The 2017 OIG Work Plan for DME Suppliers

A new year will soon be upon us and with that comes a new OIG Work Plan! Each year, the OIG publishes their Work Plan, which summarizes new and ongoing projects the OIG plans to pursue with respect to HHS programs and operations. Why is that important to you? Because once the OIG identifies their areas of focus, audit contractors such as the DME Medicare Administrative Contractors (DME MACs), Supplemental Medical Review Contractor (SMRC), Comprehensive Error Rate Testing contractor (CERT), Recovery Audit Contractors (RACs), and Zone Program Integrity Contractors (ZPICs) typically follow suit and focus on similar topics or issues. By having this knowledge, you can make a determination on the vulnerability of your business practices and then take the appropriate steps to identify your risk areas. Once you’ve identified areas of risk you will be better suited to implement the appropriate controls or corrective action plans needed to minimize the possibility of an extensive prepayment review (which ties up your cash flow) or a postpayment review (which could result in an extrapolated overpayment).

Like last year, this year’s Work Plan includes some new projects for the OIG. While that may not be exciting news to you, the DME Supplier, it should at the very least peak your interest, especially if you provide any of the equipment and supplies on the list. Projects that have carried over do not hold less importance, but rather, should signal that the OIG still believes more investigation needs to be done. Conversely, anything new to the plan this year should put you on alert for the types of audits that may come your way from the CMS audit contractors.

The Same as Last Year

Power Mobility Devices (PMDs)
PMDs are once again making the OIG’s Work Plan for 2017. Like last year, the OIG still intends to examine the lump-sum purchase versus rental option to determine whether potential savings can be achieved by Medicare if certain PMDs are rented over a 13-month period rather than acquired through a lump-sum purchase.

How does this relate to other auditors? The RACs and ZPICs both audited PMD claims in 2015 and 2016. Contracts for the new National Home Health, Hospice and DMEPOS RAC and the first Unified Program Integrity Contractor (UPIC) Jurisdiction were recently announced. It is a good assumption that these contractors could start with PMD audits, since they have been successful in the past and both the OIG and CMS have given approval to audit this type of equipment.

Nebulizer machines and Related Drugs
Supplier compliance with payment requirements for nebulizer machines and related drugs to determine whether claims are medically necessary and that the requirements were met also stays on the Work Plan for 2017. This one remains a hot topic as a result of Medicare paying approximately $632.8 million for inhalation drugs in calendar year 2014. A preliminary OIG review identified that at least 50 percent of claims reviewed were not paid in accordance with Medicare requirements.

Strategic Health Solutions, the Supplemental Medical Review Contractor (SMRC) conducted reviews on nebulizers, nebulizer supplies and related drugs in 2016, with results now trickling in. It can be anticipated that these audits will continue for 2017.

Orthotic Braces
Orthotic braces will continue to be on the OIG’s radar for 2017, related to supplier compliance with payment requirements and reasonableness of Medicare payments compared to payments by other payers. Since 2009, Medicare payments for orthotic braces, including back and knee, have more than doubled and almost tripled for certain types of knee braces, according to the OIG. Regarding the comparison in payments made for orthotic braces to amounts paid by non-Medicare payers, such as private insurance companies, the OIG will seek to identify potentially wasteful spending. In part, by estimating the financial impact on Medicare and on beneficiaries of aligning the fee schedule for orthotic braces with those of non-Medicare payers.
Prior OIG work also indicated that some suppliers were billing for services that were medically unnecessary or were not documented in accordance with Medicare requirements. For that reason, the OIG will continue to review claims for braces to ensure they are compliant with payment requirements.

Increases in direct-to-beneficiary marketing of orthotics both on television and online and in mail order suppliers have contributed to the increase in billing of orthotics and, as a result, the audits have increased. 2016 resulted in large numbers of ZPIC audits for orthotics, with devastating results. Suppliers that are not still reeling from millions of dollars in extrapolated overpayments are instead facing prepayment reviews and suspensions. In some instances, we have even seen supplier numbers revoked.

Osteogenesis Stimulators
Lastly, osteogenesis stimulators remain on the Work Plan for 2017. From 2012 to 2014, Medicare payments for these devices were approximately $286 million dollars. The OIG will examine the lump-sum purchase versus rental option to determine whether potential savings can be achieved if osteogenesis stimulators are rented over a 13-month period rather than acquired through a lump-sum purchase. Given the reimbursement amount and category, audits may come from contractors hoping to make an impact. Translation? The UPICs and RAC may jump at the chance to audit these types of claims.

What’s New for 2017?

Part B Services During a Non-Part A Nursing Home Stay
In July 2009, an OIG report found that Medicare Part B allowed inappropriate payments of $30 million for DMEPOS provided during non-Part A SNF stays. The OIG intends to study the extent of inappropriate payments to nursing home patients during non-Part A stays in 2015. The study will also put the spotlight on CMS, to determine if they have appropriate systems in place to identify improper payments and initiate recoupments.

Positive Airway Pressure Device Supplies
Medicare payments for CPAP and BiPAP supplies in 2014 and 2015 were approximately $953 million. Prior OIG work found that suppliers auto-shipped supplies when refills were not requested by the beneficiary and also that the physician orders were incomplete in regards to the types of supplies needed and frequency of use. The OIG will review supplier compliance with documentation requirements for frequency and medical necessity.

As always, being compliant in your billing practices to include having the appropriate documentation as defined in the LCD can result in lesser scrutiny to your business, particularly in an audit. Being proactive in your processes, not only by ensuring your documentation meets policy requirements, but also through awareness of the services being reviewed by the OIG and other audit bodies allows you to prepare your files, as well as your office staff. The van Halem Group offers a wide array of audit services, including proactive, or prescreen claim reviews. If you find the services you bill Medicare appear on this list, or if you just want to be more prepared as we enter 2017 contact us. Since 2006 we have saved our clients over $30 million in claims denials and overpayments. Let us help you!