
Question: What can cause an HME provider to be subjected
to a prepayment review?
Answer: One of the factors that can cause a
provider to be subjected to a prepayment review is if the provider
furnishes items that are selected by the OIG for prepayment edits.
Another factor is if the provider has caught the attention of the
MAC or ZPIC. This may result from the provider faring poorly with
prior post-payment audits and prepayment reviews; data analysis
that indicates the provider submits claims that are outside the
norm; or complaints from physicians and beneficiaries.
In order to reduce the risk of catching the attention of the
MAC/ZPIC, it is important that the provider be successful in
responding to prior post-payment audits and prepayment reviews. For
example, I am aware of a provider that received five prepayment
reviews each month for 12 months. The provider responded to the
review requests in a cavalier manner, resulting in a number of
denials. The company did not care because it was growing at such a
rapid pace; not being paid for five claims per month was no big
deal.
After the 12 months were up, the provider was placed on 100
percent prepayment review. When the provider asked why, the ZPIC
said “Because you fared so poorly on the small prepayment reviews
we hit you with during the past 12 months.”
It is important that the provider have a good relationship with
physicians and beneficiaries so as to reduce the chances of a
complaint being filed. If a competitor files a complaint, then the
government may not listen (it is “just a competitor”). However,
when a physician or beneficiary files a complaint, then the
government will usually take action.
Question: So how is a prepayment review carried
out?
Answer: The provider will submit a claim to the
MAC for a product that the provider has furnished to a beneficiary.
Instead of paying the claim, the MAC/ZPIC will mail an additional
document request (ADR) to the provider. Essentially, the ADR will
say, “Give me everything you have regarding this claim.”
The provider will need to send the requested documentation to
the contractor within 30 days. If the prepayment review falls under
the category of “medical review,” then the contractor must reach a
determination within 60 days from receipt of the provider’s
documentation.
Normally, it is the MAC (not the ZPIC) that conducts the Medical
Review prepayment review. Conversely, if the prepayment review
falls under the category of “benefit integrity,” then the
contractor (the ZPIC) does not have any set timeline within which
to make a determination. If the contractor denies the claim, then
the provider will need to go through the administrative appeals
process to get paid (redetermination, reconsideration, ALJ).
Question: How long will a provider be on a prepayment
review?
Answer: Normally, the provider will be on a
prepayment review until its charge denial rate (CDR) is less than
or equal to 20 percent. Let’s say that the provider is initially
placed on 100 percent prepayment review. Once its CDR drops below
75 percent, then the review should be converted to a targeted
review.
In a targeted review, the contractor will review a portion of
claims based on the provider’s CDR. For example, if the provider’s
CDR is 40 percent, then 40 percent of the claims submitted in a
month should be reviewed. This process should continue until the
provider’s CDR equals to or is less than 20 percent, at which time
the prepayment review should terminate.
Question: When a provider is placed on a prepayment
review, what steps should the provider take?
Answer: The goal of the provider is to reduce
its CDR. The provider needs to review its documentation thoroughly
to ensure that it supports the submitted claims. The provider
should open up a line of communication with the contractor’s
auditor.
If the provider is initially on a 100 percent prepayment review,
then the provider should try to convince the auditor to limit the
prepayment review to a set number of claims and/or to limit the
review to a set time period. The provider needs to push the auditor
to make claims determinations as quickly as possible.
The provider needs to be polite, but persistent. This is the
proverbial “squeaky wheel gets the grease.”
If necessary, the provider should go over the auditor’s head and
speak with the contractor’s district/regional manager. If
necessary, the provider should go over the contractor’s head and
speak with CMS (in particular, to the person in charge of
supervising the contractors). If necessary, the provider should ask
its elected officials (U.S. representative and/or senator) to
contact the contractor on behalf of the provider.
Question: Where can a provider look to determine if it
may be at risk for a prepayment review?
Answer: Sign up for the DME MAC listserv and
read its quarterly advisory newsletter. Also look at OIG reports,
CERT reports, the OIG work plan, Office of Evaluation and
Inspection reports, Office of Audit Services reports, Supplier
Manual and articles from the Medicare Learning Network.
Question: What items are currently targets for
prepayment reviews?
Answer: Mail-order diabetic testing supplies,
CPAPs, Group 2 support surfaces, oxygen concentrators and enteral
nutrition.
Series
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].
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