Monthly Archives: January 2015

Audit Alerts

Audit alert van Halem GroupDME contractors perform pre- and post-payment reviews on a continual basis. Through data analysis, the medical review department determines the codes they will review and then sends Additional Documentation Request letters to suppliers that bill those codes.

The following list includes those codes currently being reviewed among two or more DME jurisdictions:

  • Noninvasive vents (E0464)
  • CPAPs (E0601)
  • Test strips (A4253)
  • Diabetic shoes (A5500)
  • Hospital beds (E0260)
  • Group 2 pressure reducing support surfaces (E0277)
  • Vacuum Erection Devices (L7900)
  • Oxygen (E1390, E0431, E0434, E0439)
  • Immunosuppressive Drugs (J7507, J7517, J7518, J7520)
  • Nebulizers and drugs (E0570,J7605, J7606, J7613, J7620, J7626)
  • Enteral nutrition (B9000, B9002, B4150, B4154)

Strategic Health Solutions is the supplemental medical review contractor responsible for conducting nationwide medical review as directed by CMS. Past DMEPOS projects included power mobility devices and Vacuum Erection Devices. Currently, SHS is conducting reviews of diabetic testing strips (A4253).

SHS audit requests consist of 100 claims, regardless of business size. Like other audit contractors, SHS notifies the supplier of the results of the audit, then recommends the claims for overpayment to the DME MAC. The audit can result in an overpayment of the claims audited and/or an extrapolated overpayment of the claims universe during the time period reviewed. To date, vHG clients have received overpayment notifications for VEDs on individual claims rather than extrapolated overpayments. Our clients have begun receiving audit results letters for diabetic testing strips, but are currently awaiting the overpayment demand letters from the DME MACs. Therefore, the results of these audits to be individual or extrapolated overpayments are to be determined.

RAC Update

rac-update-imageOn December 30, 2014, the CMS announced that the National DMEPOS and Home Health & Hospice Recovery Audit contract had been awarded to Connolly, LLC. Connolly is no stranger to the RAC game, as they were previously the Region C Recovery Audit Contractor.

Approved issues will be posted to the Connolly website as they were previously, and can be accessed through this link:

Along with the announcement that Connolly has been awarded the National DMEPOS and HHH contract comes the implementation of Improvements to the Recovery Audit Program, which were created in part, to reduce supplier burden and provide transparency to the program. Of note, the improvements include:

  • Establishing ADR limits based on a supplier’s compliance with Medicare rules. Meaning, a supplier with low denial rates will have lower ADR limits while a supplier with high denial rates will have higher ADR limits.
  • RACs must wait 30 days to allow for a discussion request before sending the claim to the DME MAC for adjustment. This allows time to initiate a discussion period and allow for possible changes to be made on the improper payment determination prior to the claim being sent to the DME MAC for adjustment. Suppliers will no longer have to choose between a discussion or an appeal.
  • RACs will not receive their contingency fees until the 2nd level of appeal has been exhausted. This ensures that the RAC is properly applying Medicare rules and regulations on the claims they audit.
  • RACs must maintain an accuracy rate of 95% and an overturn rate of less than 10%. Failure to meet these requirements will result in decreased ADR limits or elimination of certain reviews until the problems are corrected.


The RACs are now required to employ a Contractor Medical Director (CMD), which among other things, could indicate that they will now be participating at ALJ Hearings, much like the DME MAC CMDs do now. While this does not immediately translate into unfavorable outcomes, it does provide another barrier in conveying the need for the equipment/supplies that were previously denied.

At this time, Connolly has not posted any new issues to their website and information is still forthcoming as to what we can expect in these improvements. What is certain is that a national RAC focusing solely on DMEPOS and HHH claims will mean an increase in RAC audits.

Compliance Corner – January 2015

Compliance Corner by van Halem GroupWith the implementation of the Affordable Care Act, the government has been given greater authority to enforce compliance and address fraud, waste and abuse. As noted in our last newsletter, the ACA mandates Compliance Programs as a condition of enrollment in Medicare, Medicaid and CHIP.   Even more compliance efforts under the ACA and Medicare enrollment are being empowered by CMS.

On Dec. 3, 2014, CMS issued a Final Rule under the provisions of the Affordable Care Act that will improve CMS’ ability to deny or revoke the enrollment of entities and individuals that pose a program integrity risk to Medicare.   Provisions of this Final Rule include:

  • adding the ability to deny enrollment to providers, suppliers and owners affiliated with an entity that has unpaid Medicare debt;
  • adding the ability to deny enrollment or revoke billing privileges of providers or suppliers if a managing employee has been convicted of certain felony offenses;
  • permit CMS to REVOKE billing privileges of providers and suppliers that have a pattern or practice of billing for services that do not meet Medicare requirements (regularly submit improper claims); and
  • make the effective date of billing privileges consistent across certain provider and supplier types.

It is more important than ever for all providers and suppliers to have an “effective” Compliance Program that encompasses consistent auditing and monitoring of claims. Your Compliance Program will assist in avoiding government audits or investigations, and prevent your Medicare enrollment from being denied or revoked.

FYI: The OIG is successfully identifying and investigating providers and suppliers who are committing fraud, waste and abuse, which CMS will monitor for their new Medicare enrollment enforcement authority. On Dec. 10, 2014, the OIG HHS released its Semiannual Report to Congress – Fiscal 2014 Report to Congress noting that $4.9 BILLION dollars in improper health care payments are expected to be returned to taxpayers this year.