Are Ongoing DME Probes Setting Table For RAC Audit?

This article originally appeared in the in Nov. 2010.

At this point in time, there has been a limited focus on durable medical equipment by the RACs. Currently, HDI, the Region D RAC, is leading the way with 20 DME issues approved for widespread review. DCS in Region A follows close behind with 14 issues, while Connolly and CGI have 9 and 5 respectively.

In their latest report, the Comprehensive Error Rate Testing program determined the payment error rate on DME claims to be 51.9 percent. It is believed that the steep increase in the DME error rate from 9 percent in a previous report had to do with changes in review methodology for DME claims. Yet given that this number stands head and shoulders above error rates for all other types of Medicare claims, the lack of a RAC focus up to this point is somewhat surprising.

DME MAC probes
As we’ve come to learn with other types of services, the Medicare Administrative Carriers, through the use of probe reviews, are making an attempt to fill the audit void on their own. This is especially true for the four DME MACs, who have been busy of late looking at certain claim types in an attempt to gain a clearer picture of payment errors. When it is determined that the payment error rates are unacceptable, a few of the DME MACs are taking the additional step of implementing pre-payment review of selected services.

Dismal results
This past November, NHIC, the Jurisdiction A DME MAC, issued results of three widespread prepayment reviews for select services billed in the 3rd quarter of 2010. The first of these involved the familiar target of power wheelchairs, specifically those covered by HCPCS code K0823. Of 952 claims submitted featuring these codes during the time period, 596 were denied, for a claim denial rate of 62.6 percent. Next up was oxygen and oxygen equipment, with codes E1390, E0431 and E0439 going under the microscope. 376 out of 478 services submitted were denied, resulting in a rate of 79 percent. Rounding out the triumvirate was nebulizers with compressors, represented by code E0570. 211 claims were submitted, resulting in 143 denials and a 67.7 percent claim denial rate. Across the three probes, the biggest reason for denial was a lack of sufficient documentation necessitating the need or provision of the equipment.

In Jurisdiction B, National Government Services conducted a post-payment probe of blood glucose test strips (HCPCS code A4253). 125 of 137 claims were denied, resulting in a claims error rate of 91.2 percent. The majority of these claims were denied due to a lack of either a valid physician’s order or a key piece of requested documentation.

The Jurisdiction C MAC, CIGNA Government Services, also took it upon themselves to review claims for glucose test strips as a prepayment probe. This resulted in a similar claims denial rate of just under 90 percent. CIGNA also followed NHIC’s lead by reviewing power wheelchairs in a prepayment probe, with a finding of a claims error rate of 92 percent. Prepayment reviews are currently underway by CIGNA for such items as enteral nutrition, nebulizer drugs, oxygen contractors and CPAP devices.

Finally, Jurisdiction D and its MAC, Noridian, traveled over ground both familiar and alien to their DME cohorts. Following a prepayment review of blood glucose strips which found a 77 percent error rate, Noridian conducted a complex targeted pre-payment review (“complex” in this case defined as “larger sample universe”), which found a 72 percent error rate. While any improvement is good, obviously there is a lot of work yet to be accomplished in the realm of testing strips. Begging equally for intervention are claims for high strength, lightweight wheelchairs, billed with HCPCS code K0004, which had a 93% error rate in a probe review.

Grim conclusions
Up to this point, most of us in the compliance community have existed alongside the RACs with a lingering sense of waiting for the other shoe to drop. There is a whole universe of claims issues ripe for the picking by the contractors, as the above reviews clearly illustrate. Having typed that, there is what I see as an accountability gap with regard to how the MACs are processing claims and identifying errors. Not one of the claims reviews above can boast of an error rate of 50%. For some of these issues, an error rate as “low” as every other claim being paid in error would be a paradigm shift for the carrier.

To add to the general frustration, parenteral nutrition, home blood glucose strips and power wheelchairs currently appear on the OIG Work Plan for 2011, in addition to at least one RAC looking at one or all of these issues. When three sets of eyes are identifying the same issue for audit, it appears to me that at least some of the blame for the current climate of “pay-and-chase” can be placed at the feet of the administrative carriers. Like you, I won’t hold my breath waiting for someone of importance to make that point.

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