This is a great time to be in the HME business. Not only are people living longer, but today’s seniors—a group that now increasingly includes the politically active and consumer-oriented Baby Boomers—also want a better quality of life. In order to accomplish this, the demand for HME products and services is growing and business opportunities are endless.

Certainly, there are factors that might impact the viability of an HME provider: competency of employees, effectiveness of marketing, and technological efficiency of the provider’s billing operation. However, none of these factors can, in and of themselves, constitute a death sentence for an HME provider the way one single event can.

The event? A cavalier response to a DME Regional Carrier (DMERC) audit. An HME provider must take all such audits seriously.

Why Are Audits Increasing?
Long ago, DME was an almost sacrosanct area of Medicare billing and reimbursement. Back then, the items were different from the physician and hospital services the carriers were used to reviewing, and carrier review personnel did not really understand the reimbursement guidelines. In addition, since the carriers were not regionalized, DME was a very small percentage of any carrier’s claims, and the number of medical reviews performed on DME claims was concomitantly low.

Much has changed in recent years. There is not a single DME supplier who has not received a documentation request from a DMERC, and a significant number have faced a postpayment audit for review of medical necessity.

Why is this? First, many DME suppliers provide relatively expensive items. For example, Medicare spends the greatest percentage of its DME budget on oxygen. Any item that carries a high dollar reimbursement or, as a whole, accounts for significant dollars paid out on claims becomes more likely to be the subject of audits—eg, oxygen, scooters, and electric wheelchairs.

Second, there has been a significant increase in the use of DME. Much of the increase is due to the increase in elderly patients who are more likely than the general population to require DME. There also appears to be an increase in fraudulent activity in the DME field. Witness last month’s announcement of the “Operation Wheeler Dealer” crackdown on fraud in power mobility.

Finally, the auditors themselves are becoming more sophisticated. While most DMERC medical necessity reviewers are not DME professionals, they are receiving more extensive training and do have the ability to confer and consult with appropriate professionals where necessary. As the auditors become more experienced, they are also becoming stricter in deciding whether medical necessity has been established for a given piece of DME. Unfortunately, in most of the audits we have seen to date, supplier documentation is still not sufficient to withstand scrutiny.

Prepare for the Worst
Smart suppliers prepare for an audit before they ever become the subject of one. The first step is to verify that each patient file contains the documentation explicitly required by Medicare rules. Develop a checklist of the documents required for various types of equipment and keep the checklist in the patient file. Items that should be in every supplier’s patient files include:

• A detailed written order from the physician.
• An intake form that records all applicable diseases and conditions, including their ICD-9 codes.
• Signed delivery tickets.
• Any specifically required additional documents, such as a statement of ordering physician, evidence of periodic reevaluation of medical necessity, and detailed notes of every interaction with the patient or the patient’s family, whether in person, by telephone, or by other means.

Second, it is imperative you make sure the documents are valid. Review documents for the use of correction fluid and return any that have correction fluid on them to the physician for a signature and date to indicate approval of any changes. Make sure there are no erasures or attempts to change or correct numerals or other critical information. If someone other than the physician completed Section B of a certificate of medical necessity (CMN), make sure that person is appropriately identified. Check for the use of different kinds of ink, especially if the ink used in Sections A and/or C also appears in Section B of a CMN.

Third, suppliers should verify that all of the documentation supports medical necessity and that the documentation is internally consistent. For example, a high-strength, lightweight wheelchair requires more documentation of medical necessity than simply an ICD-9 code of 496 for chronic obstructive pulmonary disease (COPD). Likewise, a patient is not qualified for a semi-electric hospital bed with just the ICD-9 codes of 998.89 for postoperative fever and 718.44 for joint contracture of the hand.

What to Do
So where does this leave a DME supplier? First, make sure that your documentation is extensive. Document everything. Remember the five W’s of journalism: who, what, where, when, and why. Write down exactly who did what to whom, when, and why. Remember to include what materials, supplies, or equipment was used. Note the patient’s statements about his or her diseases/conditions and activities of daily living and how the equipment will affect the patient’s diseases/conditions or engaging in those activities of daily living. Note family member comments. Add detail to any descriptions of activities of daily living. If necessary, go out to the patient’s church and count the number of steps up to the front entrance. Note whether public transportation is readily accessible to handicapped individuals. State if the patient lives in a rural area without paved roads. Measure the distance from the patient’s home to the corner mailbox. Measure the width of the hallways in the patient’s home and note where the bathrooms are located.

Second, make sure that you document as you go along. Your recollection of the patient’s abilities a year or two after seeing the patient will not help when a DMERC medical reviewer looks in the file for documentation contemporaneous with the time the service was provided.

Third, seriously consider involving other allied health care professionals. Some wheelchair suppliers are now hiring physical therapists to perform and document a thorough patient assessment and evaluation, as well as to help with patient fitting and training on using the wheelchair.

Fourth, work with and keep in contact with your patients. In audits, the DMERCs are now routinely performing telephone interviews with beneficiaries about their equipment. Educate the patients thoroughly about proper care of the equipment and relevant body part, if necessary. Document the education process and then follow up. Call the patient a month to 6 weeks after providing the equipment to see how the patient is faring with the device. Offer to make minor adjustments or do retraining, if necessary, and document such intervention. Then call periodically afterward to see if the patient is still using the item. Nothing will cause an overpayment request faster than a patient telling a DMERC interviewer that he or she has not used a particular piece of equipment because “it is too cumbersome” or “it just doesn’t fit right and was uncomfortable.”

Finally, educate your physicians. In any audit, the DMERCs will want to obtain verification of medical necessity, usually in the form of copies of progress notes. Physicians must understand their obligation to respond (and respond promptly) to a DMERC letter requesting copies of patient charts. Failure of a physician to respond to a DMERC information request will result in that claim being denied.

Hints and Tips
One of the key elements to working to overturn a rejection and appealing a denial or an overpayment is documentation. Although the Centers for Medicare and Medicaid Services (CMS) transmittals, the Carrier’s Manual, and the Supplier’s Manual all state that DME suppliers need not maintain documentation already held by physicians, often the physician is unable or unwilling to provide sufficient medical necessity documentation, especially in the time frames needed to properly appeal denials. Remember that the physician has no incentive to provide this documentation and is not penalized for not providing it. Thus, in a denial situation, one of the first things to do is to review the documentation you do have in the patient’s file and determine what additional documentation you may gather. Examples of additional supporting documentation include hospital records, hospital discharge summaries, copies of the treating physician’s notes in the patient’s chart, any consultations by a specialist physician, home health agency plans of care and notes, and evaluations and/or treatment notes from ancillary health care providers.

Begin gathering additional documentation now. Develop a checklist of items that should be in every file. Make the checklist specific to the type of equipment. Review recent files to determine what is missing. Don’t wait until you have a 10- or 30-day deadline to respond to an audit to begin gathering documentation. If you wait to gather documentation until you receive an audit notice, you have dug yourself into a deep hole. Remember that the Medicare system for paying providers and suppliers is based in large part on the honor system. Just because you have been paid for a product or service based on your electronic billing information does not mean you will be able to keep the money if you are audited and lack proper documentation.

Finally, keep in mind that DMERC auditors are human beings. If you treat them politely and with respect, and do not try to conceal information, you may prevent the escalation of an audit to the next level, a full-scale fraud investigation. If auditors suspect you are not being fully forthcoming with requested data, they may conclude that a deeper investigation is warranted.

Time and again, we are consulted by suppliers who have “played the odds” that they will not be audited and are now faced with a six-figure overpayment. They have focused their energies on the next sale rather than taking the time up front to assemble proper documentation. This is a recipe for disaster. If you are in the HME business, there are now three things you can count on—death, taxes, and a DMERC audit. Will you be ready?

Darrel J. Scott, JD, is an attorney in the health care group of Brown & Fortunato PC, Amarillo, Tex. He is board certified in health law by the Texas Board of Legal Specialization and can be reached at (806) 345-6327.