It is a beautiful day and business is going so well your mind toys with the idea of expanding the product lines. Alas, you are forced from your dream weaving to tackle the mundane. Scanning the mail, you notice a letter from the DME Regional Carrier (DMERC). You have long since forgotten the request for a mail-in chart review of some 30 medical records it sent you months ago, but that request is about to come back and haunt you.

As you read the letter, your eyes jump from phrase to phrase, “you have received Medicare payments in error,” “found at fault,” “applied standard statistical formulas found in RAT-STATS,” and finally, “you have been overpaid” an astronomical amount in the six-figure range.

The DMERC has denied your claims because your patient files lack physician orders and medical necessity documentation. Surely, this is not happening to your company, you think. Your patient files may not be perfect, but they are certainly in pretty good shape.

As a paralegal in an active health care attorney practice, I can sympathize with this scenario. Our practice frequently works with suppliers who contact us for help in resolving medical necessity documentation issues related to DMERC overpayments. Unfortunately, many suppliers learn too late that maintaining adequate documentation to justify medical necessity is of paramount importance. Take, for example, specialty footwear for diabetics.

Study Could Increase Oversight
One factor that can prompt closer government scrutiny of a particular product area is a well-publicized study casting doubt on that product’s effectiveness. In May of last year, that happened to diabetic footwear. The Journal of the American Medical Association published the findings of a study on the effect of therapeutic footwear on foot re-ulceration in diabetic patients. The study, conducted by the Veterans Affairs Puget Sound Health Care System and the University of Washington, followed for 2 years 400 diabetic patients who had a history of foot ulcer, but who did not have severe foot deformity. Based on the data collected, the authors concluded that the widespread dispensing of therapeutic shoes and inserts to diabetic patients with a history of foot ulcer may not be the best way to help prevent foot re-ulceration. They wrote that “careful attention to foot care by health care professionals may be more important than therapeutic footwear, but does not negate the possibility that special footwear is beneficial in persons with diabetes who do not receive such close attention to foot care by their health care providers or in individuals with severe foot deformities.”

Whether physicians prescribe less therapeutic footwear for their diabetic patients because of this study remains to be seen. However, what is important for suppliers to remember is that, when therapeutic shoes are dispensed, keeping their companies in good shape with Medicare and other third-party payors means complying with strict coverage criteria and payment rules.

Protect Your Claims
According to the Health and Human Services Office of Inspector General (OIG) Fiscal Year 2003 Work Plan, Medicare paid more than $87 million for specialty footwear in 2001—a sixfold increase since 1996. The work plan also indicated that the OIG will determine “the appropriateness of Medicare payments for diabetic footwear” and whether “beneficiaries have used the footwear provided.” In addition, as reported in the 1998 Work Plan, the OIG found that suppliers were unable to provide adequate supporting documentation for 57% of the claims sampled.

Since the OIG identified inadequate documentation as a concern and since we frequently work with suppliers receiving overpayments due to lack of medical necessity documentation, a thorough understanding of the therapeutic shoe medical policy and, specifically, the documentation requirements is critical.

This spring, several revisions were made to the therapeutic shoe medical policy, including changing the title of the policy from Therapeutic Shoes for Diabetics to Therapeutic Shoes for Persons with Diabetes to reflect the current American Diabetes Association nomenclature. These revisions were effective for services performed on or after April 1 of this year.

According to DMERC coverage and payment rules, for any item to be covered by Medicare, it must:

1. Be eligible for a defined Medicare benefit category.
2. Be reasonable and necessary for the diagnosis or treatment of illness or injury, or to improve the functioning of a malformed body member.
3. Meet all other applicable Medicare statutory and regulatory requirements.

Are Your Files Complete
General DMERC documentation requirements expect that the patient’s medical records will reflect the need for the care provided. In addition, suppliers must obtain an order for each item billed. That order must be signed and dated by the prescribing physician (the physician who writes the order for the therapeutic shoes and accessories), kept on file by the supplier, and made available to the DMERC upon request. The prescribing physician may be a medical doctor, a doctor of osteopathy, or a podiatrist.

Starting this year, all items billed to the DMERC before the supplier receives a signed and dated order must be submitted with an EY modifier added to each affected Healthcare Common Procedure Coding System (HCPCS) code. It denotes that no order by a physician or other licensed health care provider for an item or service is on file prior to dispensing the item. For items requiring an order by statute, such as therapeutic shoes, failure to obtain an order will result in the claim being denied as noncovered. Typically, my firm finds that suppliers have obtained the signed physician order but that the order is dated (by the physician) months after billing for the products/services.

In addition, before dispensing specialty footwear for diabetics, the supplier must obtain a signed and dated statement from the certifying physician (the physician who manages the systemic diabetic condition) specifying that the patient has diabetes mellitus (ICD-9-CM codes 250.00-250.93) and that the patient has one or more of the following conditions: history of previous ulceration of either foot, pre-ulcerative calluses of either foot, peripheral neuropathy with evidence of callus formation of either foot, foot deformity of either foot, poor circulation in either foot, or previous amputation of the other foot or part of either foot. The physician must also certify that the patient is being treated under a comprehensive plan of care for diabetes and that the patient needs the diabetic shoes.

The DMERCs recommend that suppliers use the “Statement of Certifying Physician for Therapeutic Shoes” so that all required elements are captured. Also, keep in mind that the certifying physician may not be a podiatrist.

This policy mandates that suppliers submit claims with the KX modifier appended to codes only if the supplier receives and maintains an appropriate physician order and Statement of Certifying Physician for Therapeutic Shoes or similarly worded physician certification. Accordingly, if the requirements for the KX modifier are not met, the supplier should not append this modifier to its claims.

The supplier should also be aware that certain HCPCS codes for specific shoes and/or accessories require additional medical necessity documentation. For example, a custom molded shoe (A5501) is covered when the patient has a foot deformity that cannot be accommodated by a depth shoe. The nature and severity of the deformity must be well documented in the supplier’s patient record. In the event of an audit, if the DMERC finds that there is insufficient medical necessity justification for the custom molded shoe (A5501) but the general coverage criteria are met, payment will be based on the least costly alternative, a depth shoe (A5500).

Maintaining the right documentation in patient files can be challenging, but the alternative is worse. With a strong understanding of medical necessity documentation, your diabetic footwear claims will be less likely to cause audit problems.

Marcia Castillo, RHIT, CCS, is a paralegal-medical information specialist with the law firm Brown & Fortunato PC, Amarillo, Tex. She is a Registered Health Information Technician and specializes in medical record audits. Contact her at (806) 345-6354 or mcastillo@bf-law.com.