The latest on documentation, medical necessity, and those "pesky" free meters.

Sadly, diabetes is on the rise, and Americans will need to recalibrate their lifestyles. In the meantime, demand is increasing for self-testing equipment and supplies. As HME companies strive to meet this demand, they must be aware of the documentation and medical necessity requirements imposed by the Medicare program, and Medicare guidelines pertaining to free meters. Doing so will allow HME companies to meet the needs of diabetic patients while avoiding postpayment audits.

Medicare Part B covers blood glucose self-testing equipment and supplies for beneficiaries who have diabetes. This coverage includes blood glucose monitors, test strips, lancing devices, lancets, and glucose control solutions. In the 2008 OIG Work Plan, the Office of Inspector General (OIG) stated that it plans on reviewing Medicare Part B payments for home blood glucose test strips and lancets this year. The OIG will focus its efforts on the medical necessity of the amount of supplies a beneficiary is furnished. The OIG also indicated it would scrutinize a supplier's compliance with local coverage determination requirements, particularly documentation requirements.

To be in full compliance with the local coverage determination guidelines, a supplier must maintain documentation on the following coverage criteria: 1) the patient is being treated for diabetes by a physician; 2) the diabetic supplies are ordered by the treating physician and the beneficiary's medical records reflect the physician's treatment, including medical necessity for frequency of testing; 3) the beneficiary has successfully completed, or is scheduled to begin, training on the use of blood glucose monitors, test strips, and lancing devices; 4) the patient is capable of using the test results to monitor and treat their blood glucose levels; and (5) the device (monitor) is designed for home use.

Blood glucose monitors with special features, such as voice announcement of test results, are covered if the treating physician certifies that the beneficiary has a special need, such as visual impairment, which requires the special features. If a supplier furnishes a monitor with special features, but the additional documentation is not maintained, then reimbursement will be based on the least costly medically appropriate alternative (a monitor without the special features).

As stated above, Medicare will cover diabetic testing equipment and supplies only if furnished pursuant to a prescription. The prescription must include: 1) all items ordered, including the kind of blood glucose monitor the patient needs and a reason for the need; 2) the treating physician's signature and date; (3) a start date for the order if different from the signature date; and (4) the frequency of blood glucose testing.

In addition, every claim must include a diagnosis and a modifier to indicate whether the patient is insulin-treated or non-insulin-treated. It is helpful if this information is in the prescription, but it is not a required element for the prescription. In the event of an audit, the supplier will have to provide medical documentation to support the information submitted on the claim.

Medicare Part B covers the same type of equipment and supplies for diabetic beneficiaries, regardless of insulin usage. The difference is in the quantity of testing supplies covered. If the beneficiary uses insulin to treat their diabetes, then Medicare will cover up to 100 test strips and lancets each month. If the beneficiary does not use insulin, then Medicare will cover up to 100 test strips and lancets every 3 months. This means Medicare expects a beneficiary using insulin to test blood glucose levels approximately three times a day, and a beneficiary not using insulin to test blood glucose levels approximately once a day.

Medicare covers one lancet device every 6 months, regardless of insulin usage. To exceed these utilization guidelines, the following additional coverage criteria must be met: 1) the supplier maintains the treating physician's order for the diabetic supplies in its records; (2) the beneficiary has nearly exhausted their supply; (3) the treating physician ordered a frequency of testing that exceeds the utilization guidelines and has documented the specific reason for the additional testing in the beneficiary's medical record; (4) the treating physician has seen the beneficiary and evaluated the beneficiary's diabetes within 6 months of the order for the supplies; and (5) for refills, either the treating physician or supplier must document, at least every 6 months, that the patient is testing at a frequency that corresponds to the quantity of supplies furnished.

This documentation must be available upon request. If the first two additional criteria are not met, then Medicare will deny all testing supplies as not medically necessary. If the last three additional criteria are not met, then Medicare will deny the supplies in excess of the utilization guidelines as not medically necessary.

Phuong D. Nguyen

Regardless of the frequency of testing, a supplier may not furnish more than a 3-month supply of testing supplies at one time. Also, a beneficiary must request each refill; a supplier may not automatically refill diabetic testing supplies, even with advance beneficiary authorization for the refill. A new order is required when there is a change in testing frequency.

A supplier must include the ICD-9 diagnosis code supporting the medical necessity of glucose testing on each claim for blood glucose equipment and testing supplies. On claims for a beneficiary using insulin, add the KX modifier to the code for the glucose monitor or supply. On claims for a beneficiary not using insulin, use the KS modifier. In addition, a supplier delivering diabetic supplies will need to add the KL modifier to its claims.

FREE METERS

Diabetic test strips are designed to be used only in meters from the same manufacturer with the same brand names. Diabetic supply companies normally carry only one or a couple of brands of test strips. If a new customer is using a meter that is not compatible with the strips furnished by the company, then the company will need to provide a compatible meter to the customer. Normally, the company will desire not to charge the beneficiary for the meter.

As a general rule, a supplier may not offer anything of value to a potential customer. However, there are limited parameters within which a supplier may offer an item—including a free meter to a prospective customer. It is important that, in offering something of value to a prospective customer, the supplier stays within these limited parameters.

The primary statute limiting a diabetic supplier's ability to offer a free meter to a prospective customer is the Beneficiary Inducement Statute, which is found at Section 1128A(a) of the Social Security Act, 42 USC 1320a-7a(a). That section provides in part as follows: Any person (including an organization, agency, or other entity, but excluding a beneficiary, as defined in subsection (i)(5) of this section) that offers to or transfers remuneration to any individual eligible for benefits under subchapter XVIII of this chapter, or under a State health care program (as defined in section 1320a-7(h) of this title) that such person knows or should know is likely to influence such individual to order or receive from a particular provider, practitioner, or supplier any item or service for which payment may be made, in whole or in part, under subchapter XVIII of this chapter, or a State health care program (as so defined); shall be subject, in addition to any other penalties that may be prescribed by law, to a civil money penalty of not more than $10,000 for each item or service ... In addition, such a person shall be subject to an assessment of not more than 3 times the amount claimed for each such item or service in lieu of damages sustained by the United States or a State agency because of such claim ... In addition the Secretary may make a determination in the same proceeding to exclude the person from participation in the Federal health care programs (as defined in section 1320a-7b(f)(1) of this title) and to direct the appropriate State agency to exclude the person from participation in any State health care program.

In the preamble to the regulations issued under the Beneficiary Inducement Statute, the OIG stated that the statute does not prohibit the giving of incentives that are of "nominal value." Although the exception for nominal value is not explicit in the statute, the OIG observed that "if an incentive is nominal in value, then the individual providing the incentive would not and should not know that the incentive is likely to induce a beneficiary to use a particular provider, practitioner, or supplier. Accordingly, we believe that incentives that are only nominal in value are not prohibited by the statute, and therefore no exception is necessary."

The OIG went on to state that "[f]or purposes of consistency with HCFA national marketing guidelines," it would define "nominal value" to be no more than $10 per item or $50 in the aggregate to any one beneficiary on an annual basis. It should be noted that the national marketing guidelines cited by the OIG specify that the $10 definition of "nominal value" is based on the retail purchase price of the item.

Because the giving of an item of nominal value is not prohibited under the statute, a supplier may offer to give an item, such as a meter, to a potential customer provided the retail value of the meter is $10 or less. To avoid violating the statute, the meter being offered must have a true retail value of $10 or less. The retail value is the price at which a customer can purchase the item either over the Internet or in a store.

The retail transaction is the one that must be examined for purposes of the statute. Therefore, it is not necessary that the cost to the supplier of the meter be $10 or less, only that it be available to the public at a retail cost of $10 or less. If a supplier has a national customer base, the meter must be available on a national basis for $10 or less. It is not sufficient for a supplier to offer a meter for less than $10 if every other retailer in the United States sells the item for more than $10.

Some national diabetic suppliers offer meters for free and have advertising campaigns centered around the offer of a free meter. In these situations, the supplier is usually providing a private label meter that is available only from the supplier. Since the supplier is the only company that offers the private label meter, it can set the retail price. This is true even if the cost of the meter exceeds $10. If the retail price is less than $10, then the offer is not prohibited under the inducement statute.

Ultimately, you can't get by with "skipping over the details" when it comes to diabetic testing supplies. When meeting the needs of its diabetic patients, the HME company must carefully understand and adhere to the documentation and medical necessity requirements imposed by Medicare, and the Medicare guidelines pertaining to free meters.

Phuong D. Nguyen, JD, is an attorney with the Health Care Group at Brown & Fortunato PC, Amarillo, Tex. The Health Care Group represents HME companies, pharmacies, infusion companies, and other health care providers throughout the United States. Nguyen can be reached via e-mail: .