Deeper Than the Headlines: Healthcare Equipment and Supplies

Deeper Than the Headlines: Healthcare Equipment and Supplies

Posted by CJ Wolf
Jan 28, 2019 4:30:37 PM

If you are a provider of equipment or supplies to your patients, the latest OIG audit report will be of interest to you. The OIG took a deep dive to look at a specific type of equipment: orthotic braces. But understanding their process, findings and conclusions for this type of supply could be applied to many other types of equipment and supplies.

From January 1, 2015, through March 31, 2017 Medicare paid approximately $1.3 billion for back, knee, and ankle/foot braces (selected orthotic braces) provided to Medicare beneficiaries. During this period, the Centers for Medicare & Medicaid Services found that orthotic braces were among the top-20 items of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) with the highest improper payment rates. Prior OIG reviews found that some DMEPOS suppliers billed for orthotic braces that did not comply with Medicare billing requirements. After analyzing Medicare claims data, the OIG audited Kelley Medical Equipment and Supply, LLC (Kelley Medical), an orthotic braces supplier in Durant, Oklahoma. The objective was to determine whether Kelley Medical complied with Medicare requirements when billing for selected orthotic braces. Turns out, as much as $4 million was considered to be overpayments.

Background

Orthotic braces are defined as “rigid and semi-rigid devices which are used for the purpose of supporting a weak or deformed body member or restricting or eliminating motion in a diseased or injured part of the body.” Medicare Part B covers DMEPOS, including orthotic braces. However, to be paid by Medicare, a service or an item must be reasonable and necessary for the diagnosis or treatment of illness or injury, or improve the functioning of a malformed body member.

CMS contracts with two durable medical equipment Medicare administrative contractors (DME MACs) to process and pay Medicare Part B claims for DMEPOS, including orthotic braces. When submitting claims to DME MACs for orthotic braces, suppliers use Healthcare Common Procedure Coding System (HCPCS) codes. Under Medicare Part B, the MACs reimburse suppliers for orthotic braces based on a fee schedule.

Before submitting a claim for an orthotic brace to the DME MAC, a supplier must have on file the following:

  • Written documentation of a verbal order or a preliminary written order from the treating physician
  • A detailed written order from the treating physician
  • Information from the treating physician concerning the beneficiary’s diagnosis
  • Any information required for the use of specific modifiers and
  • Proof of delivery of the orthotic brace to the beneficiary.

A supplier should also obtain as much documentation from the beneficiary’s medical record as it determines necessary to assure itself that the orthotic brace meets Medicare requirements. If the information in the medical record does not adequately support the medical necessity of the orthotic brace, the supplier is then responsible for the payment amount of the brace.

OIG Audit and Findings

During the OIG’s audit period, Kelley Medical received $6,731,911 in Medicare Part B payments. Approximately 99 percent of these payments were for orthotic braces. Primarily, those were back and knee braces, which they provided to 7,189 Medicare beneficiaries in every State and territory, excluding Alaska.

The OIG’s review covered 7,067 beneficiaries, representing 8,508 paid claims and totaling $6,530,929, after excluding for claims previously reviewed. They then selected a stratified random sample of 100 beneficiaries and reviewed 135 claims, totaling $103,718, that were associated with the sampled beneficiaries.

Kelley Medical complied with Medicare requirements on 24 of the 100 sampled beneficiaries. However, on the remaining 76 beneficiaries, the OIG concluded Kelley Medical did not comply with the requirements.

Specifically, the OIG stated Kelley Medical:

  • Billed for orthotic braces that were not medically necessary for 67 beneficiaries and,
  • Could not provide medical records for 9 beneficiaries.

These deficiencies occurred because Kelley Medical did not always obtain sufficient information from the beneficiaries’ medical records to assure itself that the claims submitted to the DME MAC for orthotic braces met Medicare requirements. On the basis of their sample results, the OIG estimated that Kelley Medical received at least $4,079,308 in Medicare payments for orthotic braces that it was not due.

Example of Medically Unnecessary Back and Knee Braces for the Same Beneficiary

In one instance, Medicare paid Kelley Medical $1,282 for providing a back brace and a left knee brace to a 60-year-old beneficiary. According to the physician order dated September 21, 2016, the back brace was prescribed for low back pain, and the knee brace was prescribed for arthritis of the knee. However, the medical record showed that there was no history, or mention of recent injury to, or surgery on the beneficiary’s spine or knee, and there was no mention of deformity, weakness, or complaints of pain with motion or mobility affecting the spine. The physician notes described the beneficiary’s posture while standing and walking as “normal,” despite weakness of the right side of the body, and there was no mention of a back or knee brace. Rather, according to the medical records, the beneficiary saw the physician multiple times from August 6, 2015, through June 13, 2016, to obtain necessary documentation for dental work and to have follow-ups for blood work to monitor diabetes and hypertension. As a result, the independent medical review contractor found that the back and knee braces were not medically necessary.

Example of a Medically Unnecessary Back Brace

In another instance, Medicare paid Kelley Medical $754 for providing a back brace to a 62-year-old beneficiary. According to the physician order dated March 7, 2017, the brace was prescribed for lower back pain. However, the medical records did not indicate a complaint of back pain, and there was no mention of a back brace. Rather, according to the medical records, the beneficiary saw his physician on March 2, 2017, for relief of persistent cough and chest congestion. As a result, the independent medical review contractor found that the back brace was not medically necessary.

Example of a Medically Unnecessary Knee Brace

And finally, Medicare paid Kelley Medical $515 for providing a knee brace to a 77-year-old beneficiary. According to the physician order dated November 2, 2016, the brace was prescribed for arthritis of the knee. However, the medical record showed that the beneficiary made no complaint of knee pain, or instability when walking, and there was no history of a recent surgery or injury and no mention of a knee brace. Rather, according to the medical records, the beneficiary saw the physician twice: once on August 22, 2016, to manage her digestive disorder and again, on September 16, 2016, to establish care. As a result, the independent medical review contractor found that the knee brace, again, was not medically necessary.

OIG Recommendations

Following the audit, the OIG recommend that Kelley Medical:

  • Refund to the DME MACs $4,079,308 in estimated overpayments for orthotic braces (of which $76,964 was overpayments identified in our sample)
  • Exercise reasonable diligence to identify and return any additional similar overpayments outside of our audit period, in accordance with the 60-day rule, and identify any returned overpayments as having been made in accordance with this recommendation
  • Obtain as much information from beneficiary medical records as it determines necessary to assure itself that claims for orthotic braces meet Medicare requirements

Kelley Medical disputed much of the OIG’s findings. The report offers an interesting read of back-and-forth comments between the OIG and Kelley Medical in regards to this audit. When you have a moment, I recommend you read it in full here.

Questions or Comments?