Funding Focus

Safeguarding Your Business for OIG Inspections

• By Kelly Riley
• May 01, 2007

Anyone who has worked in the HME industry for more than a month has certainly heard of fraud and abuse. In 1999, the Fraud Control Account program paid off big for the Office of the Inspector General (OIG) by showing a rate of return of 118 to one. By 2000, four years after reporting a 14-percent improper payment rate, the OIG cut that rate in half. Fiscal year 2000 also brought reported savings of more than $15 billion, 3.350 exclusions, 414 convictions and 357 civil actions against individuals or entities engaged in fraud or abuse of federal programs. The Congressional Budget Office cited anti-fraud activities as one of the reasons for a 30-year extension of the Medicare Trust Fund.

Each fiscal year, the OIG sets forth a work plan. This plan identifies multiple projects that will be undertaken by a variety of offices, including those of audit, evaluation, inspections and investigations. The plan is reflective of what the OIG believes to be problem areas. The projects that concern those of us in the HME industry are those planned for the Centers for Medicare & Medicaid Services and the Department of Health & Human Services.

Take a close look internally at these areas cited in the 2007 work plan:
•    Patients receiving home health services — The OIG will review medical records for durable medical equipment (DME) items and supplies furnished to beneficiaries receiving Home Health Agency (HHA) services to determine whether the items and supplies were reasonable and necessary for the beneficiaries’ conditions. Many supplies are to be provided by the HHA as part of the episode of care, and therefore not to be billed separately by the HME. Asking whether the patient is receiving care from an HHA should become part of the initial intake process.
•    Medicare payments for durable medical equipment claims with ZX, KX and KS modifiers —The OIG will review and determine whether a DME supplier who filed claims using those modifiers does in fact have the appropriate documentation on file. Under the Medicare program, a supplier may use these modifiers to indicate that the necessary documentation supporting medical necessity is in their files. The KX modifier is used only when the specific documentation requirement found in the section of the medical policy has been met and evidence is available in your records. It’s very important that your billers are familiar with local coverage determinations for CPAP, BIPAP and PAP supplies to ensure each claim with a KX modifier can be justified. Regional DME carriers conducted reviews and found that suppliers had little or no documentation to support claims they had submitted. These discoveries indicate that the claims are invalid and should not have been paid by Medicare.
•    Payments to Medicaid DME providers — Some states require that Medicaid DME providers maintain active Medicare enrollment as a condition of participation in the state Medicaid DME program. For those states, this study will determine the extent to which Medicaid providers that are not maintaining Medicare enrollment are receiving Medicaid payments for DME, contrary to state standards.
•    Billing for DME in hurricane-affected areas — The OIG will examine payments for DME supplies and equipment in the areas affected by the recent hurricanes. According to DMERC officials, suppliers in the hurricane-affected areas were not supposed to bill for equipment until they could make contact with the beneficiary to be sure the equipment was still medically necessary and in use. If you conduct business in one of the many affected areas, an internal audit showing due diligence could go a long way. If there are no notes in your system — either electronically or otherwise — get verification, preferably in writing, that the patient was using the equipment at that time.
•    Contractual arrangements with suppliers — The OIG will take a look at contractual arrangements in which a supplier, such as a DME company, agrees to operate the service on behalf of a physician’s practice or a hospital. The OIG will review the structure of financial arrangements and determine whether these arrangements impact the Medicare program. If you have entered into an agreement with a sleep lab or physician and have not secured the opinion of a good heath care attorney, do so now.

The OIG has come a long way from its early beginnings in France in 1668, when the primary function was for the inspector general to review the troops and report back to King Louis XIV. Really, not much has changed; our current inspectors deal with waste fraud and abuse in federally funded programs.

It’s unfortunate that our industry has received so much attention in this area. Take steps now to make sure your company is not part of the OIG success story.

Author’s note: For more information, reference http://oig.hhs.gov/.

This article originally appeared in the Respiratory Management May/June 2007 issue of HME Business.