This piece was originally published in Mobility Matters, which is published by the American Association for Homecare to inform lawmakers, consumer and organizations and the media about Medicare's power mobility benefit and the need to sustain it. 

WASHINGTON-The US Department of Health and Human Services (HSS) has found serious flaws in the methodology used to calculate the error rate on Medicare payments for services and products. In fact, a March 9 HHS Office of Inspector General (OIG) report concluded that improper Medicare payments reported to Congress for fiscal years 2009 and 2010 should have been reduced by $2 billion each year. The reason: thousands of denied claims cited as improper payments were later overturned and paid during the appeals process. 

The Comprehensive Error Rate Testing (CERT) program, which annually calculates the Medicare error rate on payments, monitors how often the Centers for Medicare and Medicaid Services (CMS) denies payments to hospitals and providers because it was determined that proper reimbursement and coverage criteria weren’t used.  The government acknowledges that CERT was designed to measure billing errors in Medicare – not to measure fraud or abuse.  

But the OIG study released March 9 is significant because the findings underscore the extent of the flaws in the CMS reimbursement and documentation policies.

Under the current process, CMS is denying reimbursement claims for durable, or home medical equipment, such as oxygen therapy, hospital beds and power wheelchairs, unless certain guidelines are met. 

Clearly, however, the number of successful appeals at three different levels - Medicare Administrative Contractor, Qualified Independent Contractor and Administrative Law Judge - demonstrates that other authorities disagree with the way CMS and its contractors are reviewing claims. One major problem is the lack of a consistent and reasonable standard: providers find that the policy guidelines are routinely applied differently in different regions of the country, and can even vary within the same region or claims office.

“The OIG report reinforces the fact that the documentation process for Medicare reimbursements must be addressed in a substantial way,” said Tyler Wilson, president of the American Association for Homecare.  “These claim denials are killing legitimate businesses. Providers are paying for products and services that are medically necessary for Medicare beneficiaries. Then, largely for technical reasons, the reimbursements for providers are being denied, and they must go through a lengthy and costly appeals process to receive payment.”

Wilson cited the cash flow shortfalls caused by these payment delays as well as excessive government audits as major reasons why many providers are going out of business or deciding to no longer provide certain products to Medicare patients.

Denied claims are particular problem for power wheelchair providers.  Requirements for documenting medical necessity for mobility equipment has changed numerous times over the last decade, confusing physicians, clinicians, providers and Medicare beneficiaries.

Power wheelchair providers said nearly 90 percent of their claim denials are reversed by Administrative Law Judges, but the payment delays and administrative costs associated with making appeals place an unfair financial burden on their businesses.

Three years ago, a CMS report provided insight on the agency’s approach to reimbursement claims and cited recent changes to payment guidelines.  In the report, the agency demonstrated how unreasonable they have made some of the guidelines:

-Previously, physician medical records were requested but if all documentation was not submitted, claim reviewers considered all available information (medical records, supplier notes, etc.) and applied clinical review judgment to make a payment decision. Now, physician records must be provided and other information won’t be considered if that requirement isn’t met. For example, if a bill is submitted by a supplier for an oxygen concentrator, the supplier documentation includes a Certificate of Medical Necessity (CMN) that lists the oxygen saturation at rest and during exercise as required by the local coverage determination (LCD). The LCD also requires that the information on the CMN be supported by the ordering/referring physician’s medical records. If the physician’s medical record documentation is not submitted, the supplier claim is denied.

-Medicare requires that services provided/ordered be authenticated by a legible identifier and stamp signatures are not acceptable. In the past, if the provider’ signature was missing or illegible, and there were no other reasons to deny the claim, it would be paid.  CMS has issued instructions directing that claim reviewers strictly adhere to the policy requiring a legible identifier.

-Claims that previously would have been paid based on information from claims history will be denied. For example, if a supplier provided the treating physician’ signed and dated order for a bedside commode and it indicated a 79-year-old patient was recovering from a total knee replacement. A review of claims history may show the beneficiary had a Medicare covered inpatient hospital stay for total knee replacement with a co-morbid diagnosis of urinary tract infection shortly before this claim. The policy states a commode is covered when the patient is physically incapable of using regular toilet facilities. Previously it would have been determined that the total knee replacement combined with the urgency of urination associated with a urinary tract infection was sufficient to meet this requirement. Now, however, claims history is not a basis for payment. A medical record documenting the condition must also be submitted.

While claim reviewers are denying claims based on these confusing and onerous guidelines, they are frequently overturned in appeals. To make the error rate more accurate and not provide Congress with erroneous information, the OIG has recommended that CMS adjust its methodology to include denials overturned on appeal.

But Wilson said the home medical equipment sector is looking for more substantial change, saying CMS must address the factors creating the unjustified claim denials.  Wilson, for instance, noted that CMS is considering an electronic template that would vastly improve the documentation process for power wheelchairs.  And he said that if CMS designs an adequate process for prior authorization, it would also alleviate some issues.

“What’s clear is the underlying problems contributing to the error rate must be addressed,” Wilson said.  “It’s absurd for the private sector to have to pay such a steep price because the government can’t implement reasonable reimbursement guidelines.